ESG and sustainability managers of Henkel (Theres Bertsch), Mondi Group (Susan Brunner), Erste Group Bank AG (Ulrike Gehmacher) and Vienna Insurance Group (VIG) (Klaus Mühleder) as well as Mateusz Wielopolski and Martin Rafaj of AEVOLUTION TECHNOLOGIES, LLC., a circular design consultancy, talked at two evenings moderated by program director Arnold Schuh with the students of the MC CEE 2023-24 about environmental sustainability in Austria and Central and Eastern Europe.

We were interested in the company’s stance on environmental sustainability and its embeddedness in the business model, strategy and decision-making. But also how they see differences and similarities between Western European and CEE societies’ attitudes and efforts towards more sustainability.

What were the takeaways?

Austria – CEE: The speakers did not see great differences between Austria’s and CEE’s societies in general awareness and necessity that climate warming and biodiversity degradation have to be stopped. But the topics (coal as an energy source, clean water, deforestation etc.), the priority given to GHG-reduction in the ranking of pressing problems, and the resources available to tackle climate warming can differ by country. However, the internal sustainability standards of multinational companies are the same for all international production sites and supply chains.

Greenhouse gas emitters: Industries are differently involved. Manufacturers such as Mondi (packaging & paper) and Henkel (FMCG & adhesives) are undergoing a huge transformation of their sourcing, production processes and product portfolios to become climate positive by 2030. It is clear that this transition is a long journey but they have action plans in place and are committed to it. In contrast, the operation of banks and insurers causes fewer emissions. Their focus is more on how they can influence businesses and households through lending, risk coverage and portfolio investment to a more sustainable behavior. Green finance and Net Zero portfolios shall bring the carbon footprint down.

Information sharing as bottleneck: Sharing the necessary data of emissions between the focal company and its suppliers and partners along the value-chain is necessary to make GHG emission accounting work. Without a trustful collaboration between the value-chain partners based on common measurement standards sustainability accounting becomes a guessing game and opens the gate wide to “greenwashing”.

Attitude vs. practice: There is a lot of hypocrisy around. 97% of consumers say they are prepared to take action to live a more sustainable life – but only 13% of people are actively changing their behavior. Up to 60% of consumers would pay a maximum of 5% more for recycled products.

Conflicting goals: The topic is complex as there are many conflicting objectives involved – and often there is no clear cut right or wrong. For instance, finding the right balance between product performance such as the cleaning power of a detergent and the degradability of its ingredients is not easy. Granting credit for the exploration of a new gas field is in today’s context a tradeoff between supporting energy security and continuing a fossil fuel-based system. Finally, in a market-based economy, the company has to make a profit otherwise it cannot fulfill its purpose in the mid- to long-term. So it has to strike a balance between its investments in sustainable processes and new products and necessary revenues from the existing product portfolio to cover the costs (and related transition risks).

Circular economy: To make the circular economy work, you have to reinvent the whole eco-system. Without like-minded raw material suppliers, manufacturers, retailers, recycling facilities, consumers, and regulatory bodies any well-meaning effort will fail.

Main barriers to the circular economy: The main challenges in the transition to a circular business model are the willingness of the customers to pay higher prices for sustainable products, the availability of sufficient volume of recycled materials, smart product design, risky initial investment, and other internal priorities.