The profit of sustainability

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Sustain and gain! Translating sustainability into action is certainly not an easy task. But some companies in Switzerland are taking it seriously and already profiting from it A new face of sustainability and it's maker Frank M. Rinderknecht

“As an entrepreneur I want to leave a positive footprint, that’s why I decided to engage in sustainable mobility.” By Matthias Müller*

Kathrin Amacker, head of corporate communications of Swisscom

“The profit of sustainability is longterm economic success, a sustainable work and lifestyle and a mutual trust binding customers and Swisscom.” 80

SWISS BUSINESS · July – October 2011

Forget the old war between the idealists – whose defense that investments in sustainability are essential in order to save the world, humanity and the business – and the realists, who wait for the regulation to come, then adapt it quickly, therefore, saving costs. This discussion is over, at least for a group of companies in Switzerland which have already understood that there are no chances of building or maintaining a profitable business without putting sustainability into practice. “The profit of sustainability is longterm economic success, a sustainable work and lifestyle and a mutual trust binding customers and Swisscom”, explains Kathrin Amacker, head of corporate communications and member of the group executive board of Swisscom Ltd. A study by Verdantix named Swisscom, this June, as one of the five most sustainable telecom enterprises in Europe. One reason for this nomination can be found in the efforts of the company to reduce energy consumption for cooling the network. Swisscom designed a solution called Mistral which reduces energy consumption by up to 90%. Do such investments pay off? Amacker answers: “Swisscom has experienced very rapid return on investment with efficiency measures and with its green ICT services portfolio in less than a year. Other investments in sustainability are driven by standard economic consideration like positive net present value or short payback times and environmental consideration

(energy savings, CO²-reduction) and thus pay double.” In a study published in 2008 Bank Sarasin contradicts that “... voluntary ecological and social initiatives of enterprises destroy economical value and stock performance.” The bank concludes: “Sustainability influences the stock price in a positive way.” And it points out the benefit of risk management. “Sustainable enterprises can avoid longterm ecological and social risks which can become financially relevant.” Of course not every enterprise can release large-scale investments in sustainability like Swisscom. For instance Rinspeed, the company of car inventor Frank M. Rinderknecht, is quite small but with its concept cars, it attracts global attention: “I can’t change the world of car production but I can present prototypes which encourage and release forward thinking.” For him the sustainable car has become the major issue. “As an entrepreneur I want to leave a positive footprint, that’s why I decided to engage in sustainable mobility. But in no way am I interested in being considered the fool of the industry.” Another example is Jost Druck AG in Hünibach near Thun. It is the first enterprise to get the full certification of the tough Swiss PSO standard. According to Beat Hodler, managing director, his company invests with conviction and pride. “Firstly, the certification differentiates ourselves in the market. Secondly, it has

a positive effect on the motivation of our co-workers. They love the company they are working for and this enriches our customer relations as well.”

Fit for the future

Concepts which make the future present Business can extract inspiration also from sustainability concepts which can no longer be abandoned as idealistic thinking. Albin Kälin, CEO of EPEA Switzerland, promotes the Cradle-to-Cradle approach which considers waste as a concept of yesterday and the no-waste-concept as much more efficient production-wise and in cost-saving and, therefore, profitable. Kälin sees himself as an industrialist. There is also the model developed by the non-profit organisation The Natural Step, which helps communities and businesses better understand and integrate environmental, social, and economic aspects. The Swiss branch of this global network is to be built up by Stanley Nyoni in Geneva. “Our strategy is based on providing measures which produce adequate Return on Investment (ROI). Business and entrepreneurs are the main drivers of sustainability”, explains Nyoni. If we listen to Swiss business people nowadays it seems obvious that sustainability has become an important factor for creating profit. So it is not anymore a question of being either a realist or an idealist – it is just a question of who gets there faster.

and society should look like. Our partners come from science, business, politics, NGO’s, culture. We aim to develop the future in an interdisciplinary dialogue. Blue-Tech consists of two major events: a congress in the Casino Theatre Winterthur over two days, and a public exhibition where new products and services are presented.

Christian Huggenberg

Christian Huggenberg founded the BlueTech congress in 2008. The event, which will take place in Winterthur from 15 to 17 September, has become a major national platform for sharing information, discussing solutions and news concepts in sustainability. Huggenberg worked as an economics journalist and communication consultant before he founded his own consultancy Taktform AG. He is also member of the advisory board of Briner AG. What is Blue-Tech? Christian Huggenberg: It’s a platform for dialogue and its main topic is energy. It’s a place where people share and discuss their ideas and findings and where we develop how the future for business, environment

There are several events in Switzerland concerned with sustainability, like Natura or Energissima. What is the specific benefit Blue-Tech can provide? We focus very much on the topic of energy and energy supply. In that respect I think we can provide a unique event in the German-speaking part of Switzerland. This is possible thanks to our contributors like the Swiss Federal Institute of Technology and diverse universities of Applied Sciences. We also offer a platform for concepts, approaches developed outside Switzerland, which enhance our discussions. Our current motto – “The way to the new city – Is it all Utopia?” (Der Weg zur neuen Stadt – alles Utopie?) – has become a hot topic during the last weeks and months. After the events at Fukushima a lot of cities are trying to cut down the use of nuclear power and they need some orientation SWISS BUSINESS · July – October 2011



You are an entrepreneur and member of advisory boards. Does the investment in sustainability really pay? Of course – and it has to! The goal of long-term management and leadership is to keep an enterprise alive, to make it fit for the future: this is in itself a sustainable approach. The ecological thinking helps to develop sustainable economic concepts and to secure the success in the future. As an entrepreneur you have to decide how to use your resources in order to create benefit. At the end of the day, this is also an ecological decision: do we destroy resources or do we nourish them? It’s definitely not sustainable to cut the branch of the tree on which I am sitting. Sadly, today a lot of enterprises encourage and claim short-term thinking. They measure success with short-term indicators like the yearly financial result. So managers are focused on reaching these targets and often they don’t see that they cut the ‘branches of the tree’. In that respect, we have a crisis of the metrics and reward systems. Some entrepreneurs don’t care about sustainability because they expect the politics to give them the necessary regulation. Others try to anticipate and invest before the regulation comes. Which approach pays better financially? Obviously at first sight you won’t earn a lot of money with the effort of a pioneer. I think it’s a question of cleverness. If you are clever as an entrepreneur, among the first considerations should be the future you would want. The market will move quicker, regulation will come in when the new market is established. The clever entrepreneur will set regulation and not wait for it. He wants to realise the competitive advantage which lies in the future. Isn’t it cheaper to wait? Maybe, but the market will be gone. There will be regulation on the one hand. On the other, we observe more pressure 82

SWISS BUSINESS · July – October 2011

Time for reappraisal

and higher expectations from customers. Can their needs influence enterprises in order to become more sustainable? I think there is a group of customers which request sustainable products and services – and it’s a growing population. In Switzerland we are talking about 10% of the public, so it’s a minority. For the majority, I think price is still the decision maker. If we enter ideological grounds, does public support hinder or encourage entrepreneurial engagement and sustainable development? Firstly: this is no ideological matter; we are talking common sense here. I think it’s obvious that in the start-up phase everything needs protection and support. If I want to plant a forest I will protect the young trees so that they can grow. It’s the same with children: they need support and encouragement. So the state will support what is given strategic value for the development of the community. And, of course, we have to debate conditions given by the state. They can promote or make things difficult. For instance, the state asks employees to invest in pension plans. This is a regulation which promotes the banking business. Another example: prohibition of parallel imports is nothing less than protecting specific businesses. In an economic view, this is subvention, nothing else. Now the question is: why shouldn’t we apply this strategy in a sector which has enormous potential: renewable energy and energyefficient solutions? We desperately need it. You know a lot of entrepreneurs and investors who invest in sustainability. What is their driver – what is the prototype of a sustainable entrepreneur? Father and mother are the prototypes. They care about the future of their children and they try to do their best for their future. That’s exactly what’s going on in the business world. Sustainable entrepreneurs and investors think about the future and try to find out what is helpful for a promising future. It’s about empathy and not about egoism. What disturbs you most about the current situation? I have to talk about the political strategy. Our politicians have to define it and set it up. And they are much too slow. Instead of declarations, we need action.

Daniel Küng, CEO of Osec, talks about the future of the Swiss small and medium exporters Mr Küng, the EU is going through turbulent times. Which member states will be particularly attractive to Swiss exporters in the future? Our neighbouring countries will continue to play a very important role in this context. This is simply because a large proportion of total Swiss exports already go to these countries. Germany, France and Italy are the most important sales destinations for very many Swiss small and medium enterprises (SME). To a certain extent, these countries are a haven for ‘Swissness’ that satisfies local consumption. Scandinavia is also becoming more important, as are some Eastern European markets.

Solartaxi team in Kunming, China

But the business world, or at least part of it, seems to have an interest in maintaining slow progress, right? Right. The business world speaks in diverging voices. That’s why politics has to be the driver and has to steer. Don’t talk about the 2000-watt-society, implement it!

How do you perceive the problem of the franc exchange rate for the domestic export market? The strong Swiss franc leaves its mark on export business. Above all, it is also the margins that have suffered from it. This is also shown in the results of our SME export indicator, in which we and Credit Suisse measure the export climate at home and abroad. According to our export indicator, over 65% of the companies surveyed expect to export less on account of the strong Swiss franc. Although we have so far not seen this problem reflected in export figures, this should not blind us to the fact that the situation is serious. Many exporters are currently still living on the reserves that they set aside in good periods.

What are you very happy about – who would get your medal of honour? We are in the European year of volunteering. I know that there are a lot of people working hard for a sustainable development of our society. They merit the medal. If you want me to name a specific person then I’d refer to the Swiss environmental adventurer Louis Palmer. With Solartaxi and the Zero Emissions Race he is active globally. He helped to raise awareness also in difficult countries like Russia, China and India. This year the United Nations granted him “Champion of the Earth Award”.

* Matthias Müller, founder of Mensch Design Innovation GmbH will give a workshop about “Enterprise design for a sustainable future” at the conference Blue-Tech, which will take place from 15 to 17 September in Winterthur.

PHOTO: News Service

and input on how this can be done. They will find it at Blue-Tech. And of course one major benefit of Blue-Tech is its informal setting. Visitors can easily meet decision makers in business and politics and start a dialogue in a friendly environment.


But what next? What can be done about the strong Swiss franc? We are constantly in touch with Swiss SME and the following points have become clear over the course of many discussions in recent months: many SME are looking for opportunities to guard against currency risks – either via the banks or the options offered by natural hedging – to be less exposed to currency fluctuations. It has been possible to maintain and even increase prices in some sectors due to a stronger focus on quality and Swiss Premium. Swissness is a good sales argument, but

there must be a good reason for the prices. Many SME are also currently looking at their cost structures, analysing logistical optimisations and existing export processes in terms of possible improvements, and looking for cheaper purchasing options. In order to continue to reach the margins, it makes sense for us to examine one’s own product portfolio abroad critically and to focus even more strongly on selected markets. At the same time, one should check if it makes sense to relocate to markets in newly industrialised countries where there are high growth rates. We recommend concentrating on particular markets and building up a strong position step by step in the export business. The BRIC nations promise large growth. Will this last? I think so. In most countries, we can assume that the purchasing power and thus consumption will still grow significantly in the coming years. In these countries, the middle class segment in particular will be able to afford more in the future. Asia, with China and India at the forefront, will have a leading role. This should have a particularly positive impact on Swiss exports, as long as we continue to offer high-quality and innovative products abroad, especially in niche markets. How do you see the US as an export market in the medium term? The US will continue to be an attractive export market, not least because it is Switzerland’s second most important sales market in terms of volume. As an internationally active Swiss company, one can hardly steer clear of the US as a target market. However, the US is a very competitive market, which places certain demands on marketing budgets and staffing. On the other hand, it is also a very dynamic market and constantly offers new business opportunities.

SWISS BUSINESS · July – October 2011


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