German Companies Hop on Green Bandwagon

In the name of higher profits, powerful investors such as global banks are driving the adoption of eco-friendly business practices

by Dietmar Hawranek and Alexander Jung

In the name of increasing profits, of all things, more and more German companies are discovering climate protection. With increasingly stringent emissions laws and energy prices higher than they've been in years, sustainability has suddenly become a factor in economic growth. But can the new trend last?

Environmentalists usually devote most of their attention to such garden-variety endangered species as the brooding corncrake. But Winfried Häser, an environmental strategist with Germany's postal service, Deutsche Post, focuses his attention on another, equally sensitive species: the pin-striped financial analyst.

Häser regularly meets with the professional financial investors of international banks like Credit Agricole and HSBC to tell them about all the things his Bonn-based, internationally active logistics organization is doing for the environment. Once they've heard Häser's presentation, the investors usually fire back with questions about Deutsche Post's progress on reducing its CO2 emissions and how many of the company's 130,000 vehicles are already running on biofuels. The financial world suddenly has a burning interest in the answers to these and other questions about preserving the environment.

This is quite a sea change. In the past, no more than a handful of concerned shareholders would demand answers to their questions about the environment at annual company meetings. Critics of poor corporate environmental records were usually minor shareholders -- the kinds of troublemakers financial executives and CEOs rarely took seriously.

But nowadays the people asking the environmentally tough questions often control investments that run into the billions. They work for banks and mutual funds, and they look for attractive investment opportunities for the capital they manage.

Crisis-Proof Profits

Far from being driven by some noble-minded aim of saving the world, these masters of our money are mainly looking for one thing: profit, and as crisis-proof as possible.

This new environmental interest among powerful investors is probably the most salient indication of the important role climate change and its consequences now play in the economy. The issue has made it into the corner offices of top executives, and not just in companies already known for their support of environmental issues, such as German mail-order giant Otto and baby food manufacturer Hipp.

Companies in all sectors of the economy are suddenly examining their businesses to determine how sustainable and environmentally conscious they are in fact doing business. They are not doing this out of pure altruism. Instead, companies find themselves forced to adjust to new realities, including stricter environmental laws and the ever-rising cost of coal, natural gas, oil and electricity. In the process, some are even discovering ways to develop entirely new businesses.

Climate protection is becoming an important competitive factor. For this reason, companies are looking for strategies on how to address the issue in the future.