Although our global economy would grind to a halt without the logistics sector, it is also a significant factor in climate change. What steps is Maersk taking to become more sustainable?

Maersk is well aware of its role and responsibilities and is proud to be one of the first movers in the logistics industry when it comes to implementing sustainability initiatives.  More specifically, we are in the process of creating a company-wide sustainability strategy that is embedded at management level and underpinned by concrete measures across a range of workstreams.

What role does procurement play in this transformation?

Sustainable procurement is part of the ESG workstream but we are also closely integrated into the other workstreams. In crossfunctional teams, we support pilot projects in  areas including CO2 reduction and human rights; at the end of the day, there are very few initiatives that we can implement without the support of our suppliers.

Supply chains in particular are hugely complex. How did the sustainable procurement initiatives get started?

By creating a detailed implementation plan. We analyzed the goals for the next five years for our business sectors and put specific action plans in place for each of them. This  included developing an organizational structure that allows us to take an effective approach to the issue.

Getting the implementation phase off the ground involved a lot of paperwork. Gaining an overview of the status quo in a global organization was quite a challenge – it  involved things like checking supplier contracts, analyzing the structure of our pool of suppliers, and mapping country-specific requirements. The first thing we did with all  that information was to make sure we were fulfilling all the necessary compliance regulations and safety requirements. We’re just getting started on the next step, which is  about specific strategic issues – like reducing Scope 3 emissions in transport, actively improving safety conditions during loading operations, and implementing provisions for  human rights in developing countries – above and beyond statutory requirements. We’re working very closely with our suppliers during this phase.

Could you give us an insight into what’s involved in practical terms? Is your team having to work hard to get people on board with this?

Not really because, at the end of the day, we’re all in the same boat. I think there are hardly any companies that aren’t aware of the urgency of the situation right now. Some of  our core suppliers are major corporations and they now tend to have dedicated sustainability officers. So we and our suppliers share the same goals as a rule; we just have  different needs. Understanding them and responding appropriately is an important part of our transformation. Rather than everyone working to further their own interests as  quickly as possible, it’s about working with our suppliers to come up with the best solutions.

Some of our suppliers are still near the start of their sustainability journey and often don’t have the corresponding resources, so we’re supporting them in meeting statutory  requirements, developing targeted improvement plans, and setting objectives. But others have already made a lot of progress and are meeting or surpassing all the conditions  in our code of conduct, so we’re discussing options for further improvement with them. We’ve also adapted our total cost model to support this and added ESG criteria, so our  Category Managers have a basis for their negotiations.

But we need to be prepared to compromise as these negotiations often involve trade offs; sometimes more sustainability entails costs, while sometimes it’s the other way  round. We always try to set mutual goals with our suppliers so that we create win-win situations for both sides.

But does this mean you’ve significantly changed what you need from your team? How do make sure that all your employees are on board with you?

You need the backing of a strong management team. The clear message from our management is that sustainability is our top priority, but that doesn’t mean that the transformation as a whole will follow a top-down sequence. When we developed the strategy, it was very important to us that everyone had a say and was involved in the process, to make sure that sustainability also genuinely becomes an intrinsic part of our corporate culture. Stakeholder management is a crucial factor in our success and that includes ensuring that everyone has access to the strategy. Everyone needs to understand their individual role in the process and what needs to be done. Setting objectives and acknowledging when they are achieved underlines the importance we attach to the issue and ensures that everyone remains committed.

What are the main challenges you’ve faced so far?

Good question. The process of implementing transformation on this scale is definitely not as straightforward as it sounds. Maersk is a highly complex organization; we operate  in a very diverse range of countries around the world and, as an integrated logistics service provider, we also cover a variety of business sectors and industry specifications. Making sure we serve all the relevant interests is a mammoth task, so we’ve taken a long-term approach to designing the program and put in place very  structured processes for our action plans. There’s an Indian saying that goes “You can’t carve the elephant in one go” – what’s important is that you don’t give up and you take it one step at a time.

Data transparency was the biggest challenge during implementation. You need to develop a powerful digital platform to maintain an overview of  procurement data on a global scale, and we’re still in the early stages with that. In the long term, we want to link up with our suppliers on it as well.

How do you motivate yourself to successfully implement a transformation project on this scale?

One question drove me to focus on this priority: “What kind of a planet are we bequeathing to our children?” That angle wasn’t actually part of my career path but it genuinely  moved me. And it gives me a really positive boost whenever I see that passion in my contacts in other organizations as well. Fighting to stop climate change is probably the  most complex challenge that humanity has ever tackled, but I believe we will find ways to succeed. //

Mr. Udesen, if you look at the current situation when it comes to sustainability in business, what stands out to you?

There are two very different groups in business, with entirely different views on the importance of sustainable procurement. The first refuses to face up to the issue,  consistently taking a defensive approach, with sustainability only a secondary consideration. They delay implementing regulations or measures as much as possible and exert,  at most, the minimum of effort – and usually only to avoid getting into trouble. These companies aren’t focused on long-term planning and a better future, but on short-term  financial interest. They leave the big issues such as climate change or inequality to other people – and to the next generation.

And how would you characterize the second group?

These are the businesses that have understood how important the issue is, and how important it will remain. They’ve grasped that it will play a deciding part in whether they  can continue to be successful in the future. They’ve also recognized that sustainable procurement is by far the most significant lever to improve products, drive innovation or even safeguard human rights.

And which side of the fence are you on?

Here at Bayer, we are definitely in the second group. It’s embedded so deeply in our DNA that sustainability targets even help determine our bonus payments, which no longer  depend solely on financial results. We were also one of the first companies to sign up to the UN Global Compact, and we encourage our suppliers to do the same.

How do you achieve that?

We always follow a similar approach: “Engage, Act and Disclose.” Engaging means putting the issue on your agenda and strategy and asking yourself questions such as “what  is the human rights situation in our supply chain?” Then it’s a matter of acting: putting it into practice by providing sufficient resources for it and ensuring it’s monitored  accordingly. Then the last step is disclosure; for example, in annual reports.

Why should suppliers accept the presumably high costs of implementing these changes in procurement?

Suppliers who meet very high standards have quite different privileges with us and we make this very clear. But I want to underline that our interest is not to work solely with  perfectly sustainable companies, but also to improve things individually with each supplier. The only suppliers we have to stop working with are the ones who don’t show any  initiative in this direction in the long term. That is unfortunate, but it’s unavoidable. And these rules also apply with all the members of the TFS (Together for Sustainability) Initiative, that we’re founding member of. It’s really helpful as more companies are following the same standards.

What is TFS exactly?

TFS is the most significant initiative for sustainable standards in the chemical industry. We set up TFS in 2011; back then there were six founding members, including BASF and Solvay as well as Bayer. Before then, we were all setting standards for the industry that were broadly similar with only slight differences. Our suppliers, who were often dealing with all of us, rightly complained that they had to fill out questionnaires on sustainability on a daily basis without ever getting round to doing anything about their gaps. So we decided to create common standards; for codes of conduct and audits, for example. We currently have 42 members with a turnover of well over 500 billion euros, more than 1,000 audits and 14,000 current assessments. Our biggest achievement was launching a standard for determining a CO2 footprint in chemistry. It reminds me of an African saying: If you want to go fast, go alone; if you want to go far, go together. And we want to go a lot further.

“Together” is the key word. You’re also responsible for creating the Sustainable Procurement Pledge (SPP) Initiative. How did that come about?

At TFS, we noticed how well cooperation works, how important close collaboration is and what an effect it can have. This led to the idea for SPP in 2019. Together with  Bertrand Conqueret, CPO of Henkel I co-founded SPP. It is a registered and independent non-profit (gGmbH) organization with own funders. We are lucky that Bayer has  also decided to become a “Champion” and provides funding. Back then, climate strikes were happening everywhere and the question came to me – how can it be that humans,  who have achieved so much, are now in the process of destroying the planet? It’s a scenario that we’d all like to prevent. And the great thing is that in procurement,  we have enormous clout when it comes to this. There are a million people working in this area alone; a million people spending more than ten trillion euros every year and  who have access to virtually every market. So the idea is that if we join forces, we can actually transform every supply chain so the Sustainable Development Goals (SDGs) can  be met by 2030. So far, we are well on our way and we’ve found 10,000 ambassadors from 145 countries.

What do you want the project’s focus to be?

We want to create and freely share knowledge. So far, we’ve been a voluntary community, which is now being funded with an executive management team. Next we’ll develop  a digital platform that we’ll use to share knowledge on often very specific issues relating to sustainability and sustainable procurement. In the long term, we want people in  our field to say “let’s SPP it” instead of “let’s Google it”.

Regulators are also pressing ahead, not just businesses. The EU wants to ban certain chemical products. What do you think about that?

I think it’s mostly helpful. Improving the legal framework benefits us as a company; not least because we’re already well ahead of many of the regulations. It’s important that  we base regulations on scientific facts and not on emotions. I see this as a great opportunity for us to get better, more sustainable products that help us progress as a society.  Procurement will also play a key role in this.

You’ve been working in procurement for many years. What are the biggest changes you have seen?

There have been four major changes. First of all, procurement has taken on a central coordination role, internally as well as externally. It has become increasingly credible in  recent years and is now much more strategic than it was just a few years ago. The third change is the arrival of competence profiles: we’ve been joined by plenty of staff who  didn’t start out in procurement, and their varied experience has made us stronger. The fourth big change is the implementation of new technology that makes it possible for us  to do things more easily and efficiently.

Is this change helpful with sustainable transformation?

Definitely. Start-ups have managed to develop entirely new technologies and a heterogeneous tech landscape that’s changing traditional views and giving us entirely new  perspectives. When it comes to transparency and risk analysis, new tools have come along that have a far bigger impact in companies beyond just procurement. That’s why I  have to agree that of course technology has helped us. But ultimately it can’t bring about transformation on its own. We need people for that – and ideally every single one of  us. Bayer has been around for over 150 years, and I want us to be successful for another 150 years and beyond.

Thank you very much for talking to us. //

Quantis are the experts for sustainability. Can you describe a typical project?

There is no such thing as the typical project because, what we do with our clients always depends on their individual situation and the maturity of their sustainability strategy  of the business. Our team of experts develops innovative solutions based on the latest scientific findings and a deep understanding. In order to develop measures that fit the  client‘s situation, we divide our consulting services into three work phases: “Assess”, “Plan” and “Transform”.

In the first step, we record the company‘s footprint and create the greatest possible transparency about all sustainability factors that are relevant. This involves much more  than just looking at greenhouse gas emissions, but also other dimensions such as biodiversity and water. To simulate the impact of measures and make the findings digitally  accessible to stakeholders within the company, we use the eQoinsight tool. It enables us to compare the company‘s key figures with science-based data, identify hotspots and  set priorities for the next steps. For a subsequent transformation, it is crucial that the assessment includes not only technical data but also the current level ofperception and  knowledge on the topic of sustainability at management level and among employees, as well as the extent to which it is embedded in the corporate strategy, governance  structures and KPIs.

Once this hurdle has been cleared, what is the second step?

We use the results of the first phase to make the client, but also possible stakeholders, aware of their responsibility and to show what influence changes can have. On this  basis, we then work with the client in the „Plan“ phase to develop a realistic target picture for the company, to which the roadmap is oriented. In turn, we define all concrete individual measures, the time horizon, and individual interim goals. It is important here that we also describe the roles and responsibilities of all those involved, especially for  the management team.

What role should it play in the transformation process?

Management must act as a role model in the transformation, closely support the teams and repeatedly raise awareness of sustainability issues. To be able to do this credibly, sustainability must not only be regarded as an individual initiative, but must also be firmly anchored in the company‘s business model. Management must not only ask itself  the question of the target image and design a governance model, but also what sustainability means in concrete terms for the company, and also for eachindividual. What are  the guard rails to which we orient ourselves? And what trade-offs do we as management allow? The goal is environmentally conscious corporate governance within planetary  boundaries.

What are the success factors in the third phase, the actual implementation?

In the “Transform” phase, we support companies in the individual measures defined for successful implementation of the roadmap. An essential factor in this process is the topic of organizational development. Particularly in the case of very complex topics, it is important to also plan the change journey in detail and to accompany it with suitable measures. If companies want to achieve their sustainability goals, a transformation of the corporate culture is essential. New targets must be created and all employees must be involved at an early stage. Each member of the team should be able to answer the question „What do I have to do differently from tomorrow?”

Communication is the be-all and end-all and the most important management tool. In order to meetthe needs of all employees, their individual situation must also be taken  into account. To do this, it helps to work with personas models – so that management can understand how they can best motivate individual employees and ensure that  everyone is pulling in the same direction. As the current Inverto study also shows, a lack of knowledge and expertise – confirmed by 56 % of respondents – are among the  three biggest challenges in the internal implementation of sustainability strategies. Common visions, further training opportunities for the teams, but also clear incentives can  be helpful, for example. Once I have achieved the cultural transformation in my company, the topic of sustainability automatically moves into daily business and creates a  domino effect, so to speak, which also has an impact on my stakeholders and supply chains.

Let‘s take the target CO2 reduction as an example. What does the next step in the company look like in concrete terms?

As a rule, it makes sense to take care of oneself first and reduce Scope 1 and 2 emissions. This is because the companies themselves are in control of this, it can be planned in  concrete terms, and it also ensures an initial sense of achievement as part of the organizational transformation. Scope 3 reduction is much more complex, and many  companies and their supply chains lack transparency. Yet the supply chain is usually the largest source of environmental impact in the big picture. Just as the maturity level of one‘s own company has been determined, it is now the task of procurement teams, among others, to communicate with key suppliers on the topic of sustainability and assess  their maturity level in the Sustainability Transformation Journey. This is the basis for the individual strategy. Supportive communication and training are also the means of  choice when working with suppliers. On the one hand, procurement should set clear guidelines, but on the other hand, it should work with suppliers as cooperation partners  towards a common goal. This may require trade-offs and assistance, depending on the supplier‘s situation.

In your view, what factors are important for companies to achieve the sustainability transformation?

Embedding sustainability into corporate strategy and culture is, as mentioned above, the most important aspect that companies need to create, as this is the linchpin for true  transformation to operate within planetary boundaries. Many companies currently view sustainability as a very technical issue and one of many items on the agenda. Similar  to digital transformation, where companies are already a step ahead, sustainability needs to be integrated into corporate strategy and business models as a matter of course. It  must go from being a “nice to have” to a “must have.” Only in this way will companies also be fit for the future.

However, it is also important to note that the transformation to greater sustainability cannot be completed in a few years. Companies must constantly evolve. Once the initial  goals have been achieved, for example in terms of emissions reduction, new questions come to the fore. An example of this is the topic of the circular economy, and questions  such as “How do I, as a company, to deal with the resources I have in such a way that I can grow without further exploiting the planet?”. Ultimately, it is about nothing less than the responsibility to be able to continue to exist as humanity on our planet and that there is no longer an either-or for environmental protection or business. //

Dirk, you had your own life cycle assessment calculated. What was the result?

I used to travel a lot as an entrepreneur, especially flying, and ate meat regularly. This lifestyle takes its toll, so I had my own personal eco-balance drawn up by the scientists  at TU Berlin. This includes CO2 emissions, but also other factors. This is very important, because only the complete life cycle assessment gives you a complete picture of all  environmental emissions. But to stay with the CO2 emissions, because they are very tangible: In my 54 years of life, I caused more than 1100 tons of CO2, which is many times  more than the average person should cause if we want to achieve the 2-degree target. That would be only two tons per person per year; in my case, it was more like 24 tons per year.

What did this result do to you?

I realized right away that I couldn‘t carry on like this. I then discussed with environmental organizations like NABU and WWF how I could reduce my footprint. We found 60  measures, from renovating my house to taking the train instead of flying or eating a vegan diet. I now only buy new clothes when I really need them. That‘s how I was able to  reduce my footprint to six tons per year – that‘s all I could achieve in our Western consumer society. So I thought: How can I offset the six tons per year – and the thousand  before that? That was complex. I calculated how high my environmental costs would be. There is a European procedure for monetizing environmental emissions, and I came  up with the equivalent of 350,000 euros. That‘s how much I would have to invest in renaturation and rebuilding the environment to reduce my footprint to zero. So I realized:  it‘s going to be pretty expensive.

Surely you can plant a lot of trees from that, right?

Unfortunately, it‘s not that simple, and I had to learn that first. Simply planting a forest is not a fair compensation, the scientists explained to me. Instead, they emphasized three points: First, it requires full compensation across all impact categories, so not only CO2 compensation, but also soil acidification or biodiversity, for example. Second, I  need to give the money back to nature in the long term, not just make a one-time investment. And the area I need for this must also be able to continue to be used. Because otherwise I‘m buying 15 hectares of forest that no one is ever allowed to enter and thus taking away from nature and people land that is needed. That was my starting point.

What did you end up doing with it?

I was looking for an area where nature is in a bad state and I found it in an old mine in North Rhine Westphalia. I am investing the money to renaturalize the entire area. This  will not just be a few planted trees, but various biotopes in which many species will find a home. My children will take over this area one day, when I have paid back my debts  to nature, and they can think about what they want to do with it. Maybe then it will make sense to put wind turbines there to promote sustainability. Many things are possible.

That all sounds very elaborate and expensive, and you’re just one individual. Can a company with billions in revenue even tackle it sensibly?

The clear answer: yes. We have companies that cause environmental damage in the hundreds of millions. They approach our company to jointly develop a sustainability concept. We start at the beginning and consider: Where can environmental damage be reduced? Which products can be produced with other materials that are better for the  environment and possibly also economically more favorably in the long term? This always results in a huge potential that the company can exploit first. In addition, we  develop projects for compensation.

At Green.Zero, for example, we have purchased 150,000 hectares of devastated forest land, which we are restoring with money from companies willing to invest. Personally, I  think it‘s important that money is invested in environmental projects here on site, where the damage occurs, and not far away, for example through reforestation in South  America. Because that only externalizes our costs again: We dredge lignite for our prosperity, and in South America we are supposed to plant trees to compensate us. I don‘t  think that‘s right.

In the current crisis, clients unfortunately don’t consider sustainability, but rather focus on the price. How can they be convinced?

In times of economic hardship, there is indeed the dictate of price. But that is not so decisive. Because this crisis is hitting the people who have a low environmental footprint  anyway. The wealthy cost the environment much more, and for them it doesn‘t matter whether the shampoo costs 2.50 or 2.70 euros. I also expect them to take responsibility.  Because up to now, we‘ve been privatizing success and socializing environmental costs. Every smart manager must understand that this cannot work in the long term. Our  economic wealth is dependent on ecological wealth, and this will become much clearer in the coming years. The EU assumes a price of 500 euros per ton of CO2 by 2030.  Managers who adapt this today will align their companies accordingly and try to emit as little CO2 as possible. Managers who don‘t understand this will disappear – and so  will their companies and products.

What has been holding companies back from focusing on the topic so far?

Winning makes you stupid. The more successful companies are, the less inclined they are to question anything. Economic success is therefore often a brake on transformation.  In addition, there is uncertainty among managers who see risks rather than opportunities in change. And then they are also inundated with diverse  information: Life cycle assessment, compensation, sustainability reports: Where do I start? For some, this leads to a state of shock.

So where should companies start?

With a pilot. They should select an initial product for which they prepare an unsparing life cycle assessment and analyze where there is potential for optimization. Only when  these have been implemented should companies think about compensation measures. Successful pilot products give confidence for the transformation process and companies  will realize that it is not so difficult and can adapt other products step by step.

Do you think companies are getting their act together?

I have no doubt about that. Business and companies are the drivers of transformation, and especially those with a long corporate history understand: We have to change. We  shouldn‘t wait for politics because it‘s too slow. But successful entrepreneurs think in terms of opportunities – and there are plenty of them right now.

Thank you very much for the interview. //