Karl Borgschulze has extensive experience in sales, supply chain, and sustainable product development across various national markets, focusing on value chain optimization, sustainability market strategies, and innovative business solutions. He has also been invited to give lectures on sustainability management at several universities.
Continued from Part 1
CEC: Some manufacturers believe ESG is too complex and prefer to outsource compliance matters to intermediaries. Do you think this outsourcing model is wise?
KB: I believe this approach carries significant risks. The responsibility for compliance cannot be shifted to others. Ultimately, it is your factory. Buyers are also establishing cross-departmental verification mechanisms, enhancing certificate validation and factory audits. If there are issues, they will eventually come to light. Therefore, it’s best to keep compliance matters in-house.
We must shift our perception: ESG is not a chore to please customers; it’s about establishing a balance among economic interests, environmental protection, and social responsibility.
Every company needs to coordinate these three dimensions. Currently, many companies lack intelligent management systems that can integrate all three. By developing such a system, you will find that focusing on energy efficiency and emissions reduction not only improves energy performance but also creates cost advantages. Viewing employees as partners rather than cost burdens can foster a proactive team that drives business growth. Companies that can successfully manage these three dimensions will be the ones that survive in the long term.
From my own experience, I collaborated with many German companies 25 years ago; all the companies that acknowledged sustainability issues are still thriving today. While some have slightly altered their business models, they have survived. Conversely, many companies that refused to consider sustainability have since gone out of business.
The world is currently witnessing a wave of corporate eliminations, and brand retailers and suppliers will undergo significant restructuring. Only by transforming current burdens into development opportunities can we write a true success story.
CEC: Can you provide examples from your experience that illustrate how investments in sustainability have helped companies address challenges in the current economic environment?
KB: There are various assessment systems in the current market. When working with companies, our role is to help them achieve higher ratings across different ESG assessment frameworks.
One of our clients collaborates with a large European automotive supply chain. This supply chain is substantial, primarily composed of German companies, and has very stringent ESG requirements; suppliers must meet standards before collaboration is possible. By assisting the client in improving their ratings, we positioned them more favorably in negotiations with supply chain clients.
Today, business competition is no longer solely focused on price; meeting ESG requirements is equally critical. If a company can achieve a good rating from authoritative assessment bodies, it will enhance its market competitiveness.
For example, when a client’s goods were held up at German customs, we were able to prepare all the necessary documents within days due to the integrated ESG management system the company had established, allowing the containers to be released. This is a competitive advantage; without such a system, the customs clearance process could take weeks or even months, resulting in potential future order losses.
CEC: Recently, the Trump administration officially overturned California’s plan to ban the sale of new gasoline-powered vehicles by 2035. What impact do you think this will have on the advancement of ESG-related policies?
KB: Let’s wait and see.
The Trump administration is attempting to roll back relevant policies to 1985 or some other point in time. However, this clearly will not be the end of the story.
For instance, consider China’s booming electric vehicle market. The development of ESG may encounter some twists and turns, but its future is unstoppable. Change will come, and even if the US does not join in, other markets will support this trend.
Moreover, I am confident that in the coming years, there will be numerous legal battles related to this issue in the US. I reiterate that while the development of ESG may face obstacles and disruptions, electric vehicles represent the future, and this trend cannot be blocked. Even if it takes a few more years, it will eventually be realized.
CEC: In your opinion, can digital tools or artificial intelligence promote the advancement of ESG?
KB: Artificial intelligence will play a significant role in ESG and many other areas of business.
For our part, we are actively promoting AI-related solutions externally; internally, we are also leveraging AI to empower various teams, from sourcing and marketing to supply chain management.
AI will fundamentally change product development models, design concepts, and supply chain production methods.
Data will undoubtedly become a core element—the future of sales will not just be products, but data + products + stories. Only products with data that can tell a complete story will become bestsellers.
Take the digital product passport being implemented in Europe, for example; companies must have comprehensive data covering the entire supply chain. In the US, providing complete data support is also necessary for smooth customs clearance.
From any perspective, the demand for data has become a universal standard. Furthermore, artificial intelligence will drive countless changes in the future.
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• The content of this interview reflects only the views of the interviewee and not necessarily those of Chief Executive China or Global Sources.
