CxO debate: The role of digital in a more sustainable future
Images: Schneider Electric
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CxO debate: The role of digital in a more sustainable future

Sam Forsdick — March 2021

At the recent AVEVA World Digital conference, industry leaders discussed their approaches to sustainability and the opportunities digitalization brings for organizations looking to a greener future.

 

The AVEVA sustainability roundtable featured:

  • Craig Hayman, CEO of industrial software company AVEVA
  • Olivier Blum, Chief Strategy and Sustainability Officer, Schneider Electric
  • Prakash Kumar Karunakaran, Head of NervCentre at Petronas, Malaysia’s publicly owned oil and gas company.

Q. How can digital technologies contribute to sustainability?

Olivier Blum, Schneider Electric

““Olivier”
Olivier Blum, Chief Strategy & Sustainability Officer at Schneider Electric

The good news is that sustainability is now a standard in the market. There is a very strong focus on climate change and many of our customers are becoming more and more open to speak about this topic and they are looking for the solutions that will lead them to achieve those targets.

We like to look at the two parts of the equation, we test our own operation to see how those technologies can make us more sustainable, then we bring all our learnings to our customers, and that’s probably what differentiates us at Schneider.

As a company, we try to make long-term commitments, usually for the next five years and beyond. And it is very important we make sure these commitments can be implemented everywhere in the world.

Digital technology plays an essential role for our company in achieving this. When you have more than 130,000 employees around the world and 200 sites, we want to make sure that those commitments are taken up by all entities.

It is also important for us to track the progress we are doing. We always define a limited number of big transformations we want to achieve. To do this, we are leveraging technology and digital. We have a solution, for instance, called EcoStruxure Resource Advisor, which helps us and our customers to measure energy consumption and helps customers leverage more renewables.

We were not able to do that 15 years ago because we were not able to track our consumption everywhere in the world. Now we can track energy consumption, we can add an automated connection with the utility supplier, we can check the invoice and we can give these digital services to our customers and help them to switch to renewable. You can also do that at scale everywhere in the world, which gives you an example of what technology can help us achieve today.

 

Prakash Kumar Karunakaran, Petronas

““Prakash”
Prakash Kumar Karunakaran, Head of NervCentre at Petronas

I think it all starts with data. One of the things that we need to do is make sure that we’ve got all the measurements of everything that we might be putting into the atmosphere. The reality is that there is no way to measure some of these things, such as venting and fugitive emissions. So, you need to build models for them and that’s where big data and analytics comes in and gives us the ability to quickly look at these problems.

We’ve now got a number of models. We’ve tested them against point measurements and found them to be quite effective. In the area of measuring what you’re doing, that’s already a huge element.

Data is going to help us in that aspect but also in the area of mitigation as well. The reality is that in a lot of these processing industries you’ve got to keep the plant stable, because the minute you go down, there’s a lot of venting and flaring that might happen. The answer is to keep your plants as stable and sustainable as possible.

We’re looking at new technologies too, such as automation, remote and autonomous operations, image analytics and drone technologies to help us better manage what we’re seeing on the ground.

Q. What has been the response of shareholders and have they bought into the organization’s new purpose and sustainable mandate?

Olivier Blum

In the past 12 to 18 months there has been a huge acceleration and growth in interest from investors. I think they realize that sustainability, or what used to be called Corporate Social Responsibility, does not live in a separate universe. It’s embedded in the strategy of the company.

What shareholders have now understood is that whenever we were implementing for ourselves, it was also a way to learn, experiment and innovate and make sure that we were positioned to help our customer decarbonize their industries too.

Net zero jpg

When they realized that our strategy was a unique combination which tried to bring the best technology to our customers, I think they started really to like the way we’re moving.

Of course, you have to invest to make your company more sustainable, but at the same time it's a way to de-risk your company for the long term. We’ve demonstrated over time that doing well for the planet is not incompatible with doing well for your shareholders.

 

Craig Hayman, AVEVA

““Craig”
Craig Hayman, CEO of AVEVA

If I compare what happened following the financial crisis in 2008 when there is no doubt that climate change and sustainability got pushed down the agenda, amazingly, against the global [Covid-19] tragedy of last year, climate change and sustainability have been raised up the agenda. And that I think has really surprised a lot of people. You can even see it in the share prices of companies that are heavily aligned with ESG [Environmental, Social and Corporate Governance].

The big question then is if financial markets are much more engaged with this, then what does that mean for all of the 650,000 listed companies around the world?

Passive sustainability was the default position for most organizations in the 2010s. It was more or less a recognition that something needed to be done but there was a reluctance to change how businesses were run to achieve it. The CEOs were not going to prioritize it and instead were delegating various risk management tasks down the organization.

And so, what we’re starting to see now is the shift. You need to strategize and then, behind that, digitize so that you can actually implement changes in how you run your business.

Q. What do you see as the important first mover in terms of impetus for sustainable action?

Craig Hayman, AVEVA

As a CEO, you have to declare what you intend to do and, to use a sports analogy, plan to go out there and win the game. You don’t plan to go out there and tie.

You set out what you’re going to do and you take risks. You have to have conviction and be prepared to rally every resource you can, and get the best performance from those around you to achieve that goal.

With respect to our commitment around sustainability, we’ve changed our commercial model and we communicated that very clearly with investors. We actually think the industrial sector uses very little digital technology versus the financial services or retail, and so we think that there’s a lot of optimization that can be done using digital technology in the industrial sector.

At AVEVA, I’ve seen a change in employees too, which has made me realize change management is happening inside companies as well.

Prakash Kumar Karunakaran, Petronas

It starts with a commitment to say that we are going into this for the long haul. There are four areas of how to handle carbon right over the long term. You obviously want to start with the things that are simple, like operational efficiency, and you want to make sure that you utilize the least amount of energy possible when delivering your product.

Once that’s done, you want to go into low carbon solutions and energy transitions, such as taking coal out of the system, and making sure that you’re moving into natural gas and LNG [liquefied natural gas]. Then moving into renewables and making sure that more and more of that energy is starting to look and feel green.

And then it’s technology and innovation. So we are looking at ways we can take out bulk carbon dioxide and bulk greenhouse gases from the atmosphere, and this involves all kinds of technologies. There are some that are really expensive: from looking at carbon sequestration to stopping using gas turbines, for instance, and using motor turbines [instead].

The last bit is carbon offsets — but we have put a cap on that. Carbon offsets is all about reforestation to make sure that there are natural sources to take care of carbon that still gets released. But you don’t want that to be the priority. You want to go green as much as possible across the entire value chain in everything that you’re doing, and then leave that little bit that you just can’t handle with carbon offsets.

First published March 2021
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