Name: Innovation Forum 2024: The Green Tech Paradox
Uploaded: 2024-03-27
Duration: 15 min 27 s
Description: Jean-Pascal Tricoire, Chairman, Schneider Electric In Conversation With Claire Zillman, Fortune

Jean-Pascal Tricoire, Chairman, Schneider Electric In Conversation With Claire Zillman, Fortune

Innovation Forum 2024: The Green Tech Paradox

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Brainstorm Innovation Forum 2024: The Green Tech Paradox

So you're Chair of Schneider Electric now, but I wanna go, you were CEO before um from 22,006 to 2023. And the company under during your tenure just had really extraordinary growth. And I'm wondering if you can kind of just briefly walk through some of the pillars of that growth that really built Schneider into this sort of green, the green giant that it is today. Well, first, it's great to be with you. Uh Good evening to all. Uh it's a late session. We'll try to keep it animated. But when you speak about Schneider, many people don't know us. So as a disclaimer, we don't do elevators because people confuse us with Schindler. Normally Schneider is really a world leader in the field of electrification. Um When you speak about the transformation we drove over the past 20 years, we had the intuition on the strong conviction that the world of energy was in a deadlock. So we had to re invent because on one side, you have to provide energy to many more people in the world. On the other side already 20 years ago, people were starting to speak about carbon emission and climate change. Um personally had lived in China in the nineties and I was in emerging countries of which Africa and you soon realize that energy is your passport to decent life. But at the same time, energy is the first source of pollution, of disruption and everything. So we embarked 20 years ago to be championing sustainability thanks to technologies and we bet on two technologies mainly one is digitization and it seems obvious today. But at that time, nobody was speaking about IOS internet of things. So it was the episode two of digitization, bringing internet to machines so that we would be much more efficient in everything we do. On. The second one was electrification as a factor of decarbonization because the only way to eliminate carbon is to take out combustion and the only way to take out combustion is to refer to or to recur to clean electricity. So electrification digitization that brings we became partner of our customers in the field of sustainability. We are the partner today of 40% of the fortune 500 companies in establishing a goal driving solution. Or um the last bet or the other bet we took is to say that probably the biggest acceleration that would happen on those transitions would come in countries which have no legacy. And therefore we re embarked in new economies today. If you look 20 years after fast forward, we multiply by four, the size of the company, we multiply by 10 in Asia and in new economies, we multiply by five in North America. And the company has seen its market cap being multiplied by 12, but just by having 20 years before on much earlier than probably others, a different view of energy which is efficiency first, decarbonization, first on term to sustainability. And one of the things that, that Schneider does that I think is interesting is, you know, retrofitting buildings to be much more energy efficient through the digitization automation electrification. When we talk about a building like this, the hotel we're in now, can you just give us a sense of what Schneider can do to make this building more efficient? Well, number one, connect everything. So going to so saying, making sure that once everything is connected, the building adapts to what the people do on most of the buildings too, they don't do that. So when the room is empty, making sure that there is no energy or consumption and so on. Number three, apply on a niche software A I for to optimize everything the the life cycle of the building. So optimize every phase from design to build, to operation, to maintenance, making sure that everything is optimizing your building, heating, water, everything and and manage your company, not what we used to do before, which is building by building room by room, but making sure that you can manage your company on a holistic basis and we do that here with number of reputable company. I won't say I won't cite all of them, but we have done a digital repository for Swire from Han Nung and from other, other companies. And you were really an early adopter of this. Um uh So the philosophy that's really popular with CEO S now that you're gonna center your management strategy around the planet and around society. And I'm curious sort of, what about your personal background and experience really led you to sort of take for, for that approach to sort of be on your radar so early. Look, there is first the fact that climate change, right is probably one of the biggest challenges of of our generation and it has different expression. We speak about climate change as a as a big idea, but it can be droughts, it can be water shortages, it can lead to typhoons here in Hong Kong and major disasters. So it has already strong social and economic consequences. Then when you look at what we do, which is energy management, it's not complicated. Climate change is 80% due to carbon emissions and carbon emissions are 80% due to the way we use and produce energy. So when you speak about climate change, normally media and government, they all speak about generation like renewable, nuclear coal gas and things. But when you think about it in the story of humanity, energy transitions to something which is net zero never happens through the through the supply, there won't be more electric cars because there is more electricity. Actually, there is not more electricity. As we speak, there would be more electric cars because California and China have started a movement that goes very strong in the direction of electric cars. And with that in 10 or 20 years, we are going to decarbonize transportation which is 30% of carbon carbon emissions in the world. So we saw that our mission was to enable this transition of the demand, making sure that every building would go to net zero, every industry would go to net zero, every city would go to net zero on making sure so and we are the biggest supplier of energy to data centers that we would put together the digital infrastructure, not only for us to live in the digital age, but to make sure that everything would be connected and everything could be optimized. It took some time to be understood. But then the world keep from turn and then we had a lot of momentum on the route of advance on our competition on V CS. What created the dynamics I was describing before? And what about the buy? I mean, you you undertake this big mission. What was the response like within the company within your board among shareholders? Um When you sort of launched this big push towards sustainability, was there push back? Or I have to say I put from day 1, 2003, I became CEO of the company on Sun CEO. Day one, I put slides about sustainability in each and every of my presentation. I can say that for investors for 15 years, nobody was caring till there was 2015, the cop 21 but more important in 2019, um some of our investors starting with Black Rock Clar started to send letters saying we all view account. We we all do accountable UC OS, not only on the financials, but on the all impact you have on your environment and then it became mainstream, right? So I'm gonna give a few examples for the people who could doubt of that. The first one I from the origin, we belong to the United Global Compact. We are part of the because Global Compact gives you a sort of compass to all the companies who want to work together in that direction. Last year, another 3000 companies joined the Global Compact at the time when people could speak about the backlash against cag. But you see that movement, you've got 3000 companies who've signed to be Net zero on being certified through S BT. Those 3000 companies are tagging along or taking along thousands of other companies who are their suppliers on scope three and we are part, of course, we are company 59 on, on that group of companies. So the movement is taking place and it's a sort of snowboarding because I take Schneider 99% of our footprint is with our ecosystem. So when we took that commitment to be net zero by 2050 then we are taking along our suppliers, 1000 suppliers, we bring 100 million tons of saving to our customers. We help the communities to get access for the first time to green energy. 50 million people who didn't have access to energy, get access to energy. Thanks to what we do and investors react positively to that. So last year we are one of the top three companies in which the ESG fund are investing. So that has driven a lot of rating or positive rating for Schneider. And you've seen the share price going up very fast. So when you do that, number one, you need to align the purpose, the strategy, the mission of your company with EG and to do it very rigorously. Number two, you need to have the right governance. So for us, we have a committee at the board, we have a representative at the executive committee and we have a stakeholder committee which challenges the decision of the board, taking other stakeholders point of view. Number three, you need to embark your own ecosystem, customers, suppliers, employees shareholders, they have to, yeah, they have to be consistent with what you have described. Number four, your culture and therefore the people you choose. But when you live like me a community of 150,000 people in 100 countries. It's not only good to have one very clear purpose which is aligned on something positive because sustainable means that what you do is sustainable by definition. But it's also super important that people know how to do things. Um eeg allows you to define ethical, ecological, social sort of standards that you want to adhere to. So all of this was actually demanding at the beginning needed a lot of explanation. But suddenly the people who join you are people who believe in those things that mean your company in the right tail winds because what's sustainable actually brings a lot of growth. And one thing if you are the CEO is to derisk your company. So making sure that you have strong standards in terms of CG is bringing is decreasing, noticeably all levels of risk in the company. So more opportunities, less risk that brings normally good results. And you mentioned cop and you were there again this year. Um And when you were there, you, you um you shared this sort of remarkable stat or at least I find it remarkable that 70% of carbon emissions today can be eliminated with today's technology. And I I find that very reassuring actually that we don't need some, you know, huge breakthrough. We have some of the tools um to do that to, to really um bring down emissions today. But my question is So, so what's the hold up? You know, why aren't we making more progress or more rapid progress on cutting emissions? I think, because human beings are very, very slow to embrace change. Uh Think about it. I had my first internet connection when I was living in China in 9495. And it took another 10 years to get Facebook and probably another 12 or 15 years to get tuba and all of this could have been possible much earlier, not completely because you needed the smartphone as the as the other innovation to to enable that. Um Let's let's look at at the reality today. If you start by saying that the real transition is starting with a demand. I mean, if your building is net zero, then you put no pressure on the supply or if your plant is not zero, like we help Takida in Singapore to be 15% energy positive in a place which is constrained in terms of energy. Then suddenly your manufacturing is becoming positive in uh in Singapore and you can apply that to uh uh many, many things. But the technologies which allow us now to do that are completely different from the one that we used even 10 years ago. Smart buildings. Everybody is speaking about small buildings, you go to Europe and the US, less than 10% of the buildings are smart and buildings are representing 37% of energy consumption on carbon emissions. So before speaking about moonshots and doing whatever nuclear fusion and those kind of things, let's make sure that all of the buildings are connected and they are very energy efficient and they can load and store energy when energy is cheap and green when the solar panels are working on the, when the windmills are pro producing energy. Um I look at the buildings around me, even here in Hong Kong, there is not much solar panel and there is a lot of sun which is available. So when you speak to the construction industry and you spoke about the building, so I stick here or I stay here. Um When, when you speak about efficiency, many people will speak about windows and roofing and this is very expensive and this takes a lot of money and a lot of time um you apply digital to most of the buildings, you're going to get the same result for 1/10 of the cost and 1/10 of the time. Um And it's exactly the same thing as with the internet. Today. People have not yet integrated the capability. Uh And with that on the top of it, once you have digitized, you can connect to the grid, the smart grid. And we are doing for instance in Hong Kong, the grid smart with C LP and you can make sure that your buildings on your homes are loading energy when it's cheap and green. So all of this has barely started. But this is very exciting for the next years to come. So what I'm saying is that before thinking about the big revolution that just deploy what we have because time time counts, right? Carbon is not, it's it's it's integrated, a ton of carbon that we save today has 10 times more value than a ton of carbon we save in 10 years time. So time is really important. Great. Well, we will leave it there. Thank you so much for being with us and for giving us some actionable steps as we look to cut emissions and hopefully have a greener future, go digital and go electric. Ok. Thank you. Thank you. Thanks so much.