Schneider Electric talk sustainability, marketability and profitability
Mike Hughes and Schneider Electric found each other at the right time.
Working in the Black Forest for a company which was bought by the then rapidly-growing French energy management firm in 2000, Hughes has since enjoyed a career that has seen him master the full spectrum of Schneider in markets the world over.
From Taiwan to Paris and now to London, the new UK & Ireland zone President is ready to drop anchor and transform the fortunes of businesses operating in a host of energy-intensive industries.
“It was a mixture of business and private life that led me to this position,” he says. “I had already moved to London one and a half years ago, continuing my global customer account role based from here. My family has grown up and are attending university in London and settling down, so from a personal perspective it was the right move as well.
“My main priority is to make sure we get the key message out there about what Schneider Electric is trying to achieve – we are a company that is at the centre of a very exciting space at the moment. The big question is how we can continue to consume more energy without further polluting the world with carbon dioxide.”
Secret to Sustainable Success
An equally important question, and one which Schneider has just commissioned a report into, concerns the appetite of UK and Ireland businesses for adopting sustainable change.
The research looked into the responses of hundreds of company executives regarding how to deal with the challenge of driving profitable and sustainable business at a time of unprecedented urbanisation, digitisation and industrialisation.
“The awareness of the challenge is certainly there,” Hughes observes. “This is doubtless a positive thing. I certainly see a whole community that is acutely aware of the need to drive sustainability and energy efficiency.”
There is a dilemma, however. “Many see a predicament in meeting their short term quarterly or monthly performance targets and doing the right thing in terms of implementing sustainable practices for the medium and longer term,” Hughes continues. “That is the dichotomy of the market right now, and we just have to keep working on that.”
Throw the question of the UK’s departure from the European Union into the mix, and that short versus mid-to-long term dilemma becomes even more pronounced. “But has it changed the thinking and desire for sustainability?” Hughes asks. “Absolutely not. This is a topic that overrides politics. It is about brand image and profitability.”
There is no better way of proving this than through the showcasing of real life examples, something that Schneider Electric’s portfolio contains in abundance.
Hughes points to a recent project with Deloitte’s headquarters in Amsterdam. Not only did the multinational demand a user-friendly and enlightening space for its employees to work in, it treated the work as a financial investment. As a result, the building now produces more energy than it consumes and makes money by selling surplus power back to the Dutch grid.
“This is when it becomes real,” Hughes says. “You have to get across the fact this is a positive investment, not something that is done purely for environmental and company image reasons. There is a genuine business case for it, and this is a shift that is beginning to happen.”
This is true of Schneider Electric itself, which has forever been the greatest champion of its own technology and solutions.
“We don’t just go out and preach to the market what might be achieved,” Hughes adds. “We use our own technologies and reveal every quarter our progress towards carbon reduction – these are things we can also take to our customers and say: ‘this is what we have done’.”
Knowledge is power
Clearly Schneider is best-placed to implement its own ideas, its vast employee base well-versed in the latest technology and analytical skills to maximise the energy-saving potential of its services.
But what about companies lacking the necessary digital expertise? For Hughes, this is arguably the greatest obstacle to overcome over the next few years.
“People are little bit overwhelmed with the topic,” he says. “Everything is smart, whether it be smart buildings, smart infrastructure, smart cities and so on. All the devices are now being connected and people are getting information about what is happening in their building, what is happening in their oil and gas pipeline, what is happening inside their hospital.”
However, not all companies necessarily have the skills needed to manage this information. While some businesses are looking to address this by employing the likes of digitisation officers, it is starkly apparent that demand for this expertise is outstripping supply, a problem not confined to the UK and Ireland.
“It is a little like when the IT industry first started when the first PC came out,” Hughes recalls. “A whole new generation of job profiles that never existed before had to evolve, and I am in no doubt that the UK will master this latest generation of skills required.”
Schneider’s role is to produce solutions that are as simple as possible to understand, pulling together numerous data streams into dashboards and analytical insights in ways that do not overwhelm as Hughes alluded to. A requisite of this? Staying ahead of the curve.
“There are three ways we try to stay ahead,” Hughes explains. “First is R&D, the classical way. We invest 5% of our revenue every year into this, which currently is over €1bn (US$1.17bn). Second is acquisitions. We’re trying to bring in new technology and new people with new skills to expand our own knowledge base. We need people who think differently to us to integrate into the business.
“The last way is simply the practical experience we have built up over time. We have completed many, many projects in a number of sectors and are able to understand and retain knowledge of best practice.”
What was no more than a buzzword a decade ago is now ingrained into society writ large, and businesses failing to ingrain sustainability and energy efficiency into their operations and culture risk falling behind. Equally, the opportunities and rewards to be reaped are game-changing.
This is the clear message Schneider Electric will continue to push in the UK and Ireland, and Hughes believes the topic will become a major talking point in the coming decades.
“My honest advice is, if you’ve started that journey, keep going,” he says. “If you haven’t started that journey, why haven’t you? If businesses don’t embrace sustainability and energy efficiency, they are ultimately missing out on profitability and also a brand image story. Consumers are making choices every day based on the brand and the story of that brand.”
It is a challenge facing organisations in all parts of the world, something Hughes is acutely aware of given his first-hand experience of the past 20-plus years.
He concludes: “The future is electric and the future is digital. The challenge we have today is how we generate that electricity, and most of it is still generated by fossil fuels. Populations are growing, GDPs are rising and people want to consume more.
“This constant demand and how we feed that demand is the key issue, and Schneider has a big role to play in making sure we use that electricity as efficiently as possible.”
Trafigura and Yara International explore clean ammonia usage
Reducing shipping emissions is a vital component of the fight against global climate change, yet Greenhouse Gas emissions from the global maritime sector are increasing - and at odds with the IMO's strategy to cut absolute emissions by at least 50% by 2050.
How more than 70,000 ships can decrease their reliance on carbon-based sources is one of transport's most pressing decarbonisation challenges.
Yara and Trafigura intend to collaborate on initiatives that will establish themselves in the clean ammonia value chain. Under the MoU announced today, Trafigura and Yara intend to work together in the following areas:
- The supply of clean ammonia by Yara to Trafigura Group companies
- Exploration of joint R&D initiatives for clean ammonia application as a marine fuel
- Development of new clean ammonia assets including marine fuel infrastructure and market opportunities
Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said the agreement is a good example of cross-industry collaboration to develop and promote zero-emission fuel in the form of clean ammonia for the shipping industry. "Building clean ammonia value chains is critical to facilitate the transition to zero emission fuels by enabling the hydrogen economy – not least within trade and distribution where both Yara and Trafigura have leading capabilities. Demand and supply of clean ammonia need to be developed in tandem," he said.
There is a growing consensus that hydrogen-based fuels will ultimately be the shipping fuels of the future, but clear and comprehensive regulation is essential, according to Jose Maria Larocca, Executive Director and Co-Head of Oil Trading for Trafigura.
Ammonia has a number of properties that require "further investigation," according to Wartsila. "It ignites and burns poorly compared to other fuels and is toxic and corrosive, making safe handling and storage important. Burning ammonia could also lead to higher NOx emissions unless controlled either by aftertreatment or by optimising the combustion process," it notes.
Trafigura has co-sponsored the R&D of MAN Energy Solutions’ ammonia-fuelled engine for maritime vessels, has performed in-depth studies of transport fuels with reduced greenhouse gas emissions, and has published a white paper on the need for a global carbon levy for shipping fuels to be introduced by International Maritime Organization.
Oslo-based Yara produces roughly 8.5 million tonnes of ammonia annually and employs a fleet of 11 ammonia carriers, including 5 fully owned ships, and owns 18 marine ammonia terminals with 580 kt of storage capacity – enabling it to produce and deliver ammonia across the globe.
It recently established a new clean ammonia unit to capture growth opportunities in emission-free fuel for shipping and power, carbon-free fertilizer and ammonia for industrial applications.