Klaus Kunz, VP, Head of ESG / External Engagement and Performance Reporting, Bayer

Klaus Kunz holds a PhD in Organic Chemistry and an MBA. He joined Bayer in 2001 and has gained 22 years of experience directing business strategic topics at a global level, taking leadership and executive roles in research, R&D project management, regulatory and public/governmental affairs, sustainability and business stewardship. Since February 2022, he has been responsible for ESG strategy, non-financial and sustainability reporting and engagement with partners, investors and other stakeholders on ESG and sustainability-related matters. Integration of sustainability into business has been at the core of Klaus’ work for many years.

Klaus is a member of the advisory board of the All-Party Parliamentary Group on ESG (UK), senior advisor for the think tank Climate & Company, member of the ESG practitioners of the WEF, the Competent Boards Faculty and other international initiatives. He is passionate about driving innovation and change, cross-cultural collaboration, politics, history and science, also holding a lectureship for chemistry at the University of Aachen.

Recently, in an exclusive interview with CXO Outlook Magazine, Klaus shared his insights on the biggest sustainability challenges faced by today’s businesses, his professional journey, significant career milestones, future plans, pearls of wisdom, and much more. The following excerpts are taken from the interview.

What do you think are the biggest challenges facing businesses when it comes to sustainability?

There is still a common understanding in many companies that sustainability and business are trade-offs, that embedding sustainability only comes at costs and at best adds some reputational value. However, there is no sustainable business which is not profitable, but new parameters may be included in decision making. The key challenge is to find that value in changing businesses, products and innovation towards a more integrated view including societal and environmental dimensions.

Are there any sustainability trends that have caught your attention and that you believe companies should keep an eye on in 2024?

I think the overarching megatrends are very clear, independent from the concrete business sector. In the environmental space we talk about climate change, biodiversity loss, water scarcity, pollution and plastic waste. The model of the planetary boundaries and how we are exceeding those is very helpful to start your own analysis. In the social area human and labor rights, diversity and gender equality are on top of mind. Many companies have made commitments to address these issues and implemented respective measure.

But while in 2018-2020 there was a great appetite to communicate commitments, we have now arrived at a point where the low hanging fruits have been collected and the painful work starts. A very illustrative example is the heated debate about scope 3 emissions and respective reduction targets. Some companies are beginning to step down with their ambitions. Another example is the increasing discussion around the term “ESG” itself. That is a concerning trend. We will see now how those who walk the talk separate form those who don’t.

Klaus, could you share your journey to becoming an expert in your current position as VP, Head of ESG / External Engagement and Performance Reporting at Bayer?

It has been a long journey, beginning with a young chemist, coming straight from the university to Bayer and trying then for 8 years to find a new fungicide. Then I was ready to leave this purely science focused space to enter a larger area: Development, being responsible for a new insecticide development candidate. I began to understand the width and depth of the Bayer world, worked with Business, Regulatory and Product Supply functions and with our country organizations. It was the time to accept that the German way of doing things only works in Germany, that it is key to understand, respect and ideally partly adopt to local and cultural differences to make progress together.

The biggest learning came when leading the regulatory team for insecticides afterwards, when I was confronted with controversial discussions around bee and pollinator safety of our products on a daily basis. Only transparency and openness can help, other, more traditional corporate behaviors are typically aggravating these conflicts. Probably one of the biggest moves where I was involved was to open all Bayer files about safety data of our crop protection products to the public.

It was a great reward for me that the company then tasked me to lead Sustainability and Business Stewardship in the Crop Science division, right with the acquisition of Monsanto in 2018.  We implemented a real sustainable business strategy with respective business plans and measures. After this I was ready to take the role for ESG, now responsible for all Bayer businesses.

Can you provide examples of successful digital transformation initiatives that you have led or been a part of? What were the key factors contributing to their successes?

I have not been leading purely digital transformation projects but several, where data has played a crucial role. I mentioned our transparency initiative when we provided access to all our safety studies of our crop protection products. Key factor for that initial step was simply courage and support from the CEO. It took a while to get the organization behind, but ultimately it was the beginning of a series of additional actions, all around transparency and disclosure. I am very happy that today we receive a lot of feedback that Bayer is considered to be a leader in that space.

Looking at sustainability and ESG in the light of credible claims and reporting requirements, we will have to learn to deal with a new, huge data set, complementing traditional financial accounting. At Bayer we already have a good basis as we have prepared an annual sustainability report under assurance for years. But with the new Corporate Sustainability Reporting Directive in the EU we face a new situation and a lot more requirements. While collecting climate and emissions related data is already tangible, other areas like the systematic capturing of biodiversity figures is at very early stage.  We are preparing for this new era with highest priority and efforts. Key for success here will be the integration of internal and external perspectives to achieve acceptance for our approaches early on.

How important is the connection between the goals of the ESG / Sustainability team and the goals of the overall business?

It is absolutely crucial. If there is no connection, there is no mid- to long-term support in the organization. And even more importantly, the efforts can never reach a reasonable scale and thereby create positive and measurable impact. As mentioned in the beginning: A sustainability strategy which does not offer commercial value is simply not sustainable.

How do you approach ESG engagement across global markets, given regional differences in regulation and best practices, as well as differing investment strategies?

Understanding the needs of your audience is key, wherever you operate. I have been several times in the US this year because I felt that my view on ESG was very European sided or in other words, very positive. And indeed, when talking to all kinds of stakeholders in Washington DC, the term “ESG” was viewed as very negative, either as a greenwashing tool or as an instrument to force companies into directions which are not favorable for them. So ultimately it is all about the engagement: When I shared my view that for me “ESG” is a mechanism that helps to translate a sustainable business strategy into an investable framework, we had a good basis for a constructive discussion.

The common denominator is that ESG must add and not take out value. That might have a more environmental focus in Europe or a more social focus in Asia. The role of a global ESG function is to provide a framework to the organization which allows regional adoption and focus while defining the global guardrails.

Concerning investors, it is also really important to note that amongst them there is as much diversity as amongst the investees: For some, ESG is a compliance burden, for some a business opportunity and for some the core of all decision making. My pledge to ESG-minded investors is that we should help each other in concrete engagements which result in ESG-related actions on our side and in respective investments by them. I am very proud that this year we shared a joint statement with investors about such an engagement. It really helped us to step up on ESG, especially on transparency and governance.

What achievements are you most proud of in the sustainability space?

For some years now I have had the privilege to work in a in the field of transformation. Looking back, the biggest moves have been the transparency initiative and the integrated sustainability strategy in the Crop Science division. Within this strategy, two elements stand out for me: The commitments to reduce both 30% greenhouse gas emissions on the fields of our farmer customers and the commitment to reduce 30% environmental impact of our crop protection products. Today, both commitments are deeply embedded in our business planning, they have also opened te door to new opportunities like carbon farming. And they have impacted our narrative. I will never forget how our former CEO in Crop Science, Liam Condon, went on stage and opened an external presentation with the words: “How can we feed a hungry planet without starving it?” That level of acknowledgement, of inclusive thinking and of bridging from problem to opportunity was really new.

Another, very recent achievement is the massive improvement of Bayer’s ESG rating profile. All red flags have been removed in the last two years. The essence of success again: transparency, acknowledgement, disclosure and transparency.

How have you kept yourself motivated in difficult times? Have you developed any new skills, or a focus on personal well-being?

Today I understand what gives me energy and what doesn’t. I really love challenges and change. I also love working together with dedicated people and an energized team. I found some of my best friends in the company and it helps so much, to climb the mountain together and not alone.

Even if some find this bizarre, I am also energized by going into a very controversial discussions and explore where the common ground is. And I am an ambassador for innovation. In summary, I like difficult times and challenges. A friend recently said to me that I see the glass too empty and not full enough. But it is the empty part of the glass that I am interested in, not the full.

Over the years, my level of self-reflection has certainly increased. But I do not need to separate “work” from “life” – with my great work and my family I have a very rich life.

What are your plans for the future?

I will keep on driving change and impact together with likeminded people. That is my passion.

What advice would you give to other tech professionals looking to incorporate sustainability into their work?

Don’t start with regulations and imperatives when you look at sustainability. Find the impact and inspire your organization. Regulations may help but should not determine your strategy.

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