BayWa's climate strategy

The urgency of climate action shaped public debate worldwide in 2019. The business world and society are also increasingly worried about the issue. Moreover, the World Economic Forum’s January 2020 risk report says that the five greatest risks for the world result from the consequences of climate change. Three years ago, BayWa decided to take action and developed a Group-wide climate strategy that was presented in detail in the 2018 Sustainability Report. Its core goal is to make BayWa climate-neutral by 2030. Prof. Klaus Josef Lutz, Chief Executive Officer of BayWa AG, talks about the implementation process, the Group’s achievements to date and the impact that BayWa’s climate strategy has had so far.

Mr Lutz, what was the reaction when you unveiled the climate strategy and its ambitious targets?

Lutz: Internally, the reactions were very positive. Externally, however, our commitment received very little attention. To be honest, I expected more. But maybe it has something to do with the fact that people have already come to expect companies to set ambitious climate targets. Still, the successful placement of our first green bond in the amount of €500 million demonstrates clearly that investors are very interested in green alternatives and view BayWa’s business model as very promising, especially in the field of renewable energies. We will use the issue proceeds to finance new wind and solar power plants worldwide and to expand existing ones.

Why do you think BayWa’s employees welcomed the climate strategy?

Lutz: For employees, it is becoming increasingly important to work for a company that stands by its responsibility for the environment and society. That’s something I notice when I talk to them, and it’s something I can see when I look at how environmentally conscious our employees are. More and more of them are bicycling to work or taking part in demonstrations on the issue. Sustainability was once again one of the focal points of our annual Leadership Conference in 2019. Specifically, we looked at the consequences of climate change for BayWa. The operating segments often feel the impact directly. The managers voiced their clear commitment to making sustainability the driving force behind business at the BayWa Group!

That sounds as if all employees were convinced of the necessity of fast, systematic
and consistent climate action?

Lutz: Not entirely. We’re a conglomerate. We’re involved in international business in the fields of agriculture and renewable energies, but we’re also involved in traditional agribusiness and the heating oil trade in Germany and Austria. Correspondingly, there is also a wide range of different views and opinions when it comes to climate action. Some employees are progressive and see our commitment as an opportunity. Others are less enthusiastic.

Regardless, the best results in our experience come when we pool the expertise from the Agriculture, Building Materials and Energy Segments to develop cross-divisional solutions for climate action. Our diversity is a tremendous strength here. In Africa, for example, we worked with experts from all three segments to build a solarpowered irrigation system in Zambia that is digitally managed and saves both water and energy. This example illustrates very clearly how we can work together to grow.

In which business areas does BayWa have the most effective tools to help it achieve its
ambitious climate targets?

Lutz: First and foremost: BayWa r.e., with its core business planning, developing, constructing and selling wind and solar farms, in addition to providing technical and commercial management services and marketing the electricity generated. BayWa r.e. makes a significant contribution to achieving our climate targets and to helping the energy transition succeed in Germany and other countries. Since 2019, BayWa r.e. has been climate-neutral in its operations – a goal we plan to achieve for the entire Group by 2030.

All German Global Produce locations are already climate-neutral today as well. The international locations are also hard at work on that goal. TFC Holland in the Netherlands has been climateneutral since 2019, and our subsidiary T&G Global in New Zealand is constantly taking measures to effectively reduce GHG emissions. It is worth pointing out that not all of this has been achieved simply by purchasing high-quality carbon credits. In everything we do, our first goal is to avoid and reduce emissions before making use of compensation options. Global Produce, for example, has made greater investments in energy efficiency measures in recent years.

Are there also business areas where it is difficult to achieve climate targets?

Lutz: The agricultural division and conventional energies have a far less favourable starting position than business areas that are per se closely related to climate protection, of course. There is a trend towards ever-larger farms, and the competitive pressure on German agriculture, which relies more on smaller operations than in the rest of Europe, is mounting. At the same time, the standards in relation to sustainability are rising, even though few consumers are actually willing to pay higher producer prices. Many farmers who work in conventional agriculture therefore feel unjustly singled out.

As a partner for farmers, BayWa needs to step up to the plate in two ways. We want to empower conventional farmers to become more competitive while also making a contribution to protecting the climate. Digitalisation can help tremendously here. Our subsidiary FarmFacts, for example, provides a system that supports farmers in recording relevant data and making intelligent use of it, thereby allowing them to optimise processes on the farm and in the field so that they can work profitably and economically.