In his monthly profile of sustainability leaders, Oliver Balch meets a man who is helping to transform the French energy-management firm with carbon pricing and science-based targets
Xavier Houot wasn’t looking to shift jobs when the phone rang in 2014. He was content working as a partner at international management consultancy BearingPoint after two-and-a-half decades with some of the industry’s big-hitters: KPMG, PwC, and (for six years in India) EY.
When the headhunter on the other end of the line said the role would be a senior sustainability function at a multinational, his gut said “not interested”. But the ever-polite Frenchman continued to listen. Towards the end of the caller’s spiel, two words caused him to prick up his ears: Schneider Electric.
“As soon as they mentioned this company name, genuinely I said, ‘Oh okay, I'm interested to meet the management’. … My entire life is about trying to align business success with the ability to decarbonise the world [and] Schneider is one of those few companies whose business models and value propositions are really part of the solution,” says Houot.
Schneider’s potential for driving energy efficiency and reducing power consumption, and its associated environmental impacts, is big
Paris-based Schneider Electric may not be a household name, but it is one of those companies that, once you’ve clocked them, you realise are everywhere. A global specialist in energy management and automation, its energy tech and software services provide what Houot likes to call the “backbone” of electrical distribution in buildings, homes, data centres, industries and grids.
If there is a circuit breaker, lighting control, panel board, transformer or electricity meter in your office or apartment block, then there’s a good chance that Schneider was involved somewhere along the line.
Enabling electricity to be distributed in a “safe, secure and sustainable” way is a task to which the company’s 140,000 or so employees in over 100 countries are dedicated, and one that nets Schneider around €26bn in annual turnover. So “big”, in other words.
So, too, is Schneider’s potential for driving energy efficiency and reducing power consumption, and its associated environmental impacts. This goes a long way to explaining why climate-conscious Houot’s interest was piqued during that call with the headhunter, and those priorities have preoccupied him since he took up the job as Schneider's environment chief.
Houot started with the carbon footprint of Schneider itself, which has committed (among other steps) to going 100% renewable by 2030, with an interim 2020 goal of 80%. With 16 months to go, the company is half way towards its target, but Xavier says he is “fully confident” that a combination of on-site solar projects, green tariffs, renewable electricity certificates and power-purchase agreements have set the company on the right path.
The 52-year-old clearly likes a challenge, else he wouldn’t also have convinced his leadership to sign off on 10 other commitments for the end of this decade. The pledges include defining a precise trajectory respecting the 2C scenarios up to 2050, adopting science-based emission reduction targets, and doubling its energy productivity (compared with a 2005 baseline), among others.
As part of realising these aims, Schneider Electric has signed itself up to a raft of stetching environmental initiatives. The list includes The Climate Group’s RE100 and EP100 programmes, which oblige signatories to measure and disclose their efforts to go 100% renewable and to increase energy productivity, respectively. At the Climate Summit in New York later this month, meanwhile, the company is set to deliver on its pledge to issue a comprehensive list of science-based emissions’ targets.
Houot has pushed the importance of adopting an internal carbon price from the get-go
With a similar end in mind, Houot has pushed the importance of adopting an internal carbon price from the get-go. Schneider Electric currently operates two parallel prices (€30 and €100 per tonne of carbon dioxide), the idea being that it covers for both short and medium-term scenarios.
“We use the two prices when we do network modeling and supply chain decisions, for example. Where should I locate this factory? Where should I locate this distribution centre? . . . We also use our internal carbon prices for large investment decisions. In the case of equipment, for example, this enables us to work out the full cost of ownership and more accurately measure the real payback time.”
The same step-by-step thoroughness dictates Schneider Electric’s approach to mitigating the energy-related carbon footprint of its suppliers and its client base. Its stated objective for the 2018-2020 period is to help knock 120 million metric tonnes of carbon dioxide off the latter’s energy-related emissions. Houot asserts that the company is well on track. Such confidence is backed up by the latest performance figures, which reveal a reduction to date of 70 million metric tonnes by the end of June 2019, 58% of the target total by the half-way point.
It’s a lot to take in. Not to worry: he’ll send some files over. True to his word, a deluge of documents arrives via email within the hour.
Viewed together, they scream “consultancy”. Houot is unapologetic about taking his former profession into his current role. Indeed, two of his latest hires (he has a global team of around 20) have crossed over from large consultancies.
Houot understands that business opportunity, competitive advantage, and impact on the bottomline are what gain traction in the boardroom
“For 25 years in my career, I worked with frameworks and with a business mindset, always thinking about how the business would be impacted. That’s helped me in my Schneider tenure so far, across all these [sustainability] topics,” Houot states.
Despite being socially engaged and a committed vegetarian, he doesn’t go hard on the ethical case for sustainability. He understands that business opportunity, competitive advantage, and impact on the bottomline are what gain traction in the boardroom.
And that has defined his approach in promoting circular economy models, which form a second central pillar in Schneider’s sustainability strategy.
The electricity management sector as a whole has a culture of service and repair, rather than disposal and replacement, so the idea is not new. What Xavier has brought to the table is naming such circularity for what it is and training employees and others to increase its uptake.
Since 2015, for instance, 185 of Schneider Electric’s industrial sites are certified as “towards zero waste to landfill”. But it’s the value to the business that Xavier is always keen to put first. Particularly the innovation piece. One example is the market opportunities that could arise from developing alternatives to virgin plastic for use in its products. (The company is at an advanced stage in various advanced chemical recycling projects with German chemical giant BASF). Another is the cost savings from the 43,572 metric tonnes of primary resources that the company has avoided thanks to circular design initiatives, recycling, retrofitting and take-back programmes.
Personable in style and passionate in belief, Houot has built up a bucketload of formal and informal alliances across the business, which help to maximise the impact of his relatively small, central team.
The question I am always asking myself is, 'Am I part of the solution to our planet’s problems or am I part of the problem?'
Nor does his well-honed management mindset prohibit him bringing the personal into play. The third arm to Schneider Electric’s sustainability strategy captures Xavier’s deep concern about the planet’s dwindling resources and the seemingly unremitting pressure on biodiversity.
The term he has coined for reducing such threats to the natural world is “life preservation”. In practice, the phrase encompasses the company’s work around reducing chemical pollution, preventing deforestation in its supply chain, and managing water responsibly.
“The idea of preserving life could be the entry point into sustainable business for all sectors . . . ultimately, it invites the question I am always asking myself, which is, “Am I part of the solution to our planet’s problems or am I part of the problem?”
He has linked up with the Global Footprint Network, a research organisation specialising on the planet’s biocapacity. The two have been working together to determine a “planet-compatible” growth path for Schneider Electric.
In the same vein, Houot led a vocal campaign to mark Earth Overshoot Day (29 July): the date when we as humanity have exhausted our annual resource budget. Every litre of water and every tonne of timber we use after this date cannot be replaced by nature.
This isn’t about shaming the private sector, he insists. It’s about waking companies up to the potential that truly sustainable business models hold for long-term economic success.
We can assess where we stand now, what the trend is, and where we want to move towards
Alongisde the campaign, Schneider Electric issued a white paper on “one planet prosperity”. In the introduction to the report, Xavier commends the Global Footprint Network for providing a “simple, quantitative and robust analysis” of humanity’s ecological overshoot. Manna to a consultant, in other words.
“We can assess where we stand now (1.75 Earths), what the trend is (the date of Earth Overshoot Day moving backwards every year), and where we want to move towards (back to 31st of December and beyond).”
Problem, context, goal-setting: it’s Consultancy 101. And, as Schneider Electric’s ongoing progress on sustainability testifies, that’s no bad thing.
About Schneider Electric
Schneider Electric is leading the Digital Transformation of Energy Management and Automation in Homes, Buildings, Data Centers, Infrastructure and Industries. With global presence in over 100 countries, Schneider is the undisputable leader in Power Management - Medium Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide integrated efficiency solutions, combining energy, automation and software. In our global Ecosystem, we collaborate with the largest Partner, Integrator and Developer Community on our Open Platform to deliver real-time control and operational efficiency. We believe that great people and partners make Schneider a great company and that our commitment to Innovation, Diversity and Sustainability ensures that Life Is On everywhere, for everyone and at every moment.
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