Episode 3 (EN): BusinessShift – Advancing Toward a Greener Future with Climate Protection Management

00:00:00: BusinessShift.

00:00:05: BusinessShift.

00:00:06: The podcast for decision makers and executives who want to deal with the topic of sustainability

00:00:10: in a sustainable way.

00:00:13: Welcome to BusinessShift, the podcast that changes perspectives and explores the question

00:00:18: of how to make more out of business, namely sustainable and future proof.

00:00:24: My name is Tobias Kirchhoff.

00:00:25: Today we're talking about something we all deal with every day, the climate.

00:00:29: For a long time, the topic of climate change was rather something that was threatening.

00:00:34: But now, it is clear to everyone that we are already in the middle of it.

00:00:39: What can companies do to ensure that we do not reach the critical tipping points that

00:00:43: lead to irreversible changes in the first place, and with such measures that these companies

00:00:47: do not break down?

00:00:49: I am talking about this today with our sustainability expert from Tuv Rhineland, Dr. Bahar Cat-Krause.

00:00:56: Welcome, dear Bahar.

00:00:57: Hello, dear Tobias.

00:00:58: Dear Bahar:

00:00:59: What exactly is climate protection?

00:01:01: Climate protection means knowing how much I emit and doing everything I can to make

00:01:05: my processes more efficient, to design production processes and business processes in such a

00:01:11: way that they cause fewer greenhouse gas emissions and to establish measures that reduce emissions

00:01:17: in net terms.

00:01:18: Concrete.

00:01:19: What do you think is part of the topic of climate, climate protection, avoidance of climate

00:01:23: change, meeting climate change?

00:01:25: What topics do you think are included?

00:01:27: So when you talk about climate protection in the company, we always get to the costs

00:01:31: relatively quickly.

00:01:32: But as a company, I also have a certain responsibility, and this responsibility not only applies to

00:01:37: my company, but also to society, which is also increasingly taking on the topic of climate

00:01:43: protection so that I can not only improve myself in the company with the topic of climate

00:01:48: protection, but also my own reputation, for example, or even the sales of my products

00:01:53: to put it bluntly.

00:01:54: If for example I can show that my product is more sustainable than that of the competitor,

00:01:59: then I also have a direct contribution to profitability.

00:02:02: For companies, climate protection means positioning themselves for the future, to really establish

00:02:06: ourselves in this way, to define goals, to develop measures to remain on the market in

00:02:11: ten years time.

00:02:12: Well I can do that financially by simply trying to cushion financial imponderables.

00:02:17: But what does that mean in concrete terms?

00:02:19: More and more companies understand that they have to do something for the climate.

00:02:22: But the whole thing must also be affordable.

00:02:25: What does climate protection cost and what amortization periods can I expect as a company?

00:02:30: So of course the costs always depend on the measures that I define for myself.

00:02:34: These can be very short term measures such as energy efficiency measures, for example

00:02:37: if I have large layers in the logistics sector or something like that and my lighting is

00:02:41: switching to LEDs, then I can save costs directly.

00:02:45: Then of course I have a certain amount of investment that I make, but it pays for itself

00:02:48: relatively quickly or if I turn the cooling a little warmer by one or two degrees which

00:02:53: also brings a lot of energy efficiency and is also directly noticeable in the wallet.

00:02:57: But then of course there are also long term measures that may also require larger investments.

00:03:03: For example the investment in renewable energies, if you buy PV systems, put them on the roof,

00:03:08: then of course you have a larger investment but it will only pay for itself over several

00:03:12: years.

00:03:13: And then also repairs, building renovation measures for example to improve thermal insulation.

00:03:17: These are all investments that are more likely to pay off in the long term.

00:03:21: As an entrepreneur I'm not a non-profit organization but I have to know what to expect in order

00:03:25: to be able to plan so that I don't overdo myself financially for example.

00:03:30: How can I calculate the costs of investing in climate protection measures in a sustainable

00:03:35: way?

00:03:36: So it's always important to know where I stand first.

00:03:38: So I can define measures and in the end they may have no effect at all but simply costs.

00:03:43: So the most important thing is really to analyze the initial situation and if it is really about

00:03:47: climate protection measures and the reduction of greenhouse gases then such an investment

00:03:52: plan would always be preceded by a calculation of the greenhouse gas emissions that I cause

00:03:56: myself.

00:03:57: In other words I would create a carbon footprint for example or a balance sheet where I can

00:04:01: see exactly where the real levers are in my processes or in the company.

00:04:05: And if that is for example the purchase of energy then I could reduce my greenhouse gas

00:04:09: emissions by investing in renewable energies on the one hand and on the other hand of course

00:04:14: also position myself somewhat self-sufficiently in terms of energy prices which are on the

00:04:18: rise and make investments that will also pay off financially at some point.

00:04:23: Noticeable.

00:04:24: So kill two birds with one stone.

00:04:27: Of course it is also extremely important to record direct and indirect costs.

00:04:30: Well and you also have to keep in mind and this is something you might always forget that

00:04:34: sustainable investments also have tax advantages.

00:04:37: So that means depreciation, tax incentives through sustainable investments.

00:04:41: The banks actually look at it especially when it comes to loans, credit worthiness this is

00:04:45: always an issue and then of course it is also important to check and evaluate the profitability

00:04:49: of the measures.

00:04:51: That's why I said at the beginning that it's always good to see where my adjusting screws

00:04:55: actually are so that I really take with me when developing measures what really brings

00:04:59: something in order to avoid costs.

00:05:01: And it's also important to look okay how much do I have to invest, how long is my payback

00:05:05: period.

00:05:06: And of course you also have to look at the cost-benefit ratio i.e. putting the life cycle

00:05:10: costs of the measures in relation to the expected savings.

00:05:13: And of course it is always important to track the measures.

00:05:16: So I always say monitor annually or maybe in shorter cycles to simply show the development.

00:05:20: It can go in any direction it can be positive but we also often find in companies that measures

00:05:24: may not be as effective as expected then you have to readjust them.

00:05:28: There is no right or wrong but there is always the possibility of saying maybe I have to

00:05:32: optimize one or two more sub-measures in order to then go in the right direction again.

00:05:36: And there is always potential for cost savings there too.

00:05:39: That means always looking at the end of the day what is the target actual comparison.

00:05:43: Will the measures bring the successes that I planned at the beginning and of course I

00:05:47: can do that best at the KPI level.

00:05:49: So everything that is quantifiable is always super helpful in principle.

00:05:53: That sounds very complex now so many variables or many theme games seem to be included in

00:05:57: the financing and in the calculation.

00:06:00: Could you perhaps give us a benchmark to simplify this further and also make it practical?

00:06:04: After all what should a company invest in climate protection every year?

00:06:08: That actually depends very much on the industry, on the size of the company and of course also

00:06:13: on the initial situation and the goals I set for myself.

00:06:16: Basically you can then say that companies should really prioritize measures that pay

00:06:20: for themselves within five to ten years.

00:06:22: So as a benchmark the annual investments could ideally amount to 50 to 100 percent of the

00:06:27: expected annual savings in order to then create a balance between the effort and the

00:06:31: benefits.

00:06:32: And it is important that investments in climate protection are really strategically planned

00:06:36: and aligned with the individual goals and possibilities of the company.

00:06:39: And subsidies and external advice can also help to control the financial burdens in

00:06:43: a targeted manner.

00:06:45: Investment is now clear to me.

00:06:46: What do I just have to put in?

00:06:48: Also, how can I calculate it?

00:06:49: How does it pay for itself over the years?

00:06:52: For me however, the question arises again.

00:06:55: How does climate protection affect the profitability of my company in concrete terms?

00:07:00: So perhaps to summarize again what the positive effects are, cost reduction through increased

00:07:05: efficiency and protection against rising energy and CO2 costs among others.

00:07:09: That gives the company a certain planning security.

00:07:11: And of course you also have market advantages and predictable sales growth ahead of you.

00:07:15: If I position myself for the future then I can plan not just for the short term but for

00:07:20: sustainability is simply there to stay. And then of course, there are subsidies. There are various

00:07:25: regional and national programs in Germany, such as KFW loans, buffer grants or climate protection

00:07:30: funds. And on the other hand, of course, you also have to see that a sustainable company is all in

00:07:35: all much more attractive for investors, which of course also enables me to achieve a better

00:07:39: market positioning at the same time. And that from different perspectives on the one hand,

00:07:43: there is of course the long term nature, perhaps also the longevity of my products,

00:07:48: which I design more sustainably, but also the attractiveness for employees, which also gives me,

00:07:54: I'll say, a certain market positioning. Where or how can I find out which of the funding programs

00:07:59: is suitable for me? So there are usually online portals of the institutions mentioned where you

00:08:04: can search for keywords by federal states by company size, and you actually get a very good

00:08:10: overview relatively quickly of which subsidies are currently available, which ones are available by

00:08:16: when I have to apply with which documents. They exist at the national level, but they also exist

00:08:20: at the EU level, at the municipal level. So it's worth taking a look. And to what extent can the

00:08:25: sustainability consultant help me? Yes, the sustainability consultant can of course help if

00:08:31: he or she has expertise in applying for funding. There are many things you can do right, but also

00:08:35: many things you can do wrong. And it's always good to take a helping hand and knowledge with you to

00:08:39: avoid exactly these mistakes. We have now talked about the money. And let's assume that we have

00:08:44: raised the money or we want to raise it. Which climate issues do I address now? And how can I

00:08:50: set up a climate protection strategy and then implement it? So I always set up a strategy when

00:08:56: I know where I am, where I stand and have done an analysis of the current situation. So especially on

00:09:01: the subject of climate, I would hardly calculate a footprint as a first step. I can do it at the

00:09:06: company level, but I can do it at the product level. This means that with this tool, I have a

00:09:10: very good overview of where I actually have to intervene at all. When it comes to strategy,

00:09:14: we always talk about goals. In this case, these would be the climate targets. This means that I

00:09:19: can actually determine relatively well from this analysis what percentage of my greenhouse gas

00:09:24: emissions I want to reduce in how many years. That would be a goal. And if I now say, for example,

00:09:29: that I want to save 20% in five years, then I would work towards this 20% and see what measures I

00:09:34: can take to achieve this goal. That means that if I have now calculated a carbon footprint,

00:09:40: for example, for my company, and it turns out that the topic of energy is a great lever,

00:09:44: then one measure would be to say I am switching to renewable energies.

00:09:48: So that I would then actually define a measure here to look, I do my own PV systems as a thing is

00:09:54: perhaps the heat pump, the right thing, or what is actually the right remedy for me. And then it's

00:09:59: a matter of prioritizing these measures and also involving the responsible people in the company,

00:10:04: because they were usually not involved in the strategy or in this strategy development. So to

00:10:09: involve them, to build up the knowledge here and to say here, colleague Tobias, you are now responsible

00:10:14: for making us a little more energy efficient. And then the next step would be to see is there

00:10:19: actually funding in this area. It is always always worth actually checking this and then actually

00:10:23: introducing cycles that then also make it possible to monitor the effectiveness of the measure.

00:10:28: That means saying, okay, the employees who are now involved in this measure have to calculate the

00:10:32: carbon footprint again, every six months or every 12 months and see whether the measure is working.

00:10:38: That sounds pretty time consuming. I can imagine that as an entrepreneur, I wouldn't be able to

00:10:43: manage that at all alongside my day to day business, because I'm normally 100% booked up.

00:10:49: What alternatives do I have that I can still set it up alongside my day to day business?

00:10:54: Yes, not just anyone can calculate a carbon footprint. That's true. So of course, we as the

00:10:59: external consultants are already called upon to provide support here. There are also agencies

00:11:03: for climate protection management that can be commissioned. But the long term goal should actually

00:11:07: be to install a climate protection officer or a sustainability manager somewhere in the company

00:11:12: who does exactly what I mean by monitoring to look again and again. The measure also takes

00:11:17: effect to strengthen communication in the company. So that should actually be the highest goal. But

00:11:21: until then, I would always bring the expertise in house. We have just talked about where I can get

00:11:26: funding from. That is, where do I get money from? How much do I have to invest? It's also exciting

00:11:32: to know again, where can I save money? So that is, where do I perhaps also have tax incentives,

00:11:37: which the state then also gives me so that I can bring the topic of climate protection forward

00:11:42: in my company. So the German state uses various tax incentives to encourage investment in sustainable

00:11:48: technologies and processes. The Growth Opportunities Act introduced the Climate Protection Investment

00:11:53: Premium Act, where companies can receive a premium of 15% of the investment costs for climate-friendly

00:12:00: technologies. Then there are special depreciation, for example, for certain energy-efficient

00:12:04: renovation measures on buildings. Then there are tax incentives for electromobility, for example,

00:12:10: or the promotion of research and development, investments in innovative climate-friendly

00:12:14: technologies. This means that it is definitely advisable to check the tax advantages together

00:12:19: with the tax advisers to develop the optimal strategy for the company, which can vary.

00:12:23: And what do I have to pay attention to so that I can really benefit from the tax advantages?

00:12:28: So documentation is the be-all and end-all here. So it really has to be complete, especially when

00:12:33: it comes to investments. This means that all investments and expenditures for climate protection

00:12:38: measures must be documented, complete, and also tax verifiable. Then of course, you should also

00:12:43: keep an eye on checking the eligibility of the measures, i.e. really make sure that the investments

00:12:48: meet the requirements of the respective funding programs or tax incentives. In this context,

00:12:53: it is also important to say that the correct allocation of the cost for climate protection

00:12:57: measures is of course also important. And then of course the use of tax-free grants and subsidies

00:13:03: that do not cause any additional levies or tax burdens. Dear Bahar, I take away that companies

00:13:09: can make their contribution to climate protection and that the state and the EU also support this

00:13:14: commitment. Of course, companies must have prudence and planning diligence extended when it comes to

00:13:20: climate protection investments. But anyone who deals with it will find that the journey to climate

00:13:25: protection begins with a first small step and the second and third follow very easily and automatically.

00:13:32: Once again, a very big thank you to our esteemed listeners for being there. I hope you can take

00:13:37: something with you into your everyday business. My name is Tobias Kirchhoff and if you want to

00:13:41: learn more about sustainability in business, just stay tuned. Subscribe to our podcast and we will

00:13:50: bring you the most interesting tips and stories about sustainability in business, innovation and

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00:14:12: dog, in nature with children or dogs. And as always, you can find all the information under our show

00:14:17: notes. And don't forget, change, even in business, starts with all of us. So until next time, your

00:14:27: BusinessShift. The podcast for decision makers and executives who want to deal with the topic of

00:14:33: sustainability in a sustainable way. Stay curious. Bye bye.