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Q&A with Xavier Houot: Schneider Electric’s business model aims to #movethedate

Schneider Electric initiated a broad partnership with Global Footprint Network on metrics, innovation and stakeholder engagement. It also includes sponsoring the new Footprint Calculator. We partnered because Schneider Electric’s business model is closely aligned with getting humanity out of ecological overshoot.

It is unfortunate for the world that only few companies have such a business model. Therefore, we are doubly excited to collaborate with corporate partners who have recognized what’s needed not just for sustainability, but for their own success. As sustainability becomes the driver of a company’s business success, it also expands the company’s own long-term viability. That’s why Schneider’s CEO rigorously monitors how many times more Footprint Schneider helps its clients save compared to what it takes to run Schneider Electric.

We recently talked with Xavier Houot, Senior Vice President Safety, Environment, and Real Estate, at Schneider’s offices in Paris about the company’s strategic outlook.

How did you first become acquainted with the Ecological Footprint metric?

I’ve been an environmentalist for as long as I can remember, already as a child growing up in a mountainous area of France. It’s only natural that I would discover the work of Mathis Wackernagel (co-founder of Global Footprint Network) the moment he published his work and started receiving prizes in the 1990s. In a world economy where GDP growth was the golden metric, Mathis was one of the first people I know of who would not only question consumption patterns (on the heels of Meadows, Dobson, Strong, Brundtland, back to Gandhi, Thoreau, Aristotle, etc.) but also quantify, simplify, and help each of us understand how massive the use of natural resources is, beyond the issue of carbon emissions.

This was all the more interesting to me that, when leading sustainability consulting practices between 2004 and 2014, my team and I would already use tools with clients such as “sustainability stress tests,” looking at both the environmental and social impacts of their business models and practices, and helping them define “planet-compatible” growth paths. We were clear that consumers—whether corporations or individuals—ought to be encouraged to take on the responsibility of the choices they make.

I started using the phrase “move Earth Overshoot Day” at the beginning of 2017 when speaking in front of customers. And I was thrilled when I found out that #movethedate was precisely the motto of the Earth Overshoot Day campaign last year!

How do you view your role at Schneider Electric?

I joined Schneider Electric in 2014, after spending most of my career as a sustainability and strategy consultant, including as a partner with PricewaterhouseCoopers for almost 10 years, then EY – including four years living in India and working at EY India.

My passion is to move beyond talking about corporate responsibility with customers and focus on concrete win-win-win opportunities where the planet wins, together with our business performance and that of our customers. In this context, my role is to focus, on the one hand, on our own resource productivity with a view to decoupling our own supply-chain impacts from planet-resources intake, and on the other hand on the performance of our technologies on our customers’ end. After all, our customers also want resource productivity, circularity, health and safety, and more transparency—especially about the sustainability of our products, both in terms of how they are produced and of the impact they can expect from them on their own operations.

How is Schneider Electric contributing to #movethedate?

Schneider Electric generates €25 billion in revenue per year (2016). I am proud to witness that this commercial success comes from selling technologies that allow companies across sectors of the economy to “#movethedate.” And we’ve been doing it for a while. We are able now to demonstrate and quantify that “more Schneider Electric is a better climate.” And we will be reporting externally on related CO2 emissions numbers quarterly, starting April 2018. Through our EcoStruxure solutions for buildings, plants, power, grid, machine, data centers, and through our renewable energy enabling solutions, energy management software, and other value propositions, we will help our customers avoid more than 100 million tons (Mt) of CO2 emissions in the next three years, which is far more than the amount we’ll emit in same period to procure, make, and transport related offerings.

Our own operations include 200 factories and 100 distribution centers worldwide. We do measure and track our Ecological Footprint, and do intend to lead by example by contributing to #movethedate through improving the sustainability of our own operations. In our quarterly conference calls with investors, for instance, our performance analysis touches upon our progress and performances on topics such as eco-design, energy efficiency, transportation-related CO2, zero-waste-to-landfill sites, and now the amount of CO2 emissions and natural resources consumption that were avoided thanks to our circular supply chain, and the progress of our Green Premium ecolabel sales.

Sustainability is our raison d’être.

When did Schneider Electric embark on that path?

It was around 2005 when our CEO, Jean-Pascal Tricoire, explicitly and boldly connected our business strategy and value propositions with our sustainability strategy. He spelled out how they depend upon each other, stating that the success of the latter would fuel the former. From that point on, the company was able to hone a very clear message that’s all about business and sustainability strategies being aligned. This also accelerated technology innovation in order to support this approach.

I believe one of our competitive advantages in the market today is that our technologies are part of the solution to #movethedate. Our products are very closely aligned with our stated mission. For instance, at time of COP21 and ahead of the Paris Agreement, we had allocated $300 million R&D budget and floated a climate bond for low-carbon innovations, touching data centers, buildings, and smart grids. This climate bond received worldwide recognition for its innovative nature, precisely because of its R&D focus. Such efforts are ongoing obviously.

How do you share the sustainability message with customers?

We’re not about preaching to customers. What we do is provide them with, first, great technologies, second, digitized information about these technologies’ performances, environmental footprint, and end-of-life instructions. Studies show that our customers report seeing value-add from our EcoStruxure solutions in terms of improved operations transparency, resource efficiency, resilience, safety, performance, and with virtuous ripple effects across their activity.

Do you see sustainability becoming a growing concern in the corporate world?

We’re definitely seeing a growing awareness in the corporate world, and in civil society too. More and more companies are now joining the sustainability conversation, making commitments, innovating, even reinventing themselves at times, which is great! A major challenge sometimes remains translating “corporate responsibility” commitments into business offerings or value propositions.

However, with the equivalent of 1.7 planets being consumed each year and a current trajectory heading towards +4 degrees Celsius by the end of the century, it is imperative that the economy as a whole and each one of us move a lot faster and a lot more drastically if we want to witness significant positive change going forward.

My personal take is that all the above has to start with each one of us through the way we eat, move around, buy, heat/cool our homes. This is where change is required first, then the rest will follow. Let’s each of us #movethedate!