Green Controlling @ Hansgrohe – Sustainability in the spotlight

by Siegfried Gӓnsslen and Patricia Frey

Environmental protection and resource preservation have long been important issues in
corporate management. The following contribution shows how this approach has been
developed and implemented through the Green Controlling solution at Hansgrohe
SE. It highlights the role of Controlling in the planning, steering and control of Green
Controlling solutions and the challenges faced by the Controlling function with respect
to methodology and role perception.

Sustainability by conviction

A fundamental pre-requisite for the successful implementation of Green Controlling is

the belief in sustainability and the desire to realise it. In the following example, both are
given. Hansgrohe is one of the pioneers of the sanitary industry with respect to en-
vironmental protection and this was already the case before ecological issues were a
focus for society in general. Environmental protection and resource preservation in the
context of the perception of corporate social responsibility have long been an integral
part of company philosophy. This is how Hansgrohe launched the manual shower
Mistral Eco as early as 1987, which used 50 per cent less water compared to standard
models. Marked by the close proximity to, and the daily contact with, the resource wa-
ter, a particular sense of responsibility for water and for the environment in general was
created and promoted.

Hansgrohe is convinced that sustainable returns require the inclusion of ecological and
social aspects in the management of the company in the long-term. This throws up ques-
tions:
How can the three dimensions of sustainable corporate management - ecology,
economy and social factors - be combined with each other in an efficient and system-
atic manner? How do the Controlling processes of planning, steering and control need
to be developed to achieve this outcome?

How is the Green Controlling solution designed?

The Controlling function at Hansgrohe has been developing a Green Controlling solu-
tion based on the three pillars below with strong support from Top Management since
2010:
 Efficient and systematic integration of ecological, economic and social aspects.
 Consistent integration of business processes.
 Development of suitable methodologies and expansion of the role perception of
the Controller in terms of sustainability.

The central requirement for the design of a Green Controlling solution is not to stall at
the development of “green” KPIs, but to establish Controlling as an effective sustain-
ability driver. These aspects can be found on all levels of our Green Company Pyra-
mid, a summary of which is presented in

Figure 1.

Figure 1: Green Company levels and Green Controlling contribution

 Level 1 - Vision
Hansgrohe sets the standard for environmental and health protection, in terms of
safety and quality of the products and services, as well as the handling of water and
other valuable resources. This aims to secure the business’ success and to assume cor-
porate social responsibility. This understanding and sense of responsibility has long
been an integral part of company philosophy.

The Green Controlling contribution to the implementation of the vision

The Green Company philosophy requires Controlling to uncover green opportunities
and risks. In autumn of 2011, a Sustainability Award was offered to employees.
These people were honoured for privately initiating ideas in the social and environ-
mental fields. The objective was - and still is - to anchor the visionary thought of sus-
tainability even deeper in the company and to utilise the private ideas of the employ-
ees of the company. Together with the management board and the specialist depart-
ments, the department of Controlling evaluated the submissions and selected the win-
ners. One of the winners, for instance, joined forces with over 100 like-minded people
to allow his community to become less energy dependent. Photovoltaic and biogas
plants facilitated a reduction of carbon dioxide (CO2) of over 150 tons. Hansgrohe is
convinced that the award offered enables the transfer of a private commitment to sus-
tainability into the company.

 Level 2 – Strategy and Objectives

Since 2011, five sustainability objectives - with respect to the base year 2010 - have
been anchored in the business plan. The achievement of these objectives is envisaged
within five years (comp.
Figure 2.)

Figure 2: Hansgrohe sustainability objectives

Anchoring of the objectives in Green Controlling

Naturally, Controlling is responsible for the creation of a database that serves as a foun-
dation for evaluating the achievement of the objectives. However, this is only the first
step. More importantly, it is incumbent upon Green Controlling to develop methods
that can ensure the quality and consistency of sustainability data. In addition, reliable
criteria must be defined that allow interpretation of the data and therefore furnish man-
agement with submissions to facilitate the decision-making process.
We specifically developed a Hansgrohe Sustainability Scorecard, which integrates
the three areas of sustainability (ecology, economy and social factors). Based on the
definitions of the Global Reporting Initiative and the Greenhouse Gas Protocol, they
include indicators ranging from the aggregated group level to the individual areas and
departments. The Hansgrohe Sustainability Scorecard is mapped via the Business Intel-
ligence Tool from SAP. To this end, accounting logics and indicators have been rede-
fined. The regular provision of the required data ensures that social and environmental
data can be reported in the same reporting cycles as financial data. We have thereby
created an indispensable pre-requisite for the integration of the three dimensions of sus-
tainability from the perspective of Controlling. This information is included in the Sus-
tainability Report, which is published every two years.
 Level 3 - Green Company Guidelines
In order to make Hansgrohe even more environmentally aware and in order to ensure
that social criteria are being considered in corporate management at all times, Hans-
grohe established relevant guidelines.

Establishment of guidelines in Green Controlling

Primarily, the criteria for sustainable investment decisions, which are compiled and
implemented by Controlling, must be mentioned here. These serve to ensure that the
ideology of sustainability is spread within the company. For a sustainable investment
evaluation, it is imperative that information about the social and environmental data of
an investment is present, in addition to the financial data. Therefore, the period of amor-
tisation is no longer the main deciding factor, but rather the holistic effect of the deci-
sion.
Green Controlling developed standardised Green Company investment criteria
(comp.
Figure 3) to ensure that this information can be generated without incurring a significant
additional burden. When a new plant is procured, the early planning stages therefore
already include an assessment of sustainability criteria. In doing so, both the criteria of
the individual plant and criteria with respect to the social and environmental behaviour
of the manufacturing company are taken into account. For instance, the existence of a
certified environmental management system, the use of hazardous substances in the
operation of the plant or the expected intensity of noise are decision-making factors.
Figure 3: Excerpt Green Company investment criteria

As it is unavoidable that a conflict of objectives will arise between the social, envi-
ronmental and financial aspects, Controlling at Hansgrohe decided against a stan-
dard procedure. In line with this, energy projects are implemented, even if the payback
period proves to be slightly longer. The objective is to focus the entire company on
sustainability. In the long-term, the individual investments must contribute to this ob-
jective, even if not all areas can be optimised in the short-term.

 Level 4 - Budget
In order to achieve sustainability objectives, a separate sustainability budget is
planned for each year, for which the management board is directly responsible. One of
the purposes of this budget is the financing of investments within the scope of the en-
ergy efficiency programme.

Controllers as business partners to secure the budget

In Green Controlling, unlike the ordinary budget, the maintenance of the sustainabil-
ity budget is guaranteed. Specifically, this means that any planned sustainability in-
vestments are also implemented in economically challenging times. The contribution of
Green Controlling is the collaboration in the planning, as well as the steering and con-
trol of the projects financed through the budget within the same year in the role of a
business partner. The monetary budget positions must be compared against sustainabil-
ity criteria, such as carbon dioxide reduction or water efficiency.

 Level 5 - Innovations
Sustainability should drive innovation, in terms of products and processes, as well as
business models (the aspect of processes will be dealt within a separate section). This is
based on the conviction that environmentally friendly and resource preserving products
guarantee organisational success in the long-term.

Green Controlling aims for more than short-term success

Green Controlling not only evaluates innovation projects from the perspective of short-
term financial results, but also from the understanding that sustainable technology or a
sustainable product can become the foundation for medium or long-term market
success. If Green Controlling concludes that an innovation has such a potential, it will
recommend implementation, even if no substantial return can be expected in the short-
term. This facilitates innovative projects with a sense of urgency and in large numbers.
In one such project, involving the Raindance manual shower, the realisation of several
100 million Euros of revenues since 2005 could be demonstrated with the Sustainability
Scorecard - this is monitored in the “Green Product Sales” figures each month. The
Raindance manual shower mixes water and air and thereby reduces the quantity of wa-
ter used. Throughout the lifetime of the product, the environmental impact is reduced
and the consumer enjoys reduced energy and water costs. A family of four is able to
save 24,000 litres of water and approximately 180 Euros in operating expenses each
year - thus, the end consumer also realises a Green Profit.
In 2011, Hansgrohe established an innovative business model; Smart Water Solu-
tions. The objective was, and is, the successful further development of activities in
the field of waste water recycling and heat recovery from waste water and the mar-
ket launch of the solutions found. This not only represents a substantial growth poten-
tial, which we want to realise for ourselves, it also provides an opportunity for the crea-
tion of entirely new markets. The decision would not have stood up against a short-
term calculation that did not account for sustainability.

 Level 6 - Processes
Sustainable success absolute requires a systematic scrutiny of, and improvement to,
organisational processes.

Green Controlling monitors the establishment of processes

In the year 2000, Hansgrohe integrated a standardised efficiency improvement pro-
gramme (Plus 21) into its processes. Controlling is responsible for the monitoring of
the achievement of various projects and potentials, as well as their implementation.
Since the middle of 2012, Controlling has integrated the query for the contribution to
the achievement of the objective into the Lotus Notes based software tool with respect
to the sustainability objectives defined (comp. Figure 4). This is an expression of Hans-
grohe’s clear commitment to the equal standing of the standardised progression of so-
cial and environmental aspects and the existing financial ones. Therefore, the process
improvement intention has been supplemented by these dimensions: social and envi-
ronmental.
Figure 4: Excerpt Plus21 sustainability data

Energy efficiency efforts are the backbone of current developments. The work group
“Energiewende” - energy revolution - has been established. Here, Controlling and In-
dustrial Engineering collaborate to systematically analyse production processes for en-
ergy efficiency and on this basis to implement and monitor improvements.
Even non-energetic production processes are continuously assessed for sustainable in-
novation. One example of this is the new process for the reduction of PFT in electro-
plating waste water which Hansgrohe developed with the support of the State Ministry
for the Environment. This undertaking was successful, both from an environmental and
a financial perspective: The PFT content was reduced by more than 90 per cent and in
addition, the new cost-effective process facilitated cost savings of 105,000 Euros, which
would otherwise have had to be spent on the expansion of the existing processes.

 Level 6 - Projects
“Hands-on projects” suggested by employees or entire teams are usually implemented
quickly. This includes the utilisation of motion sensors to automatically switch lights
and power outlet strips on and off, allowing for the complete switch-off of all power
users in the work place. A departmental budget is available for such measures, which
the persons responsible in each department can allocate autonomously. With re-
spect to the social dimensions, our health management regularly carries out campaigns.
For instance, we have a cycle day on which all employees are encouraged to come to
work on their bikes, or a lift-free day. Since 1996, Hansgrohe has provided each em-
ployee with a free job ticket. The employee suggestion scheme is also involved in mat-
ters of sustainability and regularly collects and evaluates sustainable ideas.
The international establishment of sustainability is targeted. In China, for instance,
the Hansgrohe Raindance Green Forest Project, a cooperative measure between
Hansgrohe China and the NGO China Green Foundation, was realised in 2011. A tree
was planted in the province of Gansu for each customer who purchased a Hansgrohe
Raindance shower pipe. The objective of the project was to create a small green oasis
for people in the poorer regions in the west of China in which to retreat or relax.

Green Controlling evaluates projects both from a quantitative and from a qualitative
perspective
Beyond the aforementioned aspects, Controlling was actively engaged in various pro-
jects: The company’s Green Car Policy aims to take account of CO2 emissions in
addition to the leasing costs when deciding on new fleet vehicles. Naturally, Controlling
supports all projects as a central point of contact for the quantitative and qualitative
evaluation.
Green Controlling at Hansgrohe affects all areas of the Green Company Pyramid. Con-
trolling processes are also applied to ecological and social issues. However, the holistic
consideration of the company leads to a high degree of complexity. The challenge for
the Controlling function is to reduce this complexity as far as possible and thereby fa-
cilitate the implementation of tangible objectives and the deduction of reasonable meas-
ures. The Sustainability Scorecard is a vital tool in this process.
How is the solution-finding concept innovative?

The Green Controlling concept at Hansgrohe is innovative in the simultaneous consid-

eration of the following three aspects:
 Efficient and systematic integration of ecology, economy and social issues by
means of a Sustainability Scorecard.
 The consistent integration of sustainability aspects into business processes
through the expansion of the investment guidelines and of the efficiency improve-
ment programme.
 Development of suitable methodologies and expansion of the role perception of
the Controller in terms of sustainability.

Green Controlling was not implemented as a “monster of figures” that creates ecologi-
cal and social indicators as an end in itself. Rather, Controlling supports Hansgrohe on
the path to sustainability by strengthening the anchoring effect of sustainability issues in
the company through the measures described. Controlling must contribute its part to
sustainability by providing the indicators, evaluating investments and solving situa-
tions of conflict together with the management. Thus, if the targeted sustainable in-
vestment fails to achieve the required payback period, the idea is not automatically re-
jected.
The Sustainability Scorecard supports Controlling in realising the role of a busi-
ness partner of the management. The financial reporting cycles are constantly short-
ened. In order to generate a holistic view of the company, the sustainability indicators
must be generated at the same time as the monetary figures. Hansgrohe therefore util-
ises a high degree of automation. Some indicators are already integrated in the man-
agement letter for the management board. These indicators serve the holistic planning
and steering, as well as the exercise of any required corrective actions.
Hansgrohe further interprets Green to mean more than just a focus on ecological factors.
With respect to sustainability, social areas, such as the well-being of employees, are also
taken into account.

How is the Green Controlling solution implemented and what role does
the Controller play in the design, implementation and application?

As described above, the Controlling solution is implemented across all levels of the or-
ganisation. This is based on the Green Controlling Roadmap. The Controlling de-
partment at the German headquarters provides the impetus. The approaches and meas-
ures are discussed with the subsidiaries and implemented consistently at an international
level. At the moment, reporting is carried out centrally at the headquarters and transpar-
ency for the management board is ensured. A reporting system for the different loca-
tions and departments is being developed to enable the subsidiaries to integrate sustain-
ability issues into their processes autonomously (comp.

Figure 5).

Figure 5: Excerpt Green Controlling Roadmap

The Controller plays a central role in the design, implementation and active application
of sustainability issues. He is responsible for recording the relationship of the objec-
tives between the three sustainability dimensions and thereby creates the content
framework for the steering of sustainability issues. In addition, he takes account of the
scaling of the objectives and is actively involved in the steering committee Green
Company. The steering committee is led by the chairman of the management board and
is divided into the strands Products, Manufacture, Procurement/Logistics, Market-
ing/Sales, HR and Controlling. At the same time, Controlling assumes a supporting
function for other departments, as well as the development of its own content.
However, the role of the Controller goes beyond the traditional Controlling tasks.
The objective is to identify the opportunities and risks with respect to sustainabil-
ity and to proactively introduce these to the company. The idea of the intrapreneur is
not far-fetched - sustainable ideas and aspects also come from Controlling.
This results in a number of challenges for Controlling. Above all, the role perception
of the Controller is challenged. Where sustainable corporate management is concerned,
a purely monetary consideration and evaluation of organisational development no
longer suffices. The self-image and perspective of Controlling must extend to ecological
and social factors. The company is convinced that Controlling can and must assume a
key role when it comes to becoming a pioneer in sustainable company management.
Controlling must fulfil its obligation as a driver of sustainability within the company
and make the sustainability objectives set by the corporate management operational.
This requires a new definition for the role (and the perception) of Controlling. The diffi-
culty we noticed in this respect can be expressed in the following question:
“How can Controlling perform its role as a business partner and at the same time drive
sustainability and be perceived as a driving force? Green Controlling can only be suc-
cessful if the relationship between established figures and an extended Controlling
perspective is successful. Finally, a sound financial basis is a pre-requisite for ecologi-
cal and social action.
The motto is “Green Controlling – Green Profit – Green Future”. Hansgrohe does not
view sustainability as an expense but as an opportunity for long-term success - and Con-
trollers make a significant contribution.

How can the result of the solution be evaluated from an economical

and an ecological perspective?

The result of the Green Controlling solution is thoroughly positive, both in economical
and in ecological terms. Therefore, the company will continue to develop the Green
Controlling strategy vigorously.
It must be noted that the company has in recent years realised revenues in excess of 100
million Euros from green products that reduce water consumption. Within the frame-
work of energy efficiency efforts, projects were initiated in 2012 that allow a CO2 sav-
ing of approximately 1,000 tons while simultaneously reducing costs by 360,000 Euros
per year. The payback period of these projects is approximately four years. All of these
projects confirm that investments in sustainability (can) lead to “Green” profit and
sustainable growth.