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Looking behind the figures

Dr Philip Lettmann studied economics in Germany, France and England.

Dr Lettmann, you have been a member of the Management Board at WALA Heilmittel GmbH since 2008 and are responsible for infrastructure and supply. This is a role that covers finance, environmental protection, IT and many other so-called support functions. What inspired you to join WALA?

Philip Lettmann:

This supporting and financing role is about enabling others, those working directly with our customers or products, to successfully carry out their jobs – from the procurement of raw materials, through research and development, to production and sales. From 2017 to 2019, this work also included the planning and construction of two new buildings with state-of-the-art technology: a new laboratory building and our new distribution and logistics centre. In all these activities, it is crucial for us at WALA that we work within the framework of a foundation company that is serving a meaningful purpose. The foundation business model was also a key factor in my decision to join WALA, and it continues to fascinate me.

What difference does it make that WALA is a foundation company?

Philip Lettmann:

The sole shareholder of the company is the WALA Foundation; we have no private investors. This entrepreneurial framework is the practical expression of a particular view of economics, one where the focus is on customer needs and other social requirements rather than on the capital value of a company. What do I mean by that? Business is first and foremost about the production of goods to meet the needs of others, of customers, and also to contribute to the development of society and the environment. The WALA Foundation was established in 1986 because the shareholders at that time wanted to make sure that their capital would always be put towards the company’s own goals. The fact that the corporate objective is to increase the capital value of a company is, in my view, a distorted picture of real economic activity.

As someone responsible for finances, you are criticising the focus on the financial value of a company?

Philip Lettmann:

Yes. If the sole aim of business decisions is to increase the capital value of the company, the so-called “shareholder value”, all the company’s other objectives and impacts, including social and ecological ones, are completely overlooked. Every decision is based on one single factor; all other considerations and criteria disappear from view. I love being responsible for finances – numbers fascinate me. But only when I’m also using these numbers to look at social and ecological reality.

What do you do differently at WALA?

Philip Lettmann:

Of course, we too want to make a profit so we can invest in the future. But as a foundation company, we are able to operate with a very long-term time horizon. This allows us to take a very broad view of our goals and the impacts of our actions. Profit in and of itself is neither good nor bad, it all depends on how the profit is generated and how it is then used. It is also a matter of identifying any conflicts between profit targets and ecological targets and addressing such conflicts in a meaningful way.

As a foundation, is WALA therefore in principle more sustainable than other companies?

Philip Lettmann:

This institutional form of a foundation cannot guarantee sustainability. But the foundation structure is certainly geared more to the long term, which shapes a company’s thinking and actions. In my experience, such a structure also attracts people who want to work towards meaningful, long-term goals and who are committed to the common good.
In addition to our structure, there is of course also a specific goal that steers our corporate value creation in a positive direction, ecologically speaking. We are, and always have been, committed to healing, as we produce special medicines and cosmetics that are based on natural raw materials. Seventy years ago, our founders were also “trendsetters” in ecological and sustainable business. At that time, this was not yet a relevant topic in economics or politics. Part of this sustainable added value is that our raw materials come almost exclusively from biodynamic cultivation – most of the medicinal plants we use are grown in own garden. In this way, we are also contributing to climate protection. But we cannot rest on our laurels.

What do you see as good starting points for environmental management?

Philip Lettmann:

Many improvements are spearheaded by our employees, who are very committed and are constantly sharing their ideas. Here, it is important to create the freedom necessary for this commitment to produce results. In recent years, we have also been constantly developing our environmental management system. We always consider technology, material and investment decisions from an environmental standpoint. If we deem it meaningful, we may make an investment in environmental protection or climate protection that will take ten years or more to pay off. This may sound simple, but it’s actually quite unusual in the business world.

Recently, even large listed companies have started to focus on socially meaningful goals and to speak of “purpose”, “stakeholder value”, “inclusive capitalism” and sustainability. Is it all just talk?

Philip Lettmann:

It certainly does not represent the big paradigm shift we actually need. But I do see a new seriousness in it, or at least a new effort in the search for solutions. Even major institutional investors have recognised that the exclusive focus we have seen in recent decades on increasing so-called “shareholder value” is destroying economic value.

What could a different economic paradigm look like?

Philip Lettmann:

The new only ever develops from concrete action. We try to provide a different image of economic activity through our actions as a company. We want to offer our customers excellent natural cosmetics and pharmaceuticals based on our knowledge of medicinal plants, supported by science and professional, modern process engineering. It is in working towards this goal that we believe we make the biggest social impact.
This has been and continues to be a very concrete, joint social process that involves our customers and our regional partners, as well as those all along the value chain. All our partners are concerned with much more than just enforcing their own self-interest. This is certainly not a finished new paradigm, but it is a different paradigm that is the result of many individual steps.

Is WALA also involved in the “search for solutions” you mentioned above?

Philip Lettmann:

We are part of an initiative dedicated to finding new corporate law forms for companies: SOTRUST – the society of trusteed corporations . The goal of this society is to come up with appropriate structures for entrepreneurs who want to make their company permanently independent and do not see private ownership as a prerequisite. These are therefore similar business structures to WALA. This search is becoming increasingly important – including in the start-up scene. Naturally, we are also involved in many initiatives and associations that promote sustainable development in the health sector, the economy and with regard to political framework conditions in general.

As Chairman of the Supervisory Board of the social-ecological GLS Bank, you are also active in the financial sector. What motivated you to take on this responsibility?

Philip Lettmann:

For more than 45 years, the GLS Bank has provided a successful and highly attractive example of a different way of handling money – of a banking system that assumes a social and ecological responsibility. It plays a decisive role as a pioneer of and driving force behind social and ecological innovations and is thus also making an important contribution to the paradigm shift. GLS chose the legal form of a cooperative, as this enables many people to participate directly in the development of their own bank. I find it fascinating to be involved in efforts to change the way we do business in the financial sector as well.

Thank you very much for your time.