Ulrich Borgstädt

How do you switch an international company to sustainability in times of climate change and increasingly critical customers? What impact does this have on the financial strategy? And how do you take your employees with you on such a journey? An interview with Ulrich Borgstädt, alumnus of FB 07 Economics. Since 2020, he has been Corporate Vice President Group Treasury at Henkel AG&Co. KGaA, where he is responsible for Group financing, liquidity management and the company's pension asset and financial risk management.

Mr Borgstädt, you studied on the German-British business degree programme DBS AC at FH Aachen from 2002 to 2006. Why did you choose this particular degree programme?

There were several reasons. The double degree, which was a unique selling point at the time, was very important to me. Another very practical reason was that I didn't think my knowledge of French was sufficient to complete the European business degree programme with the Franco-German double degree. And I was also attracted by the opportunity to spend time on the British Isles.

You took a job at Henkel after completing your degree and have remained loyal to the company to this day. Were you already in contact with the company during your studies?

Yes, I first came into contact with the company back in 2004, when I did some practical training and then worked as a student trainee. I also wrote my final thesis during this time. Incidentally, the value-at-risk model for assessing currency risk, which I developed as part of my thesis, is still used at Henkel today.

A thesis that has lasted for years. What can you still apply from your studies?

Everything. I work with what I studied. (laughs)
I completed the German-British DBS AC degree programme with a focus on corporate finance and controlling. These are two areas in which I have already worked at Henkel and which I am still involved in today. I also specialised in other areas such as cost accounting, accounting and corporate taxation. In my opinion, it is difficult to take on a senior management position in a financial organisation without a sound basic knowledge of this entire range of topics. Ultimately, decisions are never made in a singular context. For example, my responsibility as Head of Group Treasury in the context of Group financing not only has a direct impact on our capital procurement and net financial position, but also on our financial result and indirectly on the tax result and therefore on our income statement. You therefore need to be familiar with and have an overview of the interrelationships.

You have held numerous positions within the Group and have worked in different sections and functions at several international locations. How did you get to these different positions?

The company pursues the so-called "Triple Two" philosophy when training and promoting its junior managers. This involves prospective managers going through several stages and working in at least two different roles, in two different business areas and two different countries. The basic assumption behind this approach is that working in different roles, business units and functions is good for personal development and improves understanding of Henkel as a global company.

In 2020, you took on your current position as Head of Group Treasury. How did you get there and how did you get the employees on board and convince them of your vision and plans? 

It was a multi-stage process. The first few months involved a lot of observing, learning and listening. Anyone who takes on something new and says they know how things work after eight weeks is exaggerating. That can't be true. (laughs)
During this phase, I developed ideas and plans that needed to be tested in the next step. I deliberately took the bottom-up approach and consulted the employees quite freely. For three months, small working groups developed ideas and wishes, which were then presented to me and my leadership team.
We brought this input together with the ideas from the management level and, with the support of an external strategy consultancy and also utilising the external network, translated them into a "Treasury Vision 2025" roadmap. In my opinion, external insights are important in such processes in order to avoid focussing too much on the internal perspective and stewing in one's own juices. You also need a certain amount of objectification and structuring support. And that's where our colleagues from the consultancy are simply very helpful. They were both a source of ideas and a challenger, but also a kind of service provider who brought our many ideas into shape. This resulted in this guideline at the end of 2020/beginning of 2021, which we will use as a guide for the coming years.

How do you define your leadership role in the creation and implementation of such a roadmap?

An important part of leadership is to develop a common thread, a vision, to show the direction in which things should go. You don't do this autocratically, but you don't do it democratically either. I think we have found a good middle way. One thing is very important: as a manager, you have to communicate, communicate and communicate again.

One of the company's major goals is to significantly reduce its ecological footprint, particularly in the area of packaging. What is the specific goal?

We have specific goals in different areas. Let's take one example: a large part of our business is in the consumer goods sector and, as you say, packaging is a key driver here. This is where we come in, on the one hand to achieve a USP (unique selling point, editor's note) with the consumer, and on the other simply for reasons of sustainability. One of our goals in this area is for all Henkel packaging to be reusable and recyclable by 2025.

How do you intend to achieve this ambitious goal?

Our experts are completely rethinking packaging concepts and are also examining further options for developing reusable and refillable packaging solutions that place greater emphasis on the value of longevity. You are also working on optimising transport packaging and the associated logistics.

What does the finance department have to do with this?

The topic of sustainability is playing an increasingly important role for the finance department and we have clearly set ourselves the goal of playing a leading role in this area. We implemented innovative solutions in the area of sustainable finance at an early stage. In 2018, we were the first company in Germany and worldwide in our industry to conclude a "green credit line" that combines interest conditions with sustainability criteria. In 2020, we took out an earmarked bond, a so-called "Plastic Waste Reduction Bond", totalling around 100 million dollars. In this case, earmarking means that the amounts raised may only be invested in projects that serve to reduce plastic waste. We raised this bond as part of a private placement (non-public issue of assets, editor's note), in which we targeted specific investors.

Did you take any further steps after that?

In 2021, we issued further, significantly larger bonds, this time on the capital market with a broad investor base. Although these bonds are not earmarked in terms of the use of the capital raised, the interest to be paid is linked to the achievement of certain sustainability targets. This type of bond is known as a "sustainability-linked bond". The sustainability targets used by Henkel relate to our target of reducing CO2 emissions and increasing the recycling rate. If we do not achieve these targets, this has a negative impact on the interest burden we have to pay.

What is the big idea behind all these measures?

Firstly, it shows that we at Henkel take a holistic approach to sustainability and that all areas of the company play their part. Overall, we are aiming to make our entire production climate-positive by 2030. And we mean that without offsets and compensation.

Where do you see the line between genuine sustainability and greenwashing?

Greenwashing ultimately means giving the impression of doing something in the area of sustainability management that doesn't correspond to the facts. As a finance department, we work very closely with our colleagues from Sustainability Management to ensure that this does not happen at any time. Every activity in the area of green finance must be able to clearly demonstrate that it offers added value in the area of sustainability. Our formulated targets are externally validated and correspond to the most ambitious targets currently being pursued in our field worldwide.

Was sustainability - green finance - already an issue during your studies?

When I completed my degree at FH Aachen in 2006, to be honest, it wasn't really an issue that I was aware of. When I see how Henkel and many other companies are working on sustainability today, it encompasses all sections. It's a completely different spirit than 15 years ago.