Button for menue
  • Dear Readers!

    This editorial was written and ready for print and focused primarily on the EU’s Green Deal. And then coronavirus spread around the world and the text had to be revised. Despite the current situation, though, the Green Deal remains one of the most important projects for the European circular economy. And many other things have happened as well – the question surrounding DSD, for example.

    It is now official. On 22 April 2020, the first Cartel Panel of the Higher Regional Court [Oberlandesgericht] of Düsseldorf dismissed our appeal against the Cartel Office’s decision. Their ruling surprised us as we were sure that we had the better arguments in favour of us acquiring Duales System Deutschland GmbH. But we live under the rule of law and we will, of course, accept their decision. What we need to do now is to take the time required to take a detailed look at the Panel’s reasons for dismissing our appeal and then carefully decide what our next steps should be. In light of the fact that all other major competitors operate in this market, it will be interesting to see to what extent REMONDIS will get involved in the Dual System in the future.

    It is not so easy to look ahead at the moment, though, faced with the current coronavirus emergency. When the first media reports came through on 29 December last year that China had informed the WHO that it had an unexplained cluster of people suffering from an unidentified lung disease, no one realised just how hard or how fast this virus would affect the globalised economy. It is practically impossible to estimate the costs incurred by the economy grounding to a halt as a result of the virus. And it is not just the private sector that has felt the impact. Many city and district authorities were already in financial difficulties before the crisis began. Their situation can only get worse, now that their revenue from local business tax and their takings from their local amenities have plummeted. Maybe it is time to set aside old arguments and enter into long-term partnerships with the private sector that will benefit both parties – especially when it comes to delivering essential public services. Setting up public private joint ventures dedicated to providing essential services could help mitigate the consequences of the crisis. At the end of the day, ‘a load shared is a load halved’. One positive coming from these unprecedented times is the increased sense of solidarity among the population and towards many sections of the economy. REMONDIS, too, is there to help and support its municipal partners – during this crisis more than ever.

    Past pandemics have rarely lasted longer than two years. At some stage – whether with or without a vaccine – public life and business will return to normal. This will be the moment when it will become clear to all that our planet’s biggest problem – climate change – has not solved itself. Once again, the spotlight will be turned on the European Union’s Green Deal. Looking at a list published from within the EU, there is a danger of important regulations being watered down, especially in the area of the circular economy. In contrast, the German National Academy of Sciences, Leopoldina, expressly advises against neglecting climate action and environmental protection following the Covid-19 crisis in its ad-hoc statement published on 14 April 2020. In fact, it recommends the exact opposite. The economy must be kick-started so that it can grow again and should, it says, be “guided more firmly than before by considerations of sustainability, not least because this offers vast potential for economic growth.” Climate change is and will continue to be the biggest challenge for the future and REMONDIS, being one of the leading water and recycling businesses, will continue to put forward its solutions and play an important role.

    With this in mind: stay safe and stay positive.

    Thomas Conzendorf

Huge economic impact

The global coronavirus pandemic is changing the way we live and work. Supply chains have been disrupted or are in danger of collapsing altogether. Besides being forced to deal with the unpleasantness of social distancing, people are having to increasingly cope with the economic effects of the crisis. And, with no vaccine or suitable therapy yet available, nobody is able to say when life will get back to normal. What is clear, though, is that both large sections of the economy and municipal budgets have been badly hit by the pandemic. With many city and district authorities already being in a precarious financial position before the Covid-19 crisis began, the backlog of investments is likely to get even bigger. It is time, therefore, to rethink the way problems have traditionally been solved and to enter into long-term partnerships with the private sector to ensure essential public services are delivered.

  • “The idea, the infrastructure and the services should be further developed as efficiently as possible both with a long-term view and in the interests of the local citizens. All three should be seen as being more important than the prospect of generating short-term one-off revenue.”

    Ludger Rethmann, REMONDIS Board Chairman

All areas affected

The coronavirus crisis has meant that council revenue has plummeted. Business tax income has dried up, theatres, swimming pools and exhibition centres are closed (and still generating costs), regional airports, municipal hospitals… practically all public sector areas have been affected. Over the medium-term, fees and charges may have to be increased, pushing up the bills local inhabitants have to pay, many of whom are themselves facing financial ruin as a result of the pandemic. Just how big this problem is can be seen in the City of Wuppertal. On 21 April, the City’s treasurer, Dr Johannes Slawig, appeared on the “Tagesthemen” show (Germany’s most important news programme) to describe just how dramatic the situation is in this city with its approx. 350,000 inhabitants. He believes Covid-19 will cost the city 150 million euros – and this was just a conservative estimate.

People’s everyday lives are being impacted by social distancing and the economic effects of the Covid-19 pandemic.

As councils search for a way to overcome their problems, the spotlight is once again being turned on public private partnerships. Over the last few years, many councillors have dismissed this business model both for political reasons and because a number of negative examples involving infrastructure projects have made them sceptical. Long-term partnerships, however, set up with private sector businesses – in particular to deliver essential public services – create benefits for both parties and not just in the face of the extraordinary burdens caused by Covid-19. Public private partnerships dedicated to providing essential services could prove to be one of the ways to successfully get through this crisis. At the end of the day, ‘a load shared is a load halved’.

Core services are becoming more complex

“There is a growing need for alliances. The task of providing essential public services is becoming increasingly more complex and more complicated. Just one example here is waste management. The old waste dumps – a thing long gone – and the almost complete recovery of raw materials for re-use, i.e. the circular economy, are poles apart. It is practically impossible for local authorities to set up all the technical and technological resources required to run top quality recycling operations. And, from a business point of view, it makes absolutely no sense to build and operate plants that a city or district could never run to full capacity as they generate only a fraction of the materials needed,” writes Professor Michael Schäfer in his book “Öffentlich-Private Partnerschaften” [Public Private Partnerships], which was recently published by Springer-Verlag and written together with co-author Ludger Rethmann.

PPPs dedicated to providing essential services could be one of the ways to successfully get through this crisis.

What is also true is that setting up a joint venture for the wrong reasons can lead to unequal partnerships. And desperation is rarely a good springboard for setting a new strategy. A local authority, therefore, that is weighing up whether to enter into a public private partnership to provide essential public services should never see this option as a way to achieve short-term relief or be prompted to do this by an acute emergency. On the contrary, a joint venture between the public and private sectors is a suitable means to unite economic and business know-how with municipal responsibilities and close customer ties over a long-term period.

Core services are becoming more complex

“One of the determining factors behind the success of such a partnership is the reason why it was set up in the first place. The idea, the infrastructure and the services should be further developed as efficiently as possible both with a long-term view and in the interests of the local citizens. All three should be seen as being more important than the prospect of generating short-term one-off revenue. Collaborating with a large and well-established private sector business, which has both the know-how and the financial strength to invest, can enable local authorities to bring their current offer into line with the latest technical capabilities and, where necessary, with changing requirements,” co-author Ludger Rethmann, REMONDIS board chairman, writes in the book, describing the potential of such partnerships. “It is, therefore, both a sensible and smart decision when a local authority, which is responsible by law for these services, searches for a partner that already has the infrastructure needed or can deploy it for such a large number of users that it can be performed profitably. One of the keys to the success of such a joint venture is the close collaboration between the managing directors, one of whom is always from the private sector firm and the other a representative of the local authority. This enables the very most to be made of the know-how of both managing directors. The power of decision here normally lies with the public sector partner in line with the size of their shareholding.”

Would you like to find out more about PPPs? Further information can be found in our special issue 

REMONDIS is a family-run business with strong ties to the regions it operates in and is not a listed public limited company with widely held stock. The firm, therefore, thinks and acts on a long-term and sustainable basis adapting its services to reflect the needs of the local, city and district authorities. Enabling the public sector partner to access know-how, innovation, business expertise and long-term planning security – this is the essence of public private partnerships dedicated to delivering essential public services.

© 2020 REMONDIS SE & Co. KG | Imprint | Disclaimer | Image credits