Haniel: Axel Berger

When you're almost 270 years old, it's only natural that you think about your grandchildren at least once in a while. And Franz Haniel & Cie, whose Chief Sustainability Officer is our guest in this episode, is just as old.

"'enkelfähig' is an attitude and a narrative that stands for the opportunities of sustainability. At the moment, we are still talking far too much about the alleged costs and risks," says Axel Berger. His bet: in ten years' time, only sustainable brands will be successful brands anyway. In this episode, the Haniel manager explains what makes him so sure of this and how he wants to win other companies over to sustainable business practices.

Sustainability is good and right – but how do we inspire and touch people with it? In the Sustainable Brand Stories podcast, we meet founders and brand leaders who are shaping the economy of tomorrow. We discuss greenwashing and flashes of inspiration, creative communication concepts and mobilizing brand appearances, as well as the fear of change and the art of captivating people with complex topics.

Axel: I still see this incredible attitude-behavior gap, meaning everyone says sustainability is important, but people don’t act on it. In doubt, it’s not financially worth it for them, and I believe that’s what is still making it very difficult for companies and entrepreneurs right now. I mean, the ultimate goal is to make money with and through sustainability. And the question is, how can you achieve that? Circularity issues, for instance, can be part of that, and we always try to see the opportunity rather than focusing solely on the threat to our business model. “Future-proof” is actually a positive narrative because it brings together the two sides that are often discussed: the economy and sustainability, both social and ecological. Above all, “future-proof” focuses on the opportunities and chances within that and does not only see the risks; it should encourage and inspire.

Harald: When you’re almost 270 years old, it’s natural to think about your grandchildren at least occasionally. And that’s exactly what the traditional company Franz Haniel and Company is doing, whose Chief Sustainability Officer is our guest in this episode. The family-owned conglomerate, which is involved in MediaMarkt, 1komma5°, and CWS, has developed a sustainability concept called “future-proof” that is meant to grow into a real movement. “Future-proof” is an attitude, a narrative that stands for the opportunities of sustainability. Right now, we still talk far too much about the supposed costs and risks, says Axel Berger, who now wants to attract other companies to sustainable business practices. His bet is that in 10 years, only sustainable brands will be successful brands. What makes him so sure and how Haniel wants to become more profitable through sustainable business practices, Axel Berger explains in this truly grandchild-friendly and parent-friendly episode.

Tatjana: Welcome to Sustainable Brandstories, the podcast for sustainably successful brands and communication, presented by Strichpunkt Design and part of the Brand 1 podcast network.

Harald: Axel, it’s great to have you here today to tell us about your “future-proof” concept from Haniel. But before we get into that, I have a question. Could it be that you’ve been in the media more often than you would have liked in the past year? For example, the departure of your CEO, the financial losses you incurred, and to this day, no new CEO has been appointed. It seems like you’re almost a bit rudderless. What’s going on at Haniel?

Axel: Rudderless would be an exaggeration. Yes, it’s been a turbulent time, that’s correct. We did lose our CEO last year and are searching for a new one. But things are moving along. I’m hopeful that we’ll see some progress soon. In the meantime, we’ve formed a transition team to lead the company without a CEO but with a CFO. We’ve also appointed a second managing director, so we are still able to negotiate. It’s actually an interesting experience to lead a company with the team leads or those responsible from different areas.

Harald: So you don’t really need a CEO?

Axel: Well, eventually, we’ll probably have one again, but at the moment, we’re managing without one. The plane is still flying, and we’re managing.

Harald: No turbulence.

Axel: Turbulence is always present in such times. I worked at Thyssenkrupp for 4 years, and it was constantly in crisis. So turbulence is always there, but that doesn’t mean the company is going down. No, no, we’re on our way.

Harald: You are a special company with around 800 owners, descendants of the legendary Franz Haniel and so on. Your company includes diverse businesses like the service provider CWS, the mattress brand Emma, the B2B mail-order company Kaiserkraft, and also a major investor in the energy startup 1komma5° and in Seconomy, the parent company of MediaMarkt and Saturn. What all these companies have in common is that they should be "future-proof," which is your core brand at Haniel, as well as the CWS folks with their fabric towel rolls. In short, what or who is “future-proof”?

Axel: “Future-proof” is primarily an attitude, an attitude that, in my opinion, everyone can adopt. It’s not just for companies but also for individuals, and it’s about leaving the company or society in a state that you would wish for the next generations. It also means that “future-proof” represents entrepreneurship in the 21st century. It means operating in balance between the economy, ecology, and social responsibility. There are already companies that do this, which I would call “future-proof,” and also companies within our group. It’s important to note that “future-proof” is a positive narrative. Why? Because it brings together the two sides that are often depicted: the economy and sustainability, both social and ecological. Above all, “future-proof” focuses on the opportunities and chances within that and does not only see the risks. It should encourage others and ensure that we operate more sustainably, both financially and ecologically and socially.

Harald: Indeed, one can currently observe how extremely unsustainable practices can be very successful, as seen with Exxon, TotalEnergies, and so on. It’s even more interesting. Could you give an example of a positive narrative? Which companies are leveraging these sustainable opportunities and achieving economic success? For example, 1komma5° is a great current example where we are investors because it’s about renewable energy, and it’s still at an early stage. I believe it will develop significantly in the coming years. What’s interesting is that 1komma5° is profitable and growing very quickly, and what I find exciting is that 1komma5° is also evolving its business model. It’s not just about installing renewable energy systems and charging infrastructure, heat pumps, etc., but also about energy management. For example, 1komma5° offers electricity tariffs, which are on average around 15 cents per kilowatt-hour, because the energy procurement is managed and thus the storage of energy in your energy storage system, and so on. These are things that, a few years ago, we might have thought were impossible, but we’re seeing more and more such business models emerging. Of course, there are also traditional companies that have the opportunity to develop further. For example, we’ve set up a refurbishment center at one company. There, old items are not scrapped or disposed of but are refurbished and put back into service or sold, and this is a viable business today.

Harald: Which company is that?

Axel: It’s CWS, CWS Hygiene.

Harald: So the towel holders and so on are refurbished, and it pays off, or is it just ecological?

Axel: No, it pays off. I think it’s also much easier to implement such business models or approaches when they are as economically viable as they are ecologically. And yes, it pays off. We’re seeing a trend, especially in the electronics industry, where there are more and more refurbishment offers. This is, of course, challenging because virgin materials, like plastics, are still cheaper in many cases than recycled materials or the refurbishment of materials due to the labor involved. That’s actually the problem, and it slows down the development or growth of these business models. I hope that will change eventually.

Harald: Why should I, as a CEO, invest in this? I know a specific example from Frosch, which costs 1.5 cents more per bottle when using recycled bottles compared to using mineral oil, as the big players do. This costs the Frosch CEO Schneider a double-digit million amount per year, but he can do that because it’s his own company, spending his own money. If I’m a hired CEO and need to show results, why should I do that?

Axel: Well, first of all, it’s a question of attitude. Even as a hired CEO, I have an influence on the company’s strategy. The shareholder’s willingness to support this is always a factor, but the fundamental assumption is often that sustainability costs profitability. However, we can show with this model that it does not cost money but makes us more profitable. Sustainability is always related to resource efficiency. It doesn’t have to be recycled plastic; it could be other things that I focus on. The fundamental assumption is that resource efficiency also makes us more profitable. I can start with measures that are already profitable and then observe how those that are not yet profitable develop. For example, I can prioritize and create transparency and dispel the myth that sustainability always and inherently costs profitability. In a company we worked with, we found that the totality of all measures actually makes us more profitable. The question then becomes whether a CEO will decide to implement everything or just the things that make us more profitable, which will largely depend on how the shareholders view it.

Tatjana: Quick and Dirty time for a round of quick questions. What was the point in your life when you became aware of the importance of sustainability?

Axel: There were actually two moments. The birth of my daughters and the first time I dealt with the concept of “future-proof” during my job discussions with Haniel.

Tatjana: Why do you think that sustainability and sustainable brand management will be crucial for competition in the coming years?

Axel: Because the demand for more sustainability is slowly gaining traction with customers, especially in B2B, and customers are looking for credibility and trust. I believe they will not easily trust everyone to be sustainable.

Tatjana: The argument you use to persuade even the most skeptical nerds to act more sustainably?

Axel: A measure that would convince the biggest skeptic is the internalization of externalized costs. Why? Because then unsustainable behavior would be more expensive than sustainable behavior.

Tatjana: Your definition of sustainability in one sentence.

Axel: Ensuring a livable future for my direct and indirect descendants. In balance between economy, ecology, and social responsibility.

Tatjana: And do you have a better alternative to the overused term sustainability?

Axel: It’s quite simple: "future-proof" because it combines the two poles of the market and traditional sustainability into a positive narrative that focuses on opportunities, chances, and entrepreneurship.

Tatjana: Honestly, what is your personally least sustainable product or habit? Where do you cheat?

Axel: We still fly once a year. That was the rule. At most once a year, but I know exactly what that does to my personal footprint, even if I offset it. But that’s my weak point; I can’t stop and don’t really want to stop traveling because it broadens my horizon.

Tatjana: The law regarding sustainability that you would implement tomorrow if you were Chancellor?

Axel: That would be a law for the internalization of externalized costs. Starting with a more aggressive increase in CO2 prices, but expanding it to as many sectors as possible, so that the market can work with less regulation and more freedom.

Harald: In the pre-talk, you made a strong statement that I’d like to bring up. You said in 10 years, only sustainable companies will be successful. Have you slept on it for three nights? Do you still stand by that statement?

Axel: Yes, I still stand by that statement for various reasons. First, we will be increasingly driven towards this direction by regulations because we struggle to change ourselves and are therefore always lagging behind. Regulations will ensure that—an example: early recycled content laws, meaning you must incorporate recyclate into your textiles. The fight for recyclates has already begun. Recycled plastic PET is becoming more expensive, which means companies that recycle their products in post-production or invest in recycling will have a cost advantage over those that don’t. The same applies to energy efficiency. I believe companies that use their own photovoltaic systems and wind turbines to supply themselves will produce energy for 0.4, 0.5, or 0.6 euros per kilowatt-hour, while companies that don’t will continue to pay 20 euros or, if they are large buyers, perhaps 0.08 euros or something like that. The companies that focus on resource efficiency today will be the successful ones in the future.

Harald: I want to believe you, pardon.

Axel: Yes, I just remembered that I saw a study from the food sector a while ago, which found that more sustainable companies, or more sustainable companies, on average generate 6% more EBIT. I don’t know if that’s representative for all industries, but yes, I do believe it at least.

Harald: I have another number that’s not quite as optimistic. It comes from the Council for Sustainable Development, the official advisory body of the federal government. They estimate, though defining sustainable economic activity is difficult, that the proportion of sustainably operating companies in Germany is under one percent. If what you say is true, it’s understandable why 99% either do everything wrong or just haven’t understood it yet.

Axel: That’s a very good question. Probably because, and I mean us as a society as well as companies, it is very difficult for companies. What I do see is a turning point in B2B. More and more companies are setting requirements for us regarding sustainability, such as science-based targets and decarbonization roadmaps with clear, certified goals. However, I don’t see this in B2C yet. There is still this incredible attitude-behavior gap, meaning everyone says sustainability is important, but people don’t act on it. If in doubt, it’s not financially worth it for them, and I believe that’s what currently makes it very difficult for companies and entrepreneurs to develop. But, as I said, we’ve set clear goals at the European level, and if we want to meet them, things must change. The past shows, and I don’t know how the European elections will turn out, but I firmly believe that if we as companies don’t develop further, regulation will ultimately force us to do so. Therefore, I can only recommend to companies to deal with it today so that they are not forced to do so but can maintain control themselves.

Harald: You’ve developed a benchmark for your companies: the Future with Living Rating, or FWL for short. Briefly, what does this rating measure and what is it used for?

Axel: I think the most important thing we’ve tried to achieve is to operationalize sustainability because it’s such a nice word. I also see that the word sustainability is becoming increasingly negatively connoted. But the question is, how do you actually anchor both sides of the coin—financial sustainability and ecological and social sustainability—so that you can truly manage it within the company and not just make a black-and-white decision between “yes to sustainability” or “no,” but incorporate it into daily management routines like cash or EBIT. To set goals, incentivize, and measure progress, we need to make it measurable and assessable. This was the first step; we started in 2020 and in 2023, developed 10 principles, not rocket science, but almost classic ESG criteria.

Harald: Give an example, please.

Axel: Yes, climate change, of course, but also fair working conditions or circularity. We also have compliance issues included—really everything you would probably find under ESG. One principle to mention is Principle 1: profitability. However, we don’t assess profitability in the Future with Living rating because it is separately evaluated in our second axis of success measurement, Total Shareholder Return. Very technical, sorry, but I need to explain it briefly. We have 10 principles, and based on these principles, we measure or attempt to evaluate not what the risk of companies is, as ESG ratings usually do, but what the impact of companies on the environment and society is. We developed this over three years. Last year, we finalized it with an external agency and then handed over the rating to them, so we don’t rate ourselves. We want to have an external stamp on it in the future, meaning auditors or certifiers will review it. We measure ESG, or a sustainability assessment from our perspective, and we do this every year. In 2023, we first conducted the final or near-final assessment for all 10 companies. What we primarily measure is where the company stands today and where it could stand in 5 years. This is important because ESG ratings don’t do this, nor does CSR reporting. We look at opportunities and how the company can develop further. This bridge is what we started including in the company strategies last year, so we actively work on transforming the companies and measuring progress the following year or not if they haven’t progressed.

Harald: Okay, this means higher costs for management, probably lower profit margins, and definitely more work. How dismayed were they all when you introduced the rating?

Axel: Well, again, I don’t know. You go in with this general hypothesis that it costs profitability, revenue, and results, and it’s not necessarily so. We haven’t reached that point yet. I don’t want to say it’s always the case or that it always works. I just want to clear up that it’s not necessarily that you always lose revenue and profitability. For example, we see in one of our companies that since we can show whether products are more sustainable or less sustainable, the more sustainable products are growing faster and have better margin development.

Harald: Which company is that? Which products are those?

Axel: Kaiserkraft. Kaiserkraft developed a rating with us that allows them to display products. In terms of your question, were they dismayed? Of course, no one looks forward to having to include additional dimensions in their management evaluation, no question about it. But it was the same with digital transformation when I was responsible for it. But whenever we can show that a company becomes more successful—either by gaining new customer groups, developing better margins, or reducing costs—doors open. We have increasingly been able to show this in the past. Where it happens faster, and we work with a mentality of how we can make it possible rather than why it doesn’t work, because it costs profitability, we see acceleration. But, of course, we are also in economically challenging times in some companies. Then it’s precisely the point that we need to manage it, which means not sacrificing sustainability, but also not sacrificing profitability because of sustainability. As managers, we need to manage it, just like with all other topics. The important thing is that sustainability must be embedded in such a way that we can manage it and make business decisions.

Harald: You’ve already hinted at this perspective shift. It’s about evaluating where we stand, what we’ve done wrong in the past, where there are gaps, and identifying development opportunities in the right direction that could result in business cases. Did I understand that correctly?

Axel: Yes, exactly. The ultimate goal is to earn money with and through sustainability. The question is how to achieve that, and circularity issues can be part of it. We always try to see the opportunity rather than focusing solely on the threat to our business model.

Harald: You haven’t just developed this for your own company but aim to build it into a movement. You’ve founded an association called Enkelfähig (Future-Proof), and you’re hosting the Enkelfähig Summit in early July. Why all this?

Axel: First of all, it's the Enkelfähig movement, and I am part of the executive board. There are three of us, and why we’re doing this is because we want to inspire other companies. “Enkelfähig” (Future-Proof) is a mindset, and it’s bigger than just Haniel. I believe we need a new narrative—one that encourages and activates, showing that there are more opportunities than threats in sustainability.

We need to move away from the negative connotations of the term and present examples that demonstrate it can work. There are companies in difficult industries, like VD, that are managing to operate sustainably even in tough sectors. We need such examples, answers to how it’s done, and where the opportunities lie, so we can convince other companies that it’s possible and encourage them to embark on their own transformation journey. If we don’t show these paths, we’ll either take longer or, at worst, the transformation won’t succeed. I don't want to imagine what that means for my two daughters, which is why I am committed to this both professionally and personally.

Harald: Why should a company join the Enkelfähig movement, and what does it need to do to become a member?

Axel: First, fill out a membership application, which you can find on our website at www.enkelfähig.de.

Harald: That’s the commercial break.

Axel: Exactly, the ad banner. Do I need to pay for the ad banner?

Harald: Of course, but we can discuss that when the microphone is off. Please continue.

Axel: Yes, so first, fill out a membership application. What we do is evaluate the members using a Future with Living Rating because we want companies that are truly committed to transformation, not just those that want to look green or sustainable. If you go through the Enkelfähig rating, you’ll either be an aspirant—meaning you might not be Future-Proof yet but want to be—or you’ll become a full member and be part of this movement. The benefit is that you can connect with other companies on the same journey, share best practices, and exchange methods. For example, we offer training on marginal abatement cost analysis for decarbonization, the Future with Living Rating as a benchmark to see where you stand today and where you could be in the future, and how to get there.

We offer exchange formats like the Enkelfähig Summit and are planning more events, such as one in October. There are many opportunities for exchange, best practices, and eventually, even joint investment opportunities. We’re considering whether there might be a Future-Proof fund where interested entrepreneurs could invest in more sustainable business models.

Harald: Who are your members? How many do you have, and are there any you might know?

Axel: At the moment, we have 6 companies. Besides Haniel and Arrineo, we also have some smaller companies. We are now starting active efforts to recruit more members. We have 10 founding members, including Fabian Kienbaum and Christiane Underberg. These are 10 individuals dedicated to this cause, who founded the association Enkelfähig e.V., which operates the movement. Anyone interested can contact me. We’re looking for brave entrepreneurs interested in transforming themselves and participating, or simply seeking exchange formats to help pave the way.

Harald: Sustainability is currently facing challenges, partly because it's often discussed in terms of its perceived risks and costs rather than its potential benefits. With the Future with Living Index, Haniel has turned the tables, making sustainability measurable, and showing that more sustainable products in their portfolio grow faster and yield higher margins than conventional ones. With Enkelfähig, they’ve created a narrative to attract companies to this way of doing business. I can imagine some companies might hesitate to join, as the term Enkelfähig has long been associated with Haniel, but it’s still an interesting and commendable approach. Sustainability certainly needs some good news right now.

Axel: Finally, I’d like to circle back to the company you work for and what makes it special. You were a mechanical engineer and worked at ThyssenKrupp Materials and the construction company Saint Gobain. What tangible difference does it make for you to be contracted by a 280-year-old family business like Haniel, where you ultimately have 800 bosses living by this Future-Proof principle? How does that show?

Axel: It’s definitely less anonymous than it was at the public companies where I worked before. I have the opportunity to actually interact with the owners and understand what drives and motivates them. It’s also a reflection of society since with 800 people plus families, it inevitably mirrors society to some extent.

Harald: Does that mean not everyone is enthusiastic about Enkelfähig?

Axel: Yes, there are certainly some who have reservations and aren’t sure how it will work or if it will work, and some who are more risk-averse than others. We have a range of opinions among our shareholders, just like in other companies. However, engaging with shareholders and discussing these topics is a huge opportunity. It allows you to communicate what you’re planning, where you think the path could lead, and show your successes or emerging successes. I found it fascinating that when I saw the term Enkelfähig and what it stands for, it gave me courage and sparked my interest. I was looking for ways to transform and where I could invest my work time to ensure my daughters have a future as promising as the past I experienced, which was relatively carefree compared to today. I want the same for my children and this concept resonated with me.

Harald: So, you’re in the right place at the right time?

Axel: Yes, it feels that way. That doesn’t mean everything is perfect; as with any company, we face challenges, but I feel like the company, if I may say so, has its heart in the right place and is on an interesting journey. I believe I can make a difference here—not just for the prosperity of the shareholders but also for the economic, ecological, and social prosperity of society, and thus for my children.

Harald: Axel, everything was extremely precise. Not just the final question, but overall. I have many conversations, but the way you get to the point is rare. You have a talent for it. That’s a big compliment and thank you for your time; it was also enjoyable.

Axel: I enjoyed it very much as well. Happy to do it again.

Tatjana: That’s all for today from Sustainable Brand Stories. Thank you for listening. If you liked what you heard, please subscribe and leave a review. We look forward to it. See you soon, dear listeners, and goodbye, Harald.