Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

The slew of companies pledging to reach net-zeroemissions in 30 years is an important development, butthese headlines should not detract from the importanceof achieving more of an immediate impact, whichmeans in the next 36 months, according to Schneider

most intense emissions by 50% in five years. Last year
it created a platform for Walmart suppliers, forexample, which allows smaller companies to join
forces to access power purchase agreements theywould be too small to secure otherwise.

Electric.
“A pledge to be carbon neutral by 2050 is great, but
the important question is what your roadmap is todeliver results and impact in the next three years, said
Olivier Blum, chief strategy and sustainability officer at
Schneider Electric. “The climate problem is now, it’s
not in thirty years.”
Schneider Electric was among companies early toadopt emissions targets and to innovate in emissions
reductions, and that now see regulators catching up
with their early ideas. “Now it’s more and more aquestion of compliance as regulation catches up, but
nothing prevents you from continuing to invest for the
future,” Blum said.
Evaluations are now much more stringent comparedwith what could sometimes devolve into a public
relations exercise with variable results. Scrutiny frominvestors has also intensified, Blum said. Meeting evermore demanding ESG criteria is now less of an option
and more of a requirement. “In the past few years it
has moved from a tick-box exercise to a very deep
exercise, Blum said. “I am involved with investors who
have questions, and we are facing very serious, very
professional people. These investors are very qualified
and will challenge your strategy.”
Schneider is also engaging with its suppliers andclients to help them reduce emissions. The company
has a program to work with 1,000 of its largest
suppliers to reduce their carbon emissions, cutting the© Bloomberg Finance L.P.2021

Olivier Blum, chief strategy and sustainability officer at
Schneider Electric. (Source: Schneider Electric)
At the same time, companies in Schneider’s and othercompanies’ supply chain have become more open toacting on emissions. “The topic of CO2 is very
important for suppliers. When you build a platform tohelp them reduce emissions, 90% of them raise theirhands and want to participate.”
The following interview has been edited for sense andconcision.
Q:
How does sustainability feed into strategy at Schneider
Electric?

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Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

A:
If you look at the evolution of the company over thethemselves or are they more interested in this as abusiness? But we are actually serious on the ESG side

past 10 or so years, corporate social responsibility

and this is why we have some awards in this field, suchhas always been very central for the company,
because more than CSR, sustainability was a way ofas being ranked the World’s Most Sustainable
Company by Corporate Knights in 2021. We are a role

becoming more progressive. It goes beyond business,to help with always pushing the limit on how you

model of sorts, and we have credibility from working on
this for 15 years.

engage your employees, how you can become more
inclusive, how you can do a better job for theenvironment, how you look after the ecosystem. If you
look at sustainable development, what we call ESG
today, we measure our performance and we reward
our leaders on this, it’s being discussed by the board. It
all seems quite obvious today because everyone isdoing it, but Schneider has been doing this for 15
years.

When you look at the market, investors, customers, alllarge companies, have the climate and sustainability
agenda on the table now, so you have to actually also
be part of the solution with innovation and services that
support others’ sustainable transformation, which iswhat we do through our climate advisory services andEcoStruxure solutions, for example. I was in charge ofhuman resources for Schneider for five years, and we

Secondly, our mission is to be the digital partner of ourdid many surveys of people who had worked with us
for less than one year to more than five, asking why

customers for efficiency and sustainability. We havebeen focussed on energy management and industrial

they stayed at Schneider. And the answer was always
sustainability.

automation, basically with one objective, helping
people make more of energy and resources, allowing
them to be more efficient, more renewable and have abetter impact on everything that is related to climate.
One year ago we decided to put everything under one
roof at the Executive Committee level, because when
you lead strategy and business initiatives aroundsustainability, they are very much connected to yourESG agenda. So, when it comes to sustainability,
compared to many companies, we are not just trying to
be a role model in the way we lead our own operations,
we are also part of the solution around climate for

For us, sustainability is like a company program, it is
how you are progressive, how you are innovative, how
you stretch your company to the next level ofinnovation.
We say sustainability is like a marathon, but with nofinishing line. We continue to challenge ourselves, tobe innovative, and ask how we have impact. Indeed, apledge to be carbon neutral by 2050 is great, but theimportant question is what your roadmap is to deliver
results and impact in the next three years. The climate
problem is now, it’s not in thirty years.

many of our customers.

One sub-dimension, which is really important, is how I

Q:keep a balance between a global and local impact.
Take diversity and inclusion, for example, the gender

Schneider Electric reinforced its oversight of strategy
and sustainability a year ago. You sit at this juncture.
How is that going and how do you balance businessand sustainability interests? What are the issues thatkeep you awake?
A:
For me there is no conflict. You might ask, considering
Schneider is selling sustainability as part of its
business, are they really serious on the ESG side

© Bloomberg Finance L.P.2021

topic is a universal one. Yet the topic of ethnic diversity
in the U.S. is very different to Europe or Asia. So you
need also to have a very strong local dimension. And
when you are a global company you tend to be too
global. That keeps me awake at night.
Q:
Does it take 15 years to get where you are – or are
there shortcuts?

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Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

A:
I don’t know if it takes 15 years, but it takes some time.

we were building is not too far from what was being
done in Europe. We don’t know the final definitions of

I’m not saying that other companies can’t do the same,the EU Taxonomy, but we hope they will be very closeand I say this with a lot of humility, but if there’s one
thing that is very difficult to copy in business it is

to ours.

culture. You can copy product, you can copy thebusiness model, you can copy a lot of things, but you
cannot copy culture.

Green revenue is generated from all the technologies
that you can develop to improve energy efficiency andreduce CO2 emissions. When you look at the entire

Creating a culture where your leadership, starting fromscope of Schneider Electric, some 72% of thecompany’s revenue is green today – which includes

the top down through all the levels, are passionate

everything that has a positive impact on theabout doing the right thing, which is basically what you
do in sustainability, is very important. You have toenvironment, efficiency, decarbonization, circularity,and so on. The EU taxonomy will be implemented next

assemble a group of people that truly believe that you
don’t do that for your investors, you don’t do that just toyear, so when we have the final definition, we might
have to make a re-statement. But more or less it is inlook good in your financial report, you do that becauseline with what we have seen on this topic.

that is embedded in your DNA. It is that culturaldimension that is so often underestimated in ESG

Q:

discussions, that for me is the foundation of everythingthat you can do to take the company to the next level.
The company needs to count on everyone. In a newprogram, we have decided to have a focus on
decarbonizing our Scope-3 upstream, that is our
supply chain. We have launched a massive program tocreate an ecosystem with our top 1,000 suppliers. I canonly do that if my colleague who’s running supply chain
believes in it and invests in it. I’m not going to give him
any budget for that. He’s going to partner with me andput some of his operational budget into this. That is in
our cultural dimension, and it’s very hard to get there.
Q:

Another of your goals is for CO2 emissions avoided.
But how do you do the accounting on that? We don’t
have a framework for this yet. Isn’t that a problem?
A:
We started ten years ago with Scope-1 and 2
emissions, and in the past six or seven years wemoved on to Scope 3. Accuracy seven or eight years
ago was lower, but everything today is externallyaudited and you have some assumptions that are
public. Once you have defined your carbon footprint,
you can define your ambition for decarbonization thatis in line with the 1.5 degree commitment. All of thathas to be aligned with measures recommended by

Turning to Schneider Electric’s long-term sustainability

TCFD. So yes, it is not completely perfect, but the levelof accuracy now compared with five years ago isgoals. How do you measure success here? For
example, you are aiming for 80% green revenue by

maybe 75% higher. There is a lot less room forcreativity now.

2025. But what is green revenue?

Q:

A:

Investors are working on physical and transition risk,

Green revenue comes from everything that can makeon ESG criteria, and they are trying to understand how

the planet greener, more sustainable, and that canhelp us meet goals of the Paris Agreement, basically.

best to measure all this. But there is still a lack of data
for a lot of decisions. Is Schneider Electric struggling

We have been working over two years to develop ourown methodology, but we have been inspired by thewith this as well?

work done in Europe, on the EU Taxonomy, which isstill work in progress. So we tried to ensure that what

Let’s take an example. Scope 1 and 2 are fairly© Bloomberg Finance L.P.2021

A:

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Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

regulated and clear. Scope 3 is getting better on the
upstream side, with the suppliers. But let’s look at what

are going to build a program, we want to reduce our
upstream emissions, and create an ecosystem to help

you can do downstream, with your customers. Whatthem measure their energy and their efficiency andcan be measured today is emissions that are saved.
You have an existing building, let’s say, and you install

have access to all the solutions we can offer to ourcustomers. Last year, with Walmart we created an

Schneider Electric technology. How much energy
efficiency do you add, and so how much CO2

ecosystem of suppliers for Walmart, giving themaccess to a platform where they can join forces foremissions do you save? That is measurable.

PPAs, for example. They are all very small and it would
be very hard for them to do this individually. The topic

Then you have avoided emissions. You are going tobuild something new tomorrow in a certain way. Now if
you adopt some changes in the design of your building
and with new software, you can avoid a huge amountof CO2 is very important for these suppliers. When you
build a platform to help them reduce emissions 90% ofthem raise their hands and want to participate.

of emissions. That’s what people are starting to call
Scope 4 emissions. This is not standardized. ThereQ:

are two things you can do, wait until the rules catch up,

supply chain and your customers’ supply chains.

or you take your own assumptions, which are not
perfect, and then when in a few years someone comesA:

up with Scope 4, there we will be.

So you are offering sustainability services to yourWe have launched recently our Supply Chain

But when I say we like to be progressive, that is what

Decarbonization Service for our customers and wehave a commitment to reduce by half the CO2

we do – once the regulations come along you adapt.
There is a lot of work on reporting, non-financial

emissions of our own most intensive suppliers. We had
a big online event to launch this. As we speak, ourreporting. Fifteen years ago there was nothing like that

suppliers are answering questions, then they will be

and we started doing our own reports. Now it’s more
and more a question of compliance as regulation

asked for their emissions baseline, and we support
those that need help. This is a five-year project to getcatches up, but nothing prevents you from continuing
to invest for the future.

to the 50% reduction. This will really be the year forgetting everyone going. Some of the companies areQ:large, but 80% of them are at the next level, so we will
be working with them, and will start having an impact

What are the challenges you face with your company’s
vast supply chain?
A:
When we started 15 years ago the topic was morearound human rights. And we started to build an
ecosystem of suppliers, because we wanted to checkfrom the end of the year.
It is exciting because it is central for the boards,
suppliers, customers, everyone. Five or ten years ago
you had to push everyone, but now the doors are
open.

they complied with human rights. So we started to buildthat culture of working with an ecosystem of suppliers.

Q:

Over the years, the question of climate change hasachieving your targets?

become more important for those companies too,because they also have to declare their own Scope 1

A:

and 2, and they have to comply with reporting rules.

Are carbon offsets an element in your toolbox for

We try to avoid them. We have set a target to be

At Schneider Electric, we have gone to suppliers wecarbon neutral by 2025 in our own operations, and net
zero by 2030. They are in our toolbox, but we would

have been working with for years, and explained welike to minimize their use. And we don’t have a big© Bloomberg Finance L.P.2021

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4Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

need – our CO2 emissions in Scope 1 and 2 are notbig, so we can handle those. We may use them tobecome carbon neutral by 2025, but the objective is todo this without offsets. So it’s more a tool forcustomers.
Q:
To what extent do investors and markets really careabout sustainability? What is your experience?
A:
In the past few years it has moved from a tick-box
exercise to a very deep exercise. In my job I am
involved with investors who have questions, and weare facing very serious, very professional people.
These investors are very qualified and will challenge
your strategy. We have seen the level of attention go
up. Now you have to explain the details. It’s not 100%,
but we have very competent people in front of us.
In the world of yesterday, there was little attention on
this, and it was good to bring new ideas to differentiate
yourself. But now with all this reporting, it is becoming
more about compliance, which is great. It is also about
ethics, and it’s important to keep innovating.

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5Short-Term Impacts of Climate Measures Are Vital,
Schneider Says: BNEF Q&A
July 13, 2021

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