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“Living in harmony“

One of the world’s most influential institutions when it comes to improving living conditions on this planet is the World Economic Forum (WEF). Christoph Wolff, Head of Mobility for the WEF, and Lufthansa Cargo CEO Peter Gerber talk about the opportunities for corporate responsibility

Why is corporate responsibility important today?

Christoph Wolff: Companies do not operate in a vacuum; they interface with social groups and institutions in multiple ways. This is all the more true if a company operates on a global scale. It goes without saying that companies must perform to the satisfaction of their customers and shareholders. But this alone does not take into account the impact of the company’s activities on society and on the environment; nor does it guarantee success in the medium and long term. The world has become more complex, and companies have a responsibility in terms of how the world is going to continue to develop. Most globally active companies have recognized this, and using a multi-stakeholder strategy, they are making great efforts to establish and maintain good relationships with the most diverse public and private communities – be they customers, employees, young talent, suppliers, the press and public, government institutions, neighbors, politicians or non-governmental organizations. To act responsibly means to use one’s influence to foster positive change, namely change that will benefit society as a whole and, ultimately, also the company. There was a time when companies delegated corporate responsibility to some subordinate department, in the spirit of “In our house Mr. So-and-so handles all that.” In those cases what is really a rather many-layered issue merely served an alibi or lip-service function. Today the world’s leading companies have recognized that corporate responsibility is something that needs to be dealt with at management board level. It is not about some isolated good-will projects, but about a developing a broad approach involving an enormous number of different fields of action, in a world that is becoming ever more fast-moving.

Peter Gerber: For us corporate responsibility is also growing in importance. That said, it is something that has been on our agenda for a very long time already. I would remind you of the Cargo Human Care initiative founded over ten years ago by employees of our company with the aim of improving living conditions in Kenya. Our employees travel all over the world, and they become aware of distressing circumstances and can see what could perhaps be done about it. A situation like that is what brought Cargo Human Care into existence. It is possible that our service employees just happen to be especially empathetic. Be that as it may, our company does harbor that spirit, the willingness to do good. There are two additional factors that can explain why corporate responsibility is so important to us: Lufthansa and Lufthansa Cargo are both companies that are engineering-driven, and among German engineers environmental issues have traditionally played an extremely important role. Moreover, most of the current generation of managerial employees was socialized in the 1980s, a time when the environmental movement took hold in Germany. It should therefore not come as a surprise that for many years now, we have perhaps been a little more focused on incrementally moving towards greater sustainability than the average international company.

Why is corporate responsibility important today?

Christoph Wolff: Companies do not operate in a vacuum; they interface with social groups and institutions in multiple ways. This is all the more true if a company operates on a global scale. It goes without saying that companies must perform to the satisfaction of their customers and shareholders. But this alone does not take into account the impact of the company’s activities on society and on the environment; nor does it guarantee success in the medium and long term. The world has become more complex, and companies have a responsibility in terms of how the world is going to continue to develop. Most globally active companies have recognized this, and using a multi-stakeholder strategy, they are making great efforts to establish and maintain good relationships with the most diverse public and private communities – be they customers, employees, young talent, suppliers, the press and public, government institutions, neighbors, politicians or non-governmental organizations. To act responsibly means to use one’s influence to foster positive change, namely change that will benefit society as a whole and, ultimately, also the company. There was a time when companies delegated corporate responsibility to some subordinate department, in the spirit of “In our house Mr. So-and-so handles all that.” In those cases what is really a rather many-layered issue merely served an alibi or lip-service function. Today the world’s leading companies have recognized that corporate responsibility is something that needs to be dealt with at management board level. It is not about some isolated good-will projects, but about a developing a broad approach involving an enormous number of different fields of action, in a world that is becoming ever more fast-moving.

Peter Gerber: For us corporate responsibility is also growing in importance. That said, it is something that has been on our agenda for a very long time already. I would remind you of the Cargo Human Care initiative founded over ten years ago by employees of our company with the aim of improving living conditions in Kenya. Our employees travel all over the world, and they become aware of distressing circumstances and can see what could perhaps be done about it. A situation like that is what brought Cargo Human Care into existence. It is possible that our service employees just happen to be especially empathetic. Be that as it may, our company does harbor that spirit, the willingness to do good. There are two additional factors that can explain why corporate responsibility is so important to us: Lufthansa and Lufthansa Cargo are both companies that are engineering-driven, and among German engineers environmental issues have traditionally played an extremely important role. Moreover, most of the current generation of managerial employees was socialized in the 1980s, a time when the environmental movement took hold in Germany. It should therefore not come as a surprise that for many years now, we have perhaps been a little more focused on incrementally moving towards greater sustainability than the average international company.

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What is the importance of CO₂ reduction for corporate responsibility in the aviation industry?

Christoph Wolff: Whether we are talking about passengers or freight – the biggest challenge faced by the aviation industry are the CO₂ emissions associated with flying. It follows naturally that aviation in general is coming under scrutiny, and with it the global procurement processes involving airfreight. But from my point of view, flying less cannot be the solution. Customer requirements are what they are, and the markets want to be serviced. Both these aspects are down to the fast-moving times we live in, and – let’s be realistic – this trend cannot be reversed. I take the view that two things will be required: the first is to factor the CO₂ burden into the pricing for transport services, and the second is to find innovative technical solutions. There certainly are ways to accomplish that. What we need to do is speed up their development, and to place them on a viable economic footing so that the aviation industry will then be able to offer CO₂-neutral transportation.

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Voices critical of airfreight cast doubt on whether goods need to be carried by air. What is the position of Lufthansa Cargo?

Peter Gerber: The situation in the airfreight sector is somewhat different from that in passenger traffic with sometimes absurd bargains offered by low-cost carriers. When it comes to airfreight, the only goods that fly are those that really need to be flown. This is because airfreight is relatively expensive, 40 to 50 times more expensive that sea freight, for example. Customers will really only opt for airfreight when the goods being transported are extremely valuable or when transportation has to be extremely safe or fast. I do endorse regional procurement, wherever this is a viable option. But we should neither under­estimate the influence of the markets nor condemn it. Quite the contrary: we would not be doing justice to the achievements of globalization if we tried to reverse the course of history. In a networked world, it must be possible to procure goods wherever they can be produced most efficiently, and where people will then also be given the opportunity to have a better future. A good example is vegetable culti­vation in Kenya: there simply must be a way to transport the produce from there to where there is demand for it – with the not insignificant side effect that the people in Kenya can earn a reasonable livelihood. Relocating production to our countries would also not make sense from an environmental point of view, due to the much higher energy consumption that cultivation would require. To do without something at this point would certainly not be a good option.

Lufthansa Cargo chooses to fly under the motto “enabling global business”. Does the airfreight business also have positive Socio-Economic effects on poorer countries?

Peter Gerber:
Anyone frequently visiting emerging markets and developing countries would be aware of the pronounced effect on prosperity that comes about when products can be sold on the world market at good prices simply because the option of airfreight exists. In the winter months, Kenya and Egypt are the greenhouses of Europe. Here a middle class is developing that is able to send its children to school regularly, and for many families this is an absolute first-time event. The way I see it, there is no alternative to this gradual development. Over the past 200 years, our economy has also developed step by step thanks to the efficiency gains made in agriculture and during the Industrial Revolution. People must be given the opportunity to produce goods and do business in a sustainable manner. But even though I think globalization has been a huge success overall, I would not want to be too uncritical: if only very few people reap the benefit of the gains in prosperity, then something is going wrong. This is where regulation is called for. The discussion rounds hosted by the WEF appear to me a suitable way toward finding solutions.

Christoph Wolff: This is a challenge we are taking up. Macro­economic issues are front and center of numerous WEF initiatives that are being pursued in cooperation with the UN, for example, with the World Bank and with other international organizations. Because it is a fact that inequality is currently on the rise again in our world, and is threatening prosperity for the many, and it is important to acknowledge that. The technological orientation of the global economy and the orientation of entire industries also has the potential to increase inequality once again. If the big online merchants do not have to pay taxes because they are not resident anywhere for tax purposes, then this does constitute a problem. Where value is created, it will need to be repatriated systematically in the future, in order to foster social progress. This is what we are working towards and where we can exert our influence. Conflicting objectives in relation to short-term earnings expectations do occur time and again, but companies focusing on the medium and long term will face up to the findings of a critical stakeholder analysis.

How is the WEF going about achieving its stated aim of being “committed to improving the state of the world”?

Christoph Wolff: Ever since the early days of the Forum, which was founded by Prof. Klaus Schwab almost 50 years ago, the “round tables” that we are so familiar with in Germany have been our model as an instrument of mediation. Whenever you identify a problem, you seat all those who have something to do with it and who are affected by it – all the stakeholders – at a “round table” and try to find sustainable solutions. One of the objectives then is to find ways in which enterprises can live in harmony with their stakeholders. What I find fascinating about the WEF is that in this way we can indeed achieve something that we can later tell our children about.

What are the plans of Lufthansa Cargo with regard to corporate responsibility?

Peter Gerber:
Aviation is responsible for 2.8 percent of global CO₂ emissions. This is why we say: climate protection concerns all of us, and we must act sustainably and effectively. In the first instance, our aim to meet the commitments we have made: we have set ourselves the target of reducing our specific CO₂ emissions by 25 percent by the year 2020. The most important factor in this endeavor is the renewal of our fleet through the retirement of the MD-11 and the integration of the new fuel-efficient Boeing 777 freighters. Also by 2020, we plan to replace all aluminum containers by containers made of lightweight composite materials by 2020 – this, too, will reduce our CO₂ footprint. But in the long run, our aim is to fly CO₂-neutral. We know that we can only reach this goal if fossil kerosene is replaced by renewable fuels. The most ecologically sound solution at this point is a fuel that is produced using the so-called “Power-to-Liquid” process. To make progress in this area will require a joint effort involving policymakers and the industry and business communities. Lufthansa is ready to participate in pilot projects involving the construction of ­industrial plants for producing Power-to-Liquid fuels.

Mr. Wolff, Mr. Gerber, thank you for this interview.

Lufthansa Cargo chooses to fly under the motto “enabling global business”. Does the airfreight business also have positive Socio-Economic effects on poorer countries?

Peter Gerber:
Anyone frequently visiting emerging markets and developing countries would be aware of the pronounced effect on prosperity that comes about when products can be sold on the world market at good prices simply because the option of airfreight exists. In the winter months, Kenya and Egypt are the greenhouses of Europe. Here a middle class is developing that is able to send its children to school regularly, and for many families this is an absolute first-time event. The way I see it, there is no alternative to this gradual development. Over the past 200 years, our economy has also developed step by step thanks to the efficiency gains made in agriculture and during the Industrial Revolution. People must be given the opportunity to produce goods and do business in a sustainable manner. But even though I think globalization has been a huge success overall, I would not want to be too uncritical: if only very few people reap the benefit of the gains in prosperity, then something is going wrong. This is where regulation is called for. The discussion rounds hosted by the WEF appear to me a suitable way toward finding solutions.

Christoph Wolff: This is a challenge we are taking up. Macro­economic issues are front and center of numerous WEF initiatives that are being pursued in cooperation with the UN, for example, with the World Bank and with other international organizations. Because it is a fact that inequality is currently on the rise again in our world, and is threatening prosperity for the many, and it is important to acknowledge that. The technological orientation of the global economy and the orientation of entire industries also has the potential to increase inequality once again. If the big online merchants do not have to pay taxes because they are not resident anywhere for tax purposes, then this does constitute a problem. Where value is created, it will need to be repatriated systematically in the future, in order to foster social progress. This is what we are working towards and where we can exert our influence. Conflicting objectives in relation to short-term earnings expectations do occur time and again, but companies focusing on the medium and long term will face up to the findings of a critical stakeholder analysis.

How is the WEF going about achieving its stated aim of being “committed to improving the state of the world”?

Christoph Wolff: Ever since the early days of the Forum, which was founded by Prof. Klaus Schwab almost 50 years ago, the “round tables” that we are so familiar with in Germany have been our model as an instrument of mediation. Whenever you identify a problem, you seat all those who have something to do with it and who are affected by it – all the stakeholders – at a “round table” and try to find sustainable solutions. One of the objectives then is to find ways in which enterprises can live in harmony with their stakeholders. What I find fascinating about the WEF is that in this way we can indeed achieve something that we can later tell our children about.

What are the plans of Lufthansa Cargo with regard to corporate responsibility?

Peter Gerber:
Aviation is responsible for 2.8 percent of global CO₂ emissions. This is why we say: climate protection concerns all of us, and we must act sustainably and effectively. In the first instance, our aim to meet the commitments we have made: we have set ourselves the target of reducing our specific CO₂ emissions by 25 percent by the year 2020. The most important factor in this endeavor is the renewal of our fleet through the retirement of the MD-11 and the integration of the new fuel-efficient Boeing 777 freighters. Also by 2020, we plan to replace all aluminum containers by containers made of lightweight composite materials by 2020 – this, too, will reduce our CO₂ footprint. But in the long run, our aim is to fly CO₂-neutral. We know that we can only reach this goal if fossil kerosene is replaced by renewable fuels. The most ecologically sound solution at this point is a fuel that is produced using the so-called “Power-to-Liquid” process. To make progress in this area will require a joint effort involving policymakers and the industry and business communities. Lufthansa is ready to participate in pilot projects involving the construction of ­industrial plants for producing Power-to-Liquid fuels.

Mr. Wolff, Mr. Gerber, thank you for this interview.

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WEF

The World Economic Forum (WEF), founded in 1971 by the legendary Professor Klaus Schwab, today is the most important international organization for public-private cooperation at the highest level. Heads of state, UN officials, CEOs and the leaders of associations and non-governmental organizations regularly take part in the WEF “round tables” to discuss global problems relating to economic, social, health and environmental policy. The Forum’s head office is located in Geneva, and it is known to the general public mainly because it regularly hosts the World Economic Summit in Davos.

Photos: Oliver Rösler

Author: Lars Kruse

Photos: Oliver Rösler

Author: Lars Kruse