HongKongEcho: Why energy is everything for Schneider Electric CEO Jean-Pascal Tricoire

The man at the helm of Schneider Electric wants to help accelerating the energy transition in every corner of the world with their energy and automation digital solutions.

 

“I’ve declared a war on wearing ties,” announces Jean-Pascal Tricoire with a wry smile. The 57-year-old CEO and Chairman of Schneider Electric has clearly left behind some of the stuffy corporate formalities during the COVID-19 pandemic.

His modest 19th-floor corner office is packed with mementoes and staff photos from various company visits and award ceremonies. There is not a tie in sight, we confirm, although his suit jacket hangs conveniently by the entrance.

We’re lucky to catch the athletic Frenchman in person. His regular schedule sees him shooting across the globe on an almost weekly basis – “I’ve never spent so much time in Hong Kong,” he admits happily.

Tricoire is a rarity among global CEOs for that alone. In 2011, the CAC 40-listed Schneider took the decision to split its C-level executives across their global hubs with Tricoire (or ‘JPT’ as he is often referred to by colleagues) relocating to the Hong Kong office.

Under his stewardship, the over 180 years old institution has gone from a notable European player to a leader in the digital transformation of energy management and automation with revenues topping 27 billion euros in 2019.

 

Consume less, consume better

 

Prior to “being loaned the keys to company” as he puts it, Tricoire spent most of his formative years outside of the group’s European heartland including a notable stint leading Schneider’s expansion in Asia-Pacific, now the first region for the Group with China’s market leading in the region.

His experiences beyond the bubble of the corporate headquarters left a mark. “What I saw was that life without energy is miserable,” he says plainly. “When I became CEO 14 years ago, I was convinced of two things. First, that energy is a fundamental human right. Second, that there are devastating effects when energy is not produced properly.”

 


Hear from Jean-Pascal Tricoire live at our Made in Asia sourcing symposium on 25 November by registering now!


 

Schneider’s bread-and-butter products like cost-efficient devices that help maintain electricity during power outages are useful throughout the developed (and developing) world, but they will not go far enough to tackle what Tricoire has labelled the “greatest challenge of our generation” – climate change.

“The dilemma is quite simple,” he says. “There are two billion people who still do not have correct access to energy in the world, plus another one-to-two billion more to come. At the same time, we need to reduce carbon emissions by a factor of two if we want to curb the impacts of climate change.”

The “magic equation”, he explains, is a combination of digitisation, electrification, and decarbonisation.

Seasoned in this kind of discourse, he senses our next question. “Of course, I hear people around the world dismissing electricity because it may be produced from coal in their particular region. Sure, but if you don’t build the capacity for electrification, you will never decarbonise.”

“Consume less, consume better,” he summaries. But how?

Leading innovations like Schneider’s EcoStruxure™ – an Internet of Things-enabled system architecture and platform – delivers enhanced value around safety, reliability, efficiency, sustainability, and connectivity to clients.  EcoStruxure leverages advancements in IoT, mobility, sensing, cloud, analytics, and cybersecurity to deliver innovation at every level. This includes Connected Products, Edge Control, and Apps, Analytics & Services which are supported by Customer Lifecycle Software. Microgrid Advisor – Schneider’s cloud-based energy management software platform – helps facility managers and microgrid operators to control onsite energy resources and loads to optimise the facility’s performance. Some of these buildings end up operating beyond net-zero emissions at certain times in the year and can distribute excess energy back to the grid.

Schneider has paved the way for such developments through an obsession with in-house innovation as much as a healthy appetite for acquisitions. This summer it made two significant software acquisitions, adding to its already substantial digital arm which today accounts for roughly half of its current activity.

 

"Today 70% of our turnover is directly linked to a sustainability objective. It’s absolutely at the core of our business model.”

 

On the hardware side, recent innovations include a medium-voltage switchgear (a unit composed of disconnect switches, fuses or circuit breakers often found in large buildings) which runs on pure air instead of sulfur hexafluoride (SF6).

For outsiders that means little. But SF6 remains the industry standard for insulation in such devices and, equally, the most potent greenhouse gas ever evaluated by the United Nations (UN) Intergovernmental Panel on Climate change.

“Our business is not about making a balance between profit and sustainability. Today 70% of our turnover is directly linked to a sustainability objective. It’s absolutely at the core of our business model,” he says.

 

Targeting tomorrow, today

 

The group regularly sets a range of targets outlined in its Schneider Sustainability Impact (SSI) – a set of objectives closely aligned with the UN Sustainable Development Goals (UN SDGs). These are audited by a third party and operate as financial incentives for the company’s 135,000-plus global staff.

“We are resolutely determined to contribute to the 17 UN SDGs. Schneider Electric provides innovative solutions to overcome the energy paradox: balancing the need to reduce the planet’s carbon footprint with the inalienable human right to quality energy and access to digital. Schneider seeks to be a role model and to embark its ecosystem into a just transition for a net-zero carbon world.”

Most notable among its ambitions are a set of rigorous targets to meet net zero carbon emissions for its activity and that of its suppliers.

 

“If we want to rebalance the organisation, logically we should be hiring over 50% female.”

 

By 2025 it aims to be net zero on Scope 1 emissions (essentially those which come from its direct actions). It’s doing so through transitioning to an all-electric company vehicle fleet in its freight and logistics activities and limiting or substituting certain materials embedded in products.

It plans to do the same all the way up to Scope 3 emissions (which encompasses those as a result of activities from assets not owned or controlled by Schneider but which it indirectly impacts in its value chain) by 2040.

That is more complicated, admits Tricoire. “It requires some tougher conversations because you have to approach your suppliers and ask them to change a host of activities,” he says.

Eradicating the use of SF6 through its latest innovation is part of the puzzle. “We plan to phase it out of our clients’ portfolios by 2025 which, quite frankly, is tomorrow,” he says. So too their developing offer of ‘take-back’, repair, and retrofit services for certain products to help lower the environmental footprint of customers.

 

Why business matters

 

Schneider is by no means alone in the fight. The UN Global Compact – a non-binding pact to encourage businesses to engage in sustainable and socially responsible practices – today counts over 12,000 signatories in more than 160 countries.

Tricoire and his team were one of the first to sign up in 2005 and he offers a typically deadpan assessment of how far it has come. “I remember taking part in one of its first Annual General Meetings in Paris where there were only three companies present. Frankly, it was quite depressing.”

Today he sits on the board of the UN Global Compact, after having served as President of Global Compact France for four years. As something of a veteran of the subject, he is understandably weary of its over-politicisation. On that front he sees COP21 (The 2015 UN Climate Change Conference) as a turning point. “I had been to all of the ones prior to it because I’ve always been passionate about the topic. But it had largely been a political show – the converted speaking to the converted,” he says.

It culminated in the approval of the much-famed Paris Agreement. “But it was also the first time this conference became a story of companies and cities. The latter alone accounts for 80% of the world’s emissions.” Companies, he stresses, possess the design innovation to address the issue in a way that states simply cannot.

What could Schneider be doing better? “Everything,” replies Tricoire with little hesitation.

“Take energy, for example, which is our core business. Every three years we gain 10% in energy use per unit of value – so we can always do better.”

Its adherence to the UN SDGs means Schneider also champions diversity and inclusion as key performance indicators within the company.

“We’ve come a long way for a company where only 3% of staff were women 17 years ago,” he says. The current Executive Committee is 38% female while around 40% of Schneider’s global hires are women. “This frustrates me immensely,” he says. “If we want to rebalance the organisation, logically we should be hiring over 50% female.”

At Board level, almost half of the board is female, and over 70% are non-French in origin or nationality.

“I’m talking as though everything is perfect – of course it’s not the case. But I’m convinced that you have to lead your company with an objective that cannot be disputed and is constructive to society. People will find out pretty quickly whether or not it’s true when they join, so you have to walk the talk.”