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    Protecting the climate and ensuring sustainability: “Doing nothing is not an option”
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    11. October 2021
    13:30 min.
    A conversation with three Krones sustainability experts about climate protection, sustainability regulations, and human rights within global supply chains.
    • Three Krones sustainability experts: Welf Kramer, Martina Birk and Peter Steger (from the left)

    Can climate change still be contained? Krones sustainability experts Martina Birk, Peter Steger, and Welf Kramer agree on this: Yes, but only if we take the right actions now. They explain what Krones is doing in our interview.

    No matter who is talking about the issue – whether from the perspective of policy, media, or business: The terms “sustainability” and “responsibility” are almost always used in the same breath – at Krones, too. But why is that? Or, more specifically: Who’s responsible for what? Where does this responsibility come from? And what does responsibility look like?

    Kramer: To answer that question, you have to look at the big picture. Because of globalization, we all live together within a single organization, so to speak. And when you look at problems like the climate crisis, you have to ask yourself: Who has contributed most to the problem and who has the power to effect the most change? That is true for people and businesses alike. Of course, businesses’ primary role is to generate profits. But they do that by using a variety of resources. And it is imperative that these two aspects be counterbalanced to a certain extent. If you take and consume resources, you bear responsibility to protect and preserve those resources. 

    Steger: The notion of a footprint illustrates it quite well. Every company leaves behind a footprint on the world – a positive one in terms of the jobs and wealth created, taxes paid, et cetera. At Krones, we add to that the fact that we are part of a sustainable value chain. We help provide consumers with clean foods and beverages in hygienically safe packaging. But there’s also a negative side to our footprint that detracts from this sustainability. And that’s where responsibility comes in: We have to curb the negative impact of our activities so that, on balance, our footprint is a positive one.

    Birk: Another important aspect is the Paris Climate Agreement, which establishes a legal requirement we must satisfy. We’re all responsible for doing our part. Whether individuals, governments, or businesses: We all have a clear duty to reduce our emissions. Individually and collectively.

    Whether individuals, governments, or businesses: We all have a clear duty to reduce our emissions. Individually and collectively. Erwin HächlMartina Birkenviro Officer

    Welf Kramer, Head of Corporate Governance

    And what is Krones doing to fulfill that duty?

    Steger: In 2020, we adopted a new climate strategy and set binding targets for reducing emissions. We aim to cut the greenhouse gas emissions caused at our own facilities – that is, Scope 1 and Scope 2 emissions – by 80 percent by 2030. Our reduction target for Scope 3 emissions – emissions in our upstream and downstream value chain – is 25 percent, focusing primarily on emissions resulting from the use of our products.

    That sounds pretty ambitious. But is it realistic?

    Kramer: Krones has been practicing sustainability for a very long time. We launched the enviro sustainability programme in 2008, which means that Krones was already addressing the issue long before there was a legal obligation to do so. When in 2017 the CSR Directive Implementation Act (CSR-RUG) came into force, it professionalized and standardized non-financial reporting. We took a long, hard look at the issues subject to mandatory reporting – and our own performance in this regard – and developed a suitable, group-wide system of sustainability management. In assessing the current situation, we naturally compared our performance with that of our peers. And we concluded that we have done a very good job in terms of sustainability so far. But nevertheless – or precisely for this reason – we have to be even bolder and step up our activities, even if it requires considerable effort.

    We have done a very good job in terms of sustainability so far. But nevertheless – or precisely for this reason – we have to be even bolder and step up our activities, even if it requires considerable effort. Erwin HächlWelf KramerHead of Corporate Governance

    The Krones sustainability programme enviro: top technology for ecologically efficient production.

    Birk: With respect to our climate targets, we all really knew right away that we wanted to achieve the science-based targets, which aim to limit global warming as a result of the greenhouse effect to 1.5 degrees Celsius. And that can only happen if we ourselves meet specific reduction targets.

    How do you go about distilling specific targets for your own company from a globally focused project like the science-based targets?

    Steger: That is a rather complex process. The SBTi issues a comprehensive questionnaire, and to enter some meaningful answers, you first need a soundly based stock of data from which to then calculate what is realistically feasible over the next few years. Building on this, we drafted a proposal and had it checked by the SBTi specialists. The gratifying result of around two months of validation was this: We may officially call our climate goals science-based targets.

    Krones had its climate strategy validated by the independent Science Based Targets initiative (SBTi). The results show that Krones’ climate targets are making a contribution to limiting global warming as a result of greenhouse gases to 1.5 degrees Celsius.

    And what measures do you intend to take to achieve these targets?

    Birk: As far as Scope 3 is concerned, meaning a reduction in the emissions caused by our products, our enviro program has already yielded impressive results, in that it has systematically downsized consumption levels and emissions. But since enviro was launched a very long time ago and meanwhile covers our entire product portfolio, it is getting harder and harder to find more potential for optimization – at least as far as machines are concerned. That is why our Scope 3 reduction target is considerably lower than those for in-house emissions. After over ten years of enviro, there is simply not much room left for further reductions. However, this also goes to show that we have done a good job over the past few years. Yet it does not mean we are going to rest on our laurels. Quite the contrary: We now have to look at the big picture and transfer the idea behind enviro to entire lines and factories.

    Steger: In regard to in-house (Scope 1 and 2) emissions, energy-efficiency is the most important aspect to tackle. Rendering our buildings and production lines more energy-efficient is in my view the most honest approach, which also provides a return on investment because it helps cut costs. Another significant leverage point is self-sufficiency of supply, meaning sustainable in-house energy generation, for example with photovoltaic systems or block-type cogeneration plants. And the amount of energy we additionally need but can’t produce in-house must be purchased against sustainable criteria – the greener, the better.

    Was meinen Sie damit, das Verbessern der Energieeffizienz sei die „ehrlichste Maßnahme“?
    “If you take and consume resources, you bear responsibility to protect and preserve those resources.”

    What do you mean when you say that upgrading energy-efficiency levels is the “most honest approach”?

    Steger: This must be seen in the context of how we understand the term “climate neutrality”. A very popular (because relatively easy) way to improve one’s climate footprint is to pay compensation. This means you offset your emissions by financially supporting climate-related projects. Let’s be quite clear about this: Rain forest reforestation or digging wells in dry areas are important measures – and money sensibly spent. But we have deliberately opted for a different approach because we do not want to take the easy way out. Instead of paying for emissions caused by our group, we think it is better to avoid them right from the start. Therefore, we want to achieve our climate targets as far as possible by in-house efforts. 

    Is ecological sustainability synonymous with climate protection for you? Or to put it another way: Where does this strong focus on climate targets come from?

    Steger: My answer to the first question is an unequivocal “No”. Sustainability is very multifaceted – also reaching beyond ecological aspects. So the objectives we want to achieve by 2030 are very broadly based and also include fields like ethics and social sustainability, for example. The focus on climate protection stems from the fact that we achieved the emission target we had set ourselves for 2020. In a first step, we therefore concentrated on defining a fresh, more ambitious climate target.

    Kramer: The fact is, climate protection is one of the most crucial issues of our time. But it would be wrong to make it our sole focus. We have to factor in all the different facets involved and tackle them together with the specialist departments in the group. 

    Birk: I would also sign up to that for product sustainability. Sure, emissions are at present the top issue for our customers. But our enviro program has always been more broadly based and does in fact include media-efficiency and eco-compatibility. And in many processes, these things are closely correlated: If I cut media or water consumption, I will usually need less thermal energy, too. So all these fields of action are equally important for us.

    Peter Steger, a member in the sustainability team

    Krones also offers a sustainability-consultancy service for customers. Does this overlap with the projects geared to in-house sustainability?

    Birk: Yes. We have, for instance, introduced a discussion forum where technologists exchange news and views across specialisms. This forum has seen some very controversial debates, which is not surprising since a highly complex topic like this invariably means people have different opinions. But that is precisely the reason why it is essential that we share different opinions and views – thus learning from each other.

    Kramer: This is a point of utmost importance. We have an enormous fund of knowledge here in our company, but it is distributed among many different specialist departments, locations and countries. As I see it, the tasks for us, the central sustainability team, include bringing the specialists from the various fields together and establishing a network across the group. You see: The greater our efforts to pool and utilize our group-wide expertise, the better will we be able to help ourselves – without having to rely on third parties.

    Is that part of the Krones mindset: We do it ourselves because we can?

    Kramer: To be honest, it is also a result of the Covid-19 pandemic. In the current situation, we – just like everybody else – have to keep costs down. And let’s not forget that many of the issues we are grappling with here have not yet been dealt with very extensively in the world outside Krones either. EU taxonomy is one example here, which is intended to render reports properly comparable. This is uncharted terrain not only for us but for all companies that have to satisfy the specifications of the EU taxonomy. So if the requisite know-how has to be built up from scratch anyway, it is obviously best – and the most sustainable approach, too – to do this in-house. We will then be able to use it and further expand it in future. 

    Birk: This approach has invariably served us very well so far. Sustainability is simply part of the Krones philosophy. You notice this with our staff as well: They want to get things done.

    It’s not about going and getting an official stamp or certificate. No, we want to create a shift, we want to make a difference in the world. Our motivation to do this comes from within. Erwin HächlMartina Birkenviro Officer

    Picking up on “controversial debates”: Do you have those with customers as well?

    Birk: Yes, of course, because the issue is inherently controversial. In consultancy projects, for example, we frequently find that customers no longer want to use natural gas for steam generation because it produces emissions. Instead, they would like to cover all the line’s energy requirements with green power. The idea is understandable but it does not always make sense. In most cases, it is impossible to generate all of the thermal energy needed using electricity alone – or if it is possible, then only at energy-efficiency quotas that are beyond all reason. The formula “I will now use only green power, which will automatically render me climate-neutral” is much too simple and will in most cases not work out. So we have to map out the basic facts here in our consultancy meetings and present possible alternatives. Depending on the specific application involved, it may make considerably more sense to use biogas, for example. The situation is similar for packaging: Compostable packaging and packaging made from renewable raw materials are all the rage right now, not least because they meet with great approval from consumers. And yet you have to keep an eye on all the various impacts this has on our environment, and then it often makes more sense to keep the materials in a closed loop. There is rarely a simple, fast solution when it comes to sustainability. So it is all the more important to approach the issue with an open mind, keeping an objective perspective on the overall system with all its facets. 

    enviro Officer Martina Birk

    How do you rate the role of regulation in this context? Has the law on non-financial reporting duties had any effects?

    Steger: This law definitely did have two effects: Firstly, companies that had previously not issued a report on their sustainability activities have no choice now. And secondly, there has been a noticeable improvement in the quality of reporting. And that applies to us as well. The audit requirement alone has increased the issue’s perceived weight.

    Sustainability has made its way into corporate strategy – and that is where it most definitely belongs! Erwin HächlPeter StegerMember in the sustainability team

    So, you would welcome it if the legislators were to impose a stronger obligation on companies?

    Steger: That’s already happening. Non-financial reporting requirements, that was just the first ball set rolling. Recently, the German Bundestag passed the Act on the Duty to Exercise Due Diligence in Supply Chains (in German abbreviated to LkSG), which specifies that beginning in 2023 all companies employing more than 3,000 people will be obligated to devote more attention to the issue of human rights in their supply chains – by means of risk analyses, complaint mechanisms, appropriate auditing, and so on. In a next step, the CSR reporting duties will be reviewed. That will demand another standardization process. All of that will considerably pick up speed over the next few years. Step by step, the sustainability issue will be given the same degree of relevance as financial subjects.

    Kramer: But that demands considerable resources from companies, we have to be quite clear about this. Processing and implementing the mandated CSR duties is anything but easy. We at Krones are in the enviable position of having just the right people here with us, who can handle this task in-house. But for other companies, especially smaller ones, this will surely pose many, many problems. These firms are looking at a giant wall, not knowing how to climb over it. We’ve also noticed that among some of our customers. And then when something like the Act on the Duty to Exercise Due Diligence in Supply Chains crops up, an entirely new set of challenges must be overcome – not only by them, by us, too.

    Warum? Weil man damit auch an Stellschrauben jenseits des eigenen Unternehmens drehen muss?
    “Sustainability is simply part of the Krones philosophy.”

    So, you would welcome it if the legislators were to impose a stronger obligation on companies?

    Kramer: Yes, especially as the value chain extends in two different directions. That means it is no longer enough to preclude any violations of human rights at our suppliers. We have to look in the direction of our customers as well – and when we detect risks there, we bear responsibility for taking the appropriate steps.

    A common theme in many of your answers is that sustainability can only be achieved through the joint effort of many – not only within the same organization but also across society. In view of this, what are your forecasts for the future? Is it possible to remain optimistic?

    Kramer: Yes, sure. I would even go so far as to say we have a duty to stay optimistic because optimism is absolutely essential to bringing about lasting positive change. And we pull out all the stops, deploying all the resources we have to help achieve this.

    Birk: No matter how much the 1.5-degree target will demand of us: Doing nothing is not an option. I am still optimistic and believe we can actually contain climate change. But to do this, we have to bring about some changes now and walk the talk – all of us together. That means private individuals just as well as the Krones Group and its customers. 

    Steger: What you have to keep asking yourself is this: What do you want the debate to focus on, on prohibitions or on solutions? I am personally still convinced that many problems, especially those encountered in the fields of ecology and climate protection, can be solved by technological means. Not exclusively, of course. We will also have to change our behavior patterns – and here all of us need to take a long hard look at ourselves. A pragmatic attitude is a crucial constituent of the Krones mindset: If there are problems, let’s go and tackle them instead of losing time discussing them.

    I am still optimistic and believe we can actually contain climate change. But to do this, we have to bring about some changes now and walk the talk – all of us together. Erwin HächlMartina Birkenviro Officer

    11. October 2021
    13:30 min.

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