A huge opportunity
The European Union is issuing green and social bonds. Germany is spending billions on promoting electromobility, and the boss of the world’s largest asset management firm is writing to listed companies around the world every year, reminding them of their responsibility toward the environment and society. Dr. Jochen Weyrauch, Deputy CEO of Dürr AG, and CFO Dietmar Heinrich explain how the Dürr Group is aligning its financing and business activities with the principles of sustainability.
Mr. Heinrich, the EU is increasingly funding itself through "green" bonds. In 2019, Dürr AG was the first company to raise a Schuldschein loan with a sustainability component. What has happened since then?
DH: In hindsight, the issue of a → sustainability Schuldschein loan in 2019 was a clear cut. Since then, we have only issued financing instruments with a sustainability component. They include our → credit line as well as → two further Schuldschein loans and a → convertible bond.
Let’s look at the example of your Schuldschein loans – what makes them sustainable?
DH: We conclude an additional agreement with the Schuldschein buyers: If we manage to improve our sustainability rating, we pay less interest. It’s a win-win for all. If we reduce our resource consumption, for example, the environment benefits. Plus, it lowers the risk of our business model in the eyes of the Schuldschein buyer. The lower risk automatically translates into lower interest rates, thanks to the additional agreement. This, in turn, benefits us as a company. By the way, the same also applies in reverse: If our sustainability ranking goes down, we have to pay more interest.
Who measures how sustainable the company is and how it has performed?
DH: Our guideline is the development of our EcoVadis sustainability rating. The experts of this renowned agency assess us based on 21 criteria in the fields of the environment, labor laws and human rights as well as ethics and sustainable procurement. The result also takes into account not only our CO2 emissions and energy consumption, but also how we promote sustainability in our supply chain. Dürr currently ranks well in the middle bracket. We have achieved → 55 out of 100 possible points. If we reach 62, we will pay less interest.
Speaking of the supply chain, Dr. Weyrauch: What demands do customers place on you as a supplier when it comes to sustainability?
JH: It is particularly the large automakers who ask us very formally how we organize ourselves, what rules we impose on ourselves and on our suppliers, and how we monitor their compliance, for example regarding health and safety at work. As a company, we are expected to commit fully to sustainable principles regarding human rights, labor standards, the environment and corruption prevention. This might sound obvious, but implementing these principles is often a complex undertaking. To underline our determination, we joined the → UN Global Compact network last year. Our customers also want to see that we are reducing our own emissions and that we have a clear plan for this. It’s one reason why we are currently developing a climate strategy in accordance with the Paris climate goals.
UN Global Compact
The UN Global Compact is the world’s most important initiative for responsible corporate governance. The Dürr Group has been part of this network since October 2020 and, together with more than 15,000 companies and organizations, promotes a sustainable future.
The ratings provider evaluates companies’ sustainability. It focuses on the environment, labor laws and human rights as well as integrity and procurement. The Dürr Group’s new financing instruments are based on the principle "the better the rating, the lower the interest rates."
Human Rights Policy
The Group-wide → policy statement for the respect of human rights and fair working conditions underlines and substantiates corporate due diligence. The aim is to prevent any human rights violations by the Dürr Group and its suppliers. Its content covers, among other things, occupational health and safety, protection against discrimination and the fight against child labor.
The climate strategy that has now been initiated will define the path toward reducing CO2 emissions. It is based on measures in the company and in the supply chain – as well as on the huge savings potential in the operation of our products by our customers.
Automakers are under close watch from climate protectors. What effects does this have on Dürr as a supplier?
JW: The management boards of automotive groups are showing a clear commitment to reducing their ecological footprint. For us, this is a huge opportunity. For many years now, the Dürr Group has been pursuing the goal of developing products with the highest resource efficiency within the industry. You could say this is part of Dürr’s DNA. Through our technology and intelligent software, we can significantly help our customers make their businesses more sustainable and achieve their climate goals. That said, our customers’ purchasing departments still look more at the price rather than the most sustainable solution. There is a lot of room for improvement.
Electric cars are seeing a rapid increase in sales. Is this reflected in the Dürr Group’s order books?
JW: Electromobility is a clear growth driver for us. We have gained new customers, many of them start-ups with high ambitions that appreciate our experience. They like to do business with us because we offer them high-quality, flexible and efficient solutions in final assembly, production control and painting. And because Dürr is known for its strong track record for implementation. Thanks to the → acquisition of Teamtechnik, we now also have this expertise for the power train of electric vehicles.
Does this mean the shift toward a CO2-neutral society is more of an opportunity for the Dürr Group?
JW: Yes, absolutely! Aside from resource-efficient systems, software solutions and production technology for electric cars, we offer, for instance, → coating technology for the production of lithium-ion batteries. We also benefit from decreasing emission limits through our environmental technology. And finally, we are taking advantage of the megatrend of → sustainable building by offering solutions for the construction of timber elements. In many of these growth markets, we have further strengthened our position through collaborations and acquisitions to address such opportunities in the best possible way.