Article by Dr Martin Bethke, Senior Partner company companions
17 November 2023 will go down in the history books as a turning point, even if there was no focal point on ARD or even a special television programme about it. You probably don't even remember where you were on this historic day. But that is symptomatic of the problem we are dealing with here, because 17 November 2023 was the first day in history on which the Earth was 2 degrees warmer than in pre-industrial times - and hardly anyone noticed.
The climate on our planet is changing rapidly and with effects that are difficult to calculate, but which will increase with every tenth of a degree rise in temperature (e.g. droughts, famines, water shortages, etc.). It is highly likely that 2023 will be the warmest year ever recorded. In 2100, we will be at a warming of approximately 2.7 to 3.2 degrees. In short, as the climate changes (and I am deliberately leaving out the factor of biodiversity and its ecosystem services at this point), the context of our economic activity will also change. However, almost all economic sectors are dependent on a stable climate; only the ability to adapt to global warming is sector-specific. Increasing global warming and the associated effects, such as natural disasters, resource scarcity, regulatory uncertainty, and increased insurance costs, pose a serious threat to the profitability of many companies. Clever risk management would therefore be appropriate and sustainable management would be essential not only from an ecological but also from an economic perspective.
Sustainability is becoming a key concept that combines ecological, economic, and social responsibility, and sustainable management is thus inevitably becoming a "license to operate" for every commercial enterprise.
Shaping a future worth living is no longer conceivable without sustainability. Whether in politics, business, or society - in a dramatically changing world, our actions will in the future be measured more than ever by how we act. Sustainability is becoming a key concept that combines ecological, economic, and social responsibility, and sustainable management is thus inevitably becoming a "license to operate" for every commercial enterprise.
Shaping the future and your own business model sustainably
The challenge for all companies is great, but there is no alternative. There will be no more "business as usual", even if many a CEO or politician would like to return to the "good old days". Let's not kid ourselves: We lived in those "good old days" at the expense of the future. The question for all companies now is: how do we manage to remain successful and competitive simultaneously? It's about staying in the game and making your own business model fit for the future and for the future, as well as harmonising sustainable action and economic success. Simon Sinek, multiple bestselling author and management consultant, puts it aptly in his book "The Infinite Game" when he says "In infinite games, like business or politics or life itself, the players come and go, the rules are changeable, and there is no defined endpoint. There are no winners or losers in an infinite game; there is only ahead and behind."
Isn't questioning the status quo, adapting to a new context and shaping the future the origin of entrepreneurship?
The rules of the game for politics, business and society are changing. Many companies find themselves driven by customer expectations, new regulations and often enough also by employees of a new generation who take a critical look at the purpose and vision of the company and its contribution to society. But isn't this the perfect starting point for innovation? Isn't questioning the status quo, adapting to a new context and shaping the future the origin of entrepreneurship?
Fulfilling social and political expectations
According to a recently published study by the Federal Environment Agency, 90 per cent of people in Germany are in favour of the ecological restructuring of the economy, despite concerns about the rising cost of living. Climate and environmental protection continue to play a major role and the expectation is that more will be done in this area by all social players. Only 15% of those surveyed in the study are convinced that the level of ambition in industry and business is high enough and that companies are living up to expectations.
But it is not only societal expectations that are putting companies under pressure. In line with the UN climate goals, governments and institutions have committed to the "net zero" target, which makes sustainable business even more relevant. Sustainability must therefore be understood and managed along the value chain, and business models must be continuously reflected upon and further developed. It is therefore only logical that increasing statutory regulation (e.g. the Corporate Sustainability Reporting Directive - CSRD) is prompting more and more companies - both nationally and internationally - to recognise sustainable business practices as a core element of their corporate strategy.