1 December 2023
Schneider Electric – Sustainability as a Competitive Edge and Driver of Growth
Schneider Electric is a brilliant example of a company turning sustainability into a competitive edge and a driver for growth. By embedding sustainability into its operating model, it has created significant competitive differentiation. This is credited with helping this French multinational, which produces specialized digital automation and energy management solutions, grow its annual revenue from $9 billion in 2003 to $34 billion in 2022.
In recognition of its work in sustainability Schneider Electric has been named number one in Sustainability Magazine’s top 100 companies, building on its 2021 number one ranking in the Corporate Knights index.
Schneider Electric’s long-serving chief executive, Jean-Pascal Tricoire, said the company acts as “doctor and pharmacist” to global companies by diagnosing their sustainability problems and providing the technology to meet their goals.
Tricoire gave this example of how Schneider Electric works: “Walmart came to us because they want to be greener. But 90% of the [environmental] footprint of Walmart is with its suppliers. So they contracted us to work with their thousands of suppliers to help save 1 gigatonne of carbon over the next 10 years.” According to the Guardian, “by the end of 2020 more than 2,000 of the US retail giant’s suppliers had saved more than 230m tonnes of carbon – almost a quarter of the 10-year target – after Schneider helped them to adopt renewable-based energy systems”.
Gwenaelle Avice Huet, Executive Vice President of Europe Operations lays the success of Schneider Electric’s sustainability success on a 3-pronged strategy: Strategize, Digitize and Decarbonize.
Schneider Electric started out some on this journey 20 years ago, and over the years have set out a clear road map and governance framework. Their current plan has 6 long term commitments (which unusually and interestingly include, “Harness the power of all generations”, and they claim that their 130,000 employees span five generations.).
Underneath these long term commitments sits Schneider’s sustainability impact programme including 11 global targets to be met by 2025, and these are complemented by hundreds of local goals led by regional and country teams. The company publishes progress on the global targets goals on a quarterly basis in a dedicated report.
Sustainability is firmly embedded in Schneider Electric’s culture. It’s core to all its research and development and each new business model is built around sustainability goals. New products must, where applicable, improve energy efficiency, use more sustainable material and help to develop a circular economy.
Schneider Electric’s stated mission is “To be your digital partner for sustainability and efficiency”.
They use digital transformation to help their clients become more efficient, reduce costs, and meet their sustainability goals. The Intercontinental Hotel Group with 6,000 hotels, many of them franchised, across 100 countries have partnered with Schneider Electric to set up IHG Green EngageTM, an innovative online sustainability system that gives all hotels within the portfolio the tools to measure and manage their impact on the environment. The hotels can choose from over 200 “Green Solutions” designed to help them reduce waste and their energy and water use to have a positive impact on the environment.
Schneider Electric is predicting rapid innovation from AI: “We are only just beginning to appreciate the power of AI and machine learning to transform business processes and create sustainability dividends. Faster, more powerful solutions are becoming available each year. By continuing to spur innovation, businesses will set a clear course for achieving the progress stakeholders expect of them.”
The third prong of Schneider Electric’s approach to sustainability is decarbonization.
Avice Huet wants her customers to think about reducing their overall demand for electricity, not just focusing on turning to renewable sources of energy. Much of Schneider Electric’s technical innovation is focused on this, so for example they provide sensors and software to optimize a building’s use of energy and through this comparatively simple step are reducing the energy consumption by 20 percent to 30%.
As we begin COP28 it would be a considerable step forward if more businesses could emulate Schneider Electric’s success in leveraging sustainability into a competitive edge which has been the key driver in quadrupling their turnover over the past twenty years.