The climate crisis is advancing - what answers do the DAX 30 companies have?
Denial and playing hide and seek is becoming more and more difficult. The effects of global warming are noticeable for more and more people: extreme heat waves, frequent heavy rain with floods, violent hurricanes and devastation and all this coupled with crop failures, the destruction of living space and infrastructure, water shortages and soil erosion. The chain of effects can be continued. It is becoming increasingly clear to many that it can no longer go on like this. We use 1.7 earths per year globally (bio-capacities). In Germany it is even the equivalent of 3 earths. The point in the year when we have already used up natural resources is moving forward. This year we already used up our natural capacities on July 29th (earth overload day). The positive news is that humans are adaptable and able to develop. This has been shown by the evolutionary stages from the hunter-gatherer to the local agriculture to the industrial age. At the self-convening climate summit in April, American President Joe Biden set the goal of reducing greenhouse gas emissions by 50% by 2030 compared to 2005. The EU is currently again a pioneer with the “Fit for 55” strategy and would like to reduce CO2 emissions by 55% by 2030 compared to the 1990 level. Since 24% fewer greenhouse gases were emitted in 2019, 26% still have to be mastered. The federal government also tightened the climate protection law in the spring under pressure from the Federal Constitutional Court. Compared to 1990, 65% greenhouse gas should be saved nationally by 2030.
It is exciting to see how companies react to this challenge. Are you pioneers and developing new products and technologies to strengthen our living space and society? Or do you plead for "keep it up" and only implement the minimum, i.e. what is legally necessary? The association "The Future Circle e.V." has carried out a study on the DAX 30 companies. Listed companies have had to publish an annual non-financial report since 2017. The Future Circle e.V. has analyzed the sustainability reports of the last two years 2019 and 2020. The main question was: what effect - positive or negative - do companies have on the planet and society and what progress is there in terms of new solutions and the achievement of goals. The result still leaves a lot of room for action:
(1) Transparency only in certain areas: The impact on the planet is described transparently, especially with regard to climate change. The DAX 30 companies were responsible for 1,093 million tons of CO2e emissions in 2020. This corresponds to approx. 3% of the global CO2 emissions of 34 billion tons. Compared to 2019, the DAX 30 companies have reduced their emissions by 26%. This was essentially due to the pandemic. There is still little information available on other environmental issues such as biodiversity, soil sealing, etc. The reporting also looks relatively “thin” with regard to the impact on society.
(2) Insufficient comparability: 11 companies already report the full amount of CO2e they have caused along the value chain (including suppliers) and the product life cycle (including use and disposal of the products). Companies from the automotive industry are good examples here. The rest of them don't yet. The figures are therefore not comparable and are only of limited informative value. The situation is similar for other indicators such as air pollution, water consumption and pollution, waste generation / recycling,
(3) Governance is gaining in importance: Governance describes the way the company is managed and how employees are dealt with. The quota of women in management positions and the wage differences among employees are particularly important here as a benchmark for equality. Almost all DAX 30 companies report on the quota of women in management positions. On average, the quota of women in management rose from 25% in 2019 to 27% in 2020. The companies use different definitions of what management positions are. The issue of income equity is very transparent, but the differences are large. The factor of Executive Board remuneration versus average salary ranges from 20 (Infineon) to 146 (Linde). In other words, at Linde, the Executive Board earns 146 times the average salary of employees.
(4) Less ambitious goals: It is positive that the majority of the DAX 30 companies set goals and publish them. 13 of the 15 companies with significant CO2 emissions have set time-related goals for their own company's climate neutrality. The different ambitions are striking. Seven companies follow the "minimum consensus" of the Paris climate summit to be climate neutral by 2050. Only two companies (Siemens and Bayer) with significant CO2 emissions want to be climate neutral by 2030. Here, too, the devil lies in the details: the definition of climate neutrality. The majority of companies see climate neutrality only in relation to their own processes (not to the upstream supplier processes and also not to the use phase of the product).
(5) So far, little sustainable transformation: How seriously do companies mean it? This is a difficult question to answer. Are the sustainability reports more like marketing brochures or actual concepts? To do this, you have to look deeper into the strategy, the adaptation of the business model and the control of the implementation. Only two companies stand out here that are strategically realigning themselves and integrating sustainability into their business model: Covestro (manufacturer of plastics) has recognized the problem of plastic waste worldwide and has committed itself to the development of a complete circular economy. In the future, plastic should be made entirely from either recycled plastic or biomass (naturally degradable). This is credibly anchored in the strategy and integrated into the corporate programs. BMW is also aligning its corporate strategy 100% to the circular economy - but has to underpin this ambition with more concrete measures and organizational anchoring.
(6) New technologies: Renewable energies, electrification of mobility (based on renewable energy) and the hydrogen economy are the solutions to reduce greenhouse gases and air pollution. These were the big topics of the energy and automotive industry in 2019 and climate change. No major topics were added in 2020, although there are other environmental risks in addition to climate change: land sealing / erosion, nitrate / phosphate pollution of soils and waters, reduction of biodiversity or threat to the ecosystem, ocean acidification, etc.
The resume is mixed: The topic of global warming and sustainability is on the agenda for all DAX 30 companies. However, the ambitions and measures on average of the companies are not sufficient to limit global warming significantly in accordance with EU targets. The risks outside of global warming are rarely addressed. A cause for concern, as the ecosystem of our planet has many interdependencies and does not function one-dimensionally. For example, fertilization with nitrate and phosphate also influences the nutrient content of the waters and causes entire ocean areas to die, again with an impact on the climate and biodiversity. Due to their size, the DAX 30 companies have a significant influence on our planet and society. The negative influence must turn even more clearly into the positive. With new technologies, products and business models paired with financial success. Only then will change succeed for all of us.
You can request the complete study at: info@thefuturecircle.global
The association "The Future Circle - rethinking the economy, healing planet earth e.V." is a globally active and collaborative association that works in the service of mankind for an economy that is suitable for grandchildren. We inspire and enable companies and organizations to establish sustainable, successful business models with a positive effect on our planet and our society in the interests of future generations and to actively live them. Founded in 2020, experienced managers are committed to Managing directors, consultants and scientists in projects, events and publications for a new approach. In the book “Planet Proofed”, published in August 2020, Oliver Specht and Axel Nauert describe a possible (out) way in clear and simple examples.