Stefan Schaible on the biggest barriers to companies adopting sustainability strategies

Ahead of the Sustainable Innovation Forum 2021, Climate Action caught up with Stefan Schaible, Global Managing Partner at Roland Berger, to discuss the biggest barriers to companies adopting sustainability strategies.

How can we encourage businesses to view corporate sustainability as an opportunity and a way to develop a competitive edge?

Let's start with the good news: Most companies have already realized that corporate sustainability offers exciting business opportunities. We are transitioning from a world where your competitiveness was determined primarily by your pricing or traditional quality factors to a world where your climate action or inaction is also key to your competitiveness. Innovative companies that offer sustainable products and services and reduce their climate related footprint are at a competitive advantage. However, many companies today are still struggling to identify their path towards a sustainable future, as this often requires a fundamental transformation. Sustainability front-runners show that in order to develop a competitive edge, companies need to fully embrace sustainability in all aspects of the business – from their corporate vision and strategy to their customer value proposition and from their product or service portfolio to their supply and logistics chains.

What do you think are the two biggest barriers to companies adopting sustainability strategies, and how can these be overcome?

Currently, many companies are discouraged from fully implementing sustainability strategies due to an uncertain regulatory framework and unclear government policies. As sustainability policies continue to change, the potential payback on green investments is uncertain. The business leaders we interviewed want to invest in a sustainable future but are calling for clearer and more reliable guidance from policymakers. In addition, on a global level, companies face an uneven playing field, with sustainability policies differing among economic zones around the globe. Here, businesses require more international coordination between governments in setting policies and in raising standards for climate action. The Paris Agreement can be celebrated as a major success on the road to achieving that goal, although much remains to be done and it was only a "soft start".

In which industries do you see the biggest barriers to net zero? How do you see Roland Berger’s role in decarbonising these industries?

At present, we see two kinds of industries as facing the greatest challenge to achieving net zero: Firstly, industries that emit greenhouse gases in their production process directly, such as the steel production industry. These industries will require massive investments and large-scale transformation processes as they seek, for example, to replace coal with renewable energy or green hydrogen as a prime energy source in the production process. Secondly, the transportation and logistics industries. At this point in time, fossil fuels have operational and cost advantages. Alternative green technologies and fuels require a swift systematic build-out of infrastructure, feedstock as well as further innovation to make them economically viable for usage in, say, airplanes or heavy trucks. We at Roland Berger support our clients on their sustainability journey. We develop tailored climate action strategies and specific approaches to reduce emissions in certain categories. For example, we developed a "Transportation Decarbonizer", a custom-fit and actionable pathway for reducing the emissions generated by transportation operations in the logistics sector.

What single piece of advice would you give to a company that is looking to implement net zero strategies?

Take action today! It is a matter of urgency. Even with renewed political commitments in the context of the Paris Agreement NDCs, we are on a 2.7°C warming pathway and the goal of limiting global warming to under 2°C by 2050 remains a challenge. Stricter regulations seem inevitable. Companies have to be innovative to show policymakers best practices as a basis for smart regulation. Those who act now will be future winners because carbon reduction is a long-term trend that will be stable over decades. Investments in the topic have a fundamental tailwind. Companies that transform their business today will be able to take a first-mover advantage in the green economy and secure key resources such as green energy – leading to a larger customer base, lower costs and higher profit margins. Conversely, companies that postpone their transition will ultimately face lost profits and dampened growth. As carbon prices rise, companies that do not comply with climate regulations risk the viability of their business in the near future. We estimate that in the likely scenario of a carbon price of EUR 100/t, up to 50% of the profits of companies in sectors such as transportation, energy and chemicals are at risk.

COP26 is going to be a key moment to take climate action, not just make more commitments. How can we speed up action against climate change? What is the positive impact your business can attribute?

If there is one optimistic takeaway from the COVID-19 pandemic, it is this: If governments and businesses work closely towards one goal, we can reach beyond what is deemed feasible or realistic today. In absolute record speed, companies around the world developed and produced vaccines, saving millions of lives and allowing for the reopening of our economies. In the same spirit, I remain optimistic about our fight against climate change. Achieving net zero by 2050 is realistic if we commit to a model of close and active public-private partnerships and smart regulation. Governments and international organizations need to set out clear and stable policy frameworks to incentivize and foster the innovation spirit of businesses and entrepreneurs around the world – with market-based mechanisms whenever possible. Everyone can and must make a contribution to this global challenge. Roland Berger takes this message to heart and is to be a pioneer in climate protection in our industry. We achieved climate neutrality in 2020 and are aiming for net zero emissions by 2028. We offer our clients a "Climate Impact Assessment" taking a holistic approach, looking at their entire business setup.

How did you incorporate sustainability into your career path, and why does this topic hold meaning to you personally?

Heading Roland Berger, a company with many younger colleagues, I know this first-hand: Our children and younger generations will not accept society and economy continuing down the unsustainable path of the past. Movements like Fridays for Future have shown us that the fight against climate change is not optional, it is a must. We as consultants are in a people business, so we can only be successful when we incorporate sustainability from three angles: primarily in our client work, secondly by reducing our own carbon footprint, and finally by equipping our colleagues with leading-edge knowledge. My managerial role in such a situation is a challenge, but it is also a pleasure: I studied Chemistry and Law because I always believed in technological progress, but I was convinced that it had to happen in a sustainable way – pushed by a legal framework that unleashes the full potential of our economic forces. Personally, my consumer choices are also increasingly driven by sustainability considerations: Whether I switch to an electric car, fly less, or install solar panels on my roof – like many other consumers, my consumption habits are certainly changing.

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Roland Berger are speaking at the Sustainable Innovation Forum 2021, to join them register here now.