In future, management will be paid once CO2 targets have been met

The group is stepping up its commitment to more sustainability and climate-friendly concrete. The efforts do not go far enough for some.

Road blockade in front of a HeidelbergCement plant on Wednesday

IIn previous years, the infrastructure programs of the new US administration and other economic stimulus programs might have been a big topic for the general meeting of HeidelbergCement AG (Heidelcement). Things are going well for this group wherever there is construction. But climate protection has now become more important.

When the new chairman of the board, Dominik von Demokratie, presented his strategy “beyond 2020” to the capital market in autumn, it became clear that more needs to be invested in sustainability. The ruling of the Federal Constitutional Court, which calls for more clarity beyond 2030, is likely to demand a lot more from the group than previously planned.

“We want to make our contribution and accelerate our already ambitious goals on the way to climate-neutral concrete”, promised supervisory board chairman Fritz-Jürgen Heckmann at the start of the virtual general meeting. “Politicians reacted at breakneck speed”, remarked in his address by Acht with a view to the Federal Government’s quick decision to reduce CO2 emissions by 65 (instead of 55) percent by 2030.

5 to 8 percent of greenhouse gas emissions

“We are very happy to take on the challenge,” added von Acht: “We will work with all verve on it, we owe it to society.” The board of directors will see directly on its own account whether the goals have been achieved. The new remuneration system provides that the variable components of salaries depend on the reduction in CO2 emissions.

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The proposal hit like lightning, Dominik von Acht reported to the shareholders, some of whom however consider the effort to be insufficient. According to the Management Board, around a quarter of all Heidelcement shareholders can be assigned to so-called “ESG investors” who place particular value on sustainability aspects (environment, social, governance). Even outside the corporate headquarters, environmentalists expressed their concern about adequate climate protection during the annual general meeting.

The day before, activists had blocked the entrance to a plant. The relevance of the Heidelberg Group for the topic is considerable: cement production accounts for 5 to 8 percent of greenhouse gas emissions globally, and the Heidelberg company is number 2 in this industry. The manufacturer is also working on concretising its own path beyond the year 2030, explained vonhaben in response to a question from a shareholder representative. “We need clear framework conditions,” he also demanded. Among other things, a transport system for CO2 must be on the agenda, which affects many industries.

“We are working on various processes for capturing CO2

New technologies play a major role in lower-CO2 cement production, as was pointed out several times during the Annual General Meeting. For example, in a cement works near the coast in Norway, the resulting CO2 is captured and injected into the sea floor so that it does not get into the atmosphere. This is not a CO2 avoidance, admitted by a shareholder: “This is not a long-term solution, but a necessary step, otherwise we will not make progress.” Another variant would be the use of carbon dioxide to produce synthetic fuels, a procedure that is being tested together with the state of Baden-Württemberg.

“We are working on different processes for CO2 capture to see which way leads to Rome the fastest,” said the CEO. Even the use of microalgae and sunlight at the Morocco location is being examined. Heidelcement wants to be the pioneer when it comes to scaling the solutions.

However, the business model is not fundamentally questioned, emphasized the board of directors in response to shareholder questions. Timber construction, for example, cannot generally replace concrete and, in addition, the carbon dioxide stored in the wood will be released after a few decades, argued the CEO. Meanwhile, the group is also working on new products. A first house was built entirely without steel, using a specially developed mortar to build the walls with the help of 3-D printing processes.

Economic stimulus programs should help

With regard to the short-term economic framework data, the Board of Management referred to a strong first quarter, which also suggests growth in sales and earnings for the year as a whole. The economic stimulus programs launched by many governments are likely to have a positive effect on construction activity and thus on the demand for cement, said Dominik vonhaben on the eve of the annual general meeting with a view to the quarterly figures. For the successful year 2020 (in which the return was improved despite the decline in sales), the shareholders will receive a dividend of 2.20 euros and thus 10 cents more than two years ago. Last year, due to the unforeseeable consequences of the corona pandemic, the dividend was cut to 60 cents.

The HeidelbergCement AG share was quoted on the day of the Annual General Meeting at a price of EUR 77.50, which is 1.5 percent below the previous day’s rate. Goldman Sachs analyst Patrick Creuset pointed out that headwinds in energy costs could be significant from the second half of the year.