“Profit or sustainability?” There is only one answer to this question for Prof Dr René Schmidpeter, Dr Jürgen Meyer Endowed Chair for International Business Ethics and CSR and Head – Center for Advanced Sustainable Management at the CBS: “Both!” “Sustainable Finance” is more than just a trend topic, as a recent study by FTSE Russel proves: More than half of the world’s asset owners are already implementing or investigating their investment strategies according to ESG (Environmental, Social, Governmental) criteria. We talked to him about these and other topics, such as the higher education of responsible managers in the Master’s programme “General Management – Nachhaltiges Management”.
CBS: If you consistently think about sustainable management, it means a fundamental restructuring of companies. Why is there no alternative to sustainable management?
Prof Dr René Schmidpeter: We are in a time of rapid change. Digitisation, automation, climate change… all these are buzzwords that are already becoming more and more noticeable and pose challenges for companies. Companies have to develop themselves further, be innovative and quickly develop sustainable solutions and minimize risks. Given the complexity of our global world, this is no longer possible in isolation. Sustainable management takes a holistic approach – by integrating relevant ecological, social and economic issues in all areas of the company and considering them to be of equal value. For the company, social and ecological issues can thus be seen as drivers of innovation helping companies to move ahead in economic competition. Numerous studies show that the view of profit vs. sustainability is outdated. Companies generate higher financial returns if they perform well in key areas of sustainability. These companies will also survive in the market in the long term.
CBS: In your work at the Center for Advanced Sustainable Management, you advocate a paradigm shift in business administration. As described in your article for the LOUT magazine, you see the future viability of a company in danger if the corporate and sustainability strategy are not implemented in an integrated manner. Are there any current examples from the German economy that support your thesis?
Prof Dr René Schmidpeter: One example that has already been much discussed is the automotive industry, which is so important for us in Germany. The current VW CEO Herbert Diess himself says that the chances for German car manufacturers in the race for new mobility are 50:50. A consistent and sustainable change must now take place in order to remain at the forefront of the world market over the next ten years. I think that investors will also provide a very important impetus. The capital market is taking a new direction and companies that do not follow the new trend of sustainable finance will fall behind. According to a global study by FTSE Russel last year, more than half of the world’s asset owners are already implementing or investigating ESG (Environmental, Social, and Governmental) criteria in their investment strategies.
CBS: Do you see the German economy as a driver or laggard of sustainable management? And what would be your demand to the German business decision-makers?
Prof Dr René Schmidpeter: In my opinion, Germany often lags behind when it comes to tackling major social changes. We tend to systematically underestimate certain global trends – and that includes sustainability. The discussions in India and China about the markets of the future have already progressed in some areas (electro mobility, sustainable urban development, etc.): the importance of sustainability has arrived in business and the willingness to make progressive changes is often greater than here. We are talking here about our direct competitors in tomorrow’s markets. Especially in the minds of decision-makers something has to change – they have to understand with what urgency it is a matter of continuing to play at the forefront or not. We have to develop creative opportunities without trade-off thinking and thus generate positive entrepreneurial effects. Instead of scarcity, decision-makers should think in terms of opportunities. Politicians must find the courage not to initiate changes when it is already too late or when catastrophes have already occurred.
CBS: What do you reply to sceptics, sustainability primarily as a topic of public relations work?
Prof Dr René Schmidpeter: To put it provocatively, they have not yet understood the core of the problem and the urgency with which we have to deal with. For too long, sustainability strategies have often been pure communication products of marketing or PR agencies whose underlying management methodology did not meet the requirements necessary for strategic corporate management. In the meantime, however, consumers and the public have also become more sensitive to these issues. Companies that operate classic greenwashing make themselves vulnerable and will not be able to survive in the long run if their competitors take the lead through an integrated approach. What is needed is a paradigm shift in management that is not only reflected in CSR and sustainability reports, but basically rethinks the entire company from a sustainable management perspective. Strategy and PR must work closely together and develop a common perspective.
CBS: As an academic partner, you helped to design the new master’s specialisation “Nachhaltiges Management” (“Sustainable Management”). What is so special about this study programme?
Prof Dr René Schmidpeter: Sustainability and CSR are still often a marginal topic in university education, for example in business administration. However, we will have a huge need for managers with these new qualities in the future. With our innovative range of courses in the specialisation “Sustainable Management”, we have set ourselves the goal of providing up-to-date training and fully integrating the topic of sustainability, for example in seminars on sustainable supply chains, sustainable finance or social entrepreneurship. We also take up current topics such as CSR & digitisation, A.I. and Industry 4.0. The “economy” has a clear advantage in advancing transformation, because only it has to think and act efficiently and entrepreneurially. With this new specialisation, we want to encourage our students to play an active role in shaping current social transformations and to act as tomorrow’s change makers. Business schools have an advantage here if they work closely with the sustainable pioneers from business – which we consistently implement with our students, for example in the context of business projects – and we jointly create a new management paradigm, in theory and practice!
CBS: Thank you very much for the interview!