ESG AND SUSTAINABLE CORPORATE GOVERNANCE: THE PATH TO ECOLOGICAL AND ECONOMIC SUCCESS

THE INEVITABLE PARADIGM SHIFT: RESOURCE CONSUMPTION AND ECONOMIC GROWTH

Economic growth and resource consumption are intrinsically linked. An alarming example is the Earth Overshoot Day calculated by the Global Footprint Network (GFN). In 2022, by 28 July, humanity will have used up all the biological resources the planet can regenerate in a year. If these resources were distributed equally among all countries, Germany would have used up its annual share by 4 May. This economic behaviour cannot continue if we want to preserve our prosperity.

The young generation: drivers of change

This paradigm shift is not new. The younger generations, led by personalities such as Greta Thunberg, are making a significant contribution. For example, a report from retail analytics platform First Insight shows that Generation Z is having a major impact on the purchasing decisions of older generations. Generation X shows the largest increase (42 per cent) in willingness to pay more for sustainable products.

New regulations and obligations as catalysts for change

Young generations are not only important consumers, but also the future talent that companies need to survive. Economic considerations should reach even those who cannot understand moral arguments. In addition, investors, who are increasingly assessing companies according to ESG (Environmental Social Governance) criteria, are forcing sustainable change. Companies that do not act in a resource-conserving and socially responsible manner risk losing access to credit.

The EU Sustainability Reporting Directive (CSRD): A wake-up call for businesses

The EU’s Corporate Sustainability Reporting Directive (CSRD) will require companies to report in detail on their environmental and social footprint from 2025, making their business activities more transparent. The CSRD requires companies to show how they are reducing CO2 emissions and contributing to the circular economy, among other things.

Leading in the sustainable transformation

Some companies are already contributing to sustainability. According to a ranking by Capital and Statista, Zalando is the most environmentally conscious German company. By switching to green electricity and installing solar panels, Zalando has reduced its CO2 emissions by almost 41 per cent in the last four years.

One of my clients, the medium-sized family-owned business Dietzel Hydraulik, is also taking a creative approach to sustainability. By using industrial waste heat, the company has been able to save 350,000 to 400,000 kWh per year. This is equivalent to the consumption of a small village of 200 households!

Everyone’s role in a sustainable future

As the example of Dietzel Hydraulik shows, everyone can contribute to making the economy more sustainable and maintaining our prosperity. As an entrepreneur, manager or decision-maker, you can set the direction and drive the sustainable transformation.

The first step is to be transparent about your environmental footprint. It’s not about becoming fully sustainable overnight. It’s about showing what you’re doing to get there. Use the principles of business for the common good to challenge the status quo of your business model.