Finding Common Ground

Adding value? Living values? Saving the world? And who is actually responsible? Renate Künast, Member of the German Federal Parliament and former Federal Minister, Dr Johannes Merck, Vice President Corporate Responsibility Otto Group, and Rien Jansen, Managing Director Buying, Marketing and Retail at Bonprix, discuss how politics, business, and society can listen to and learn from each other. To make sustainable actions possible.

 

Climate change, destruction of the environment, social inequality – sometimes it seems that the world is beyond repair. Do you share this pessimism?

Rien Jansen: I’m no pessimist. My children’s behaviour gives me hope. What makes them tick is quite different from what motivated me when I was young. They’re far more conscious of their consumption – and the things that surround them. This consciousness is likely to change still further over the next few years, which has a lot to do with new media and the new technological options out there. People are better able to find out every last detail – and companies cannot hide any longer. 

Renate Künast: I don’t just want to rely on other people. I want to do something myself. And I certainly never want to find myself saying: “Oh well, we couldn’t do anything anyway.” The reality is that we can actually do a lot! We now know enough to be able to change ourselves and the world. We have the intelligence. And we have the tools to make the right adjustments.

Dr. Johannes Merck: Exactly. We do have the knowledge. But we have to adjust the framework in a way to ensure that that knowledge can actually be more effective.

But what does that mean in concrete terms? Mrs. Künast, you just mentioned adjustments. What exactly are they?

RK: The top priority is transparency. Customers these days need to know where a product comes from, who made it and what’s in it. And by customers, I don’t just mean you and me. As a politician, for example, I am also interested in public procurement as a whole. It involves huge volumes of products as well as money. Where does the material for police uniforms come from? Was it produced at the expense of people and the environment?

And what is the answer?

RK: I’m going to raise the question in the Bundestag soon. I am dreading the answer. When I was a minister, I once wrote to the Defence Minister to ask if more organic food could be provided for our soldiers and got a one-line reply: “Too expensive.” Meaning that healthy nutrition is apparently too expensive for the people defending our country. Alongside transparency, there is another important aspect: the same rules need to apply to everyone in the market. It shouldn’t be the case that a company conducts itself in an environmentally friendly way but suffers disadvantages in competition because their competitors don’t act in the same way.

You have to look after the house that you live and work in, otherwise it will collapse.
– Renate Künast, Member of the German Federal Parliament and former Federal Minister for Food, Agriculture and Consumer Protection

The aim of the Textiles Partnership, established four years ago by Development Minister Gerd Müller and supported by the Otto Group among others, is to oblige producers to run their business in a sustainable manner.

RK: But the Textiles Partnership is purely voluntary and very slow. Partnerships like that move at a snail’s pace. The slowest one determines the speed. Some do a lot and spend a lot of time and effort on the issues, while others only do what’s absolutely necessary. And in the end, they both bring out almost the same cherry-red T-shirt on the market. So who’s the stupid one there? That’s why we need a European transparency directive that makes it possible to track every textile product at every single stage – from cotton cultivation to sewing. It should apply to everyone who wants to sell their products on the European market. Does every supplier comply with the standards, do they refrain from employing children, do they pay the minimum wage?

Renate Künast, Dr. Johannes Merck und Rien JansenJM: That’s a great all-encompassing approach, but you know as well as I do that politics has the same problem as business: you need the support of society for such wide-reaching decisions. You did bring in the Bio-Siegel [organic label] as Minister, but you won’t save the world with that.

RK:(laughing) I just wasn’t a minister for long enough. 

JM: You mentioned the problem of global competition, Mrs. Künast. If you impose statutory regulation on the local market, that could make it hard for domestic companies to compete on the global market. We want to find a solution to this with the Textiles Partnership. If we can’t formally regulate the global market, we want to at least set informal standards for as many partners as possible. Obviously this is all going slowly at the moment. 50 percent participation from the textiles industry is certainly far too little right now. More needs to happen so that the Partnership can become a real regulator and be of use to those who adhere to the set standards. Politicians, NGOs, and companies need to work together better to make this a reality.

RJ: I also think that companies and politicians need to take responsibility together. We need to work together to formulate the rules. I’m not as worried about the speed of developments. After all, a lot of companies are thinking about how they can make their businesses better in terms of ecology and social issues. I have always done that myself. At Bonprix, we follow not only our own objectives but also the corporate responsibility objectives of the Otto Group. For example, we have pledged to source 100 percent of our cotton from sustainable cultivation sources by 2020. And we will make that happen.

What other concrete improvements do you want to make?

RJ: We want to make the entire value chain sustainable. That’s why we introduced our own CR strategy last year in addition to our commitments in the Group, with specific focuses for the Bonprix business model. We’re currently building a factory called CleanDye in Vietnam, where we will dye shirts without water. Around 25 litres of water are usually used per shirt; we are using CO2 for dyeing. It doesn’t bring in any profit for us, but it fits our brand values. We do care. That’s why we’re doing it. As you can see: companies can act responsibly on their own initiative.

RK: That’s going the right way, but even that’s not quite enough. We need to get right down to the basics. As a politician, I feel I am judged by the climate objectives that we signed up to in Paris. They’re very ambitious. We have to do something in every area – traffic, transport, food, production. Everyone has to do their part. We need to put more pressure on in every sector in order to create more incentive for increased creativity and competition.

JM: Politicians need to remain realistic with their objectives though. I was surprised in a positive way when Gerd Müller started up the Textiles Partnership with such zeal. But when he said that everyone needed to make their entire value chain transparent and sustainable within a year, we thought that there’s someone who hasn’t understood the complexity of the challenge. It’s not something that can be rushed. Every item that followed this criterion was then to be labelled with a “green button” as a reward. The button was intended to be a sustainability indicator for consumers.

RK: He initially withdrew the idea of the “green button” again though.

JM: It would be a gigantic bureaucratic effort. If a company has to verify that every part of its value chain is ecologically and socially responsible, it will take time. Even now, four years after the Textiles Partnership was established, the partners are still far off that aim.

RK: At the time, a lot of people thought I was in favour of the “green button”, not least because of the colour. I find the idea ridiculous. What was this label meant to convey? It took a year and a half in the Textiles Partnership to even start discussing, which criteria should be considered in terms of needing to comply with set standards some day in the future. That’s what I mean by a snail’s pace. It would probably have been better to start off somewhat smaller. You could have developed a label that indicated that a company was refraining from using certain chemicals and had made a voluntary commitment to the Textiles Partnership. And that could have included a broad information campaign. No one really knows about the Textiles Partnership.

We have to adjust the framework to ensure that our knowledge can be more effective.
– Dr. Johannes Merck, Vice President Corporate Responsibility Otto Group

How did you go about introducing the Bio-Siegel in 2001, Mrs. Künast?

RK: We defined guidelines oriented towards a European level of regulation. I had a few debates with environmental organisations at the time that wanted even stricter conditions, but businesses needed to remain competitive in Europe. At the same time, we had gone nationwide with the Federal Organic Farming Programme [Bundesprogramm Ökologischer Landbau] with info campaigns and demo operations, educational activities, Kindergartens, and research. After all, if you do not understand the quality of the process and the end product, you won’t want to be a part of it. We had to think holistically. And that also goes for the textiles industry, as already mentioned. All the products on sale should be certified, like being made from sustainable cotton and being produced under fair conditions. Politicians need to apply pressure here if necessary. After the collapse of the Rana Plaza factory in Bangladesh in 2013, the EU threatened the government there with an import ban and higher customs duties if they didn’t change the working conditions. And look what happened: within a few weeks the government had raised the minimum wage by 30 percent and the structural design of all buildings is now being reviewed.

JM: The Bangladesh Accord is a real success story. We managed to improve relations without a legal agreement. We will have to continue the groundwork step by step. It will work through using laws, but also on the basis of partnerships like the Textiles Partnership.

Particularly because it’s not just about politics. Consumers also have a decisive voice here. In your opinion, to what extent are the general public prepared to pay more for sustainable products?

Renate Künast, Dr. Johannes Merck und Rien JansenRJ: If you ask customers today if they’re prepared to pay three euros more for a certified shirt, most will say “No”. I believe this will only change if you actually really make them understand the conditions under which such products are made and what and who they are supporting when they make a purchase like this. Clothes need to come into value again. A pair of jeans for a few euros is totally mad. We need to be far clearer to people and show them what it means when we use 100 percent cotton from sustainable cultivation for our products. For example, the fact that we support small farmers in the sub-Saharan region through the “Cotton made in Africa” initiative. Also, actually, in my experience customers now often want to know more about how we make clothes.

RK: I don’t think it’s great advice to tell companies to base their behaviour on whether customers have said they’re willing to pay a few more euros or not. It’s really about how you position yourself on the market. Conditions can change fast. After all, it wasn’t long ago that no one was really interested in where our food came from. That’s totally different these days. Companies can’t afford a food scandal now. That could be the same in the textiles industry soon.

JM: Reputation risks are already playing a major role in the textiles sector. The trend is clearly heading in the direction of transparency. We have an extremely high obligation to justify our decisions these days and we’re almost entirely transparent nowadays in comparison to before. As a result of the digitisation, this will only increase since information spreads faster and it becomes easier to review the supply chain in more detail. However, we also need to improve our offers. What we’re offering at Bonprix – 100 percent sustainable cotton as of 2020 – will have to apply for all market participants sometime soon.

RJ: We shouldn’t just be thinking about sustainability and environmental protection either – we also need to think about inequality around the world. It really concerns me. I was in Uganda recently, where the level of youth unemployment is over 60 percent. The people there have other things to worry about than sustainability; they need a job and something to eat. This is why we supported the opening of a new cotton processing factory. We put up a notice saying that we were looking for staff, and the next day there were 4,000 people outside the door. We could only take on 200. People there need support. We are trying to do our part without losing sight of our economic viability. These are all small steps, but in the right direction.

Clothes need to come into value again.
– Rien Jansen, Managing Director Buying, Marketing and Retail at Bonprix

Is it actually still possible at all to separate social and environmental interest on the one hand and financial interests on the other hand?

JM: If you look at everyday working life for many companies, the financial key figures are still the sole focus. That makes it hard to be sustainable. It’s different in the Otto Group. Every manager is obliged to meet certain sustainability targets. These targets are also reflected in the 17 UN Sustainable Development Goals, aiming, for example, to ensure food for all, reducing inequality or ensuring sustainable production and consumption worldwide by 2030. Many of our projects will meet these goals early. Particularly because we carry out detailed checks to see if our managers are meeting our environmental requirements in the same way as we check on economic achievements. This has a major impact.

RK: I also believe that it is not contemporary at all to separate the two levels. A colleague once came up with a wonderful phrase: “Staying in the black with green ideas.” I think this is almost an understatement now. If climate change continues as it has done, companies will soon have trouble finding sufficient raw materials. This will lead to fights for scarce resources. Both ecology and economy contain the same base word, eco or oikos, the Greek word for house. You have to look after the house that you live and work in, otherwise it will collapse.


Source: Otto Group Annual Report 2017/18

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