A Blueprint for Green

Schneider Electric travels the path to world-class sustainability and good corporate citizenship. Here’s what the company has learned along the way.

Company President/CEO Jean-Pascal Tricoire has committed Schneider Electric to “helping people navigate the transition to a new energy world.”

By Rick Carter, Executive Editor

‘It’s time for everyone to become an active player in energy’ is the call-to-arms Schneider Electric President/CEO Jean-Pascal Tricoire uses to introduce the company’s 2012/13 ‘Strategy and Sustainability Highlights’ report. 

His statement defines both the culture of Schneider Electric and its self-termed position as “the global specialist in energy management.” It’s also at the root of the company’s stated goal to “work each day for a more efficient and sustainable world” in the 100 countries where it operates. In business since 1836, with early connections to iron, steel and shipbuilding, France-based Schneider Electric has become a 21st-century thought-and-action leader in sustainability and energy efficiency. Or, as Tricoire puts it: “Helping people navigate the transition to a new energy world.”

Schneider Electric’s growing list of sustainability benchmarks includes: a 30% reduction in overall energy use and natural gas use from 2004 to 2011 at its North American facilities; avoidance of 260,000 tons of CO2 equivalent at those facilities in the same period; and a total savings of $24 million. In 2011, the company was added to the Dow Jones Sustainability Index. Best known as a manufacturer of low- and medium-voltage electrical distribution equipment, Schneider Electric also offers power-related services and solutions to its five main markets: Energy & Infrastructure; Industry; Data Centers and Networks; Buildings; and Residential. Global sales for 2012 were $32.6 billion (€24 billion), a 7% increase over the prior year and a reflection of its customers’ growing need and commitment to make industry, IT, energy use and cities themselves more efficient. The company describes its solutions as “created to provide customers a cost-effective and sustainable means to meeting business goals.”

Schneider Electric has expanded its world presence through acquisitions, a key company strategy since the late 20th century (when it acquired U.S.-based electrical-parts manufacturer Square D). Since 2000, the company has acquired more than 30 companies in the fields of automation, security, power monitoring, SCADA and control systems, energy management, power inverters and others. For 28-year employee Ted Klee, Sr. VP, Global Supply Chain, North America, the company’s brisk pace of acquisitions has meant nearly continuous involvement with integration and consolidation, which he considers a normal part of life at the company. “We’ve done this same thing in eight regions around the globe,” he says, referring to the company’s ability to standardize manufacturing perspectives on many fronts, including energy. A veteran of Schneider Electric and Square D plant-management, Klee (rhymes with “glee”) today oversees 37 plants and distribution centers in North America from Schneider Electric’s U.S. headquarters office in Palatine, IL.

“We’ve brought many new companies into the fold by applying economies of scale, while at the same time remaining true to local customers and markets,” Klee says. “Some were smaller companies that may not have seen the value in some of the sustainability issues. But as soon as we acquire or pick up a new plant, we send in our central teams and can give them high-level advice and help. The amazing part is how they are generally very receptive and excited about it.” Klee explains that facility-management functions and project budgets, including those related to energy efficiency, are entirely centralized, meaning that all decisions come out of the group. The standard-protocol process covers everything, from safety, energy and environmental procedures to the company’s lean production strategy known as the Schneider Production System. “Plants can serve up ideas,” says Klee, “but this way we can make sure we’re going after the biggest projects across the company and not on a plant-by-plant basis. This takes some of the pressure off plants while we bring the broader resources of Schneider to these smaller entities.”

CEO Tricoire has furthered Schneider Electric’s culture of sustainability by his insistence on company-wide metering. “He wants dashboards,” says Klee. “Naturally, we use our own monitoring and software, and now all Schneider locations with 50 or more people have metering and are tied into the company’s global dashboard. They are available in semi-real time on what our consumption is and what kind of projects are out there to drive improvements.” This is not entirely new for Schneider Electric, which for years has used metering in its own plants. “We’ve always had a good handle on how much energy we used,” notes Klee. As energy became more expensive, metering led to audits, then to the incorporation of procedures, practices and equipment that are becoming boilerplate in sustainable operations: lighting upgrades, occupancy sensors, improved building-control systems, variable speed drives, HVAC upgrades and others. “None of these may be revolutionary,” says Klee, “but all are part of a very engineered solution.”

‘Energy is fun’ and other factors
As a top corporate mission at Schneider Electric, energy reduction is up there with safety and profitability. “We’re a business, and you must drive financial performance,” says Klee, “whether that’s being able to market sustainability or see it in your bottom line. But I would say we get both, partly because not only is energy a win-win, it’s fun. It does take investment, but it has good payback, especially in the early years. It’s not like new-product development where there is a lot of guessing. With energy savings, you can truly build an engineered solution: You know what it’s going to cost and what the results are going to be, and it’s easy to monitor and manage. Plus, we’re an engineering-based company, so we love to measure and monitor things. And as we get deeper into monitoring our consumption at all levels, we have a solid fact base which helps us see if our investments are paying off.”

When they do pay off, broadcasting the good news is part of the Schneider Electric strategy. “The more you highlight your gains, the better,” says Klee. “In a lot of companies, the investment is made, but the results aren’t published. The financial community likes to see what’s going on. After all, this is where the conservatism toward new projects usually arises. So if you can draw them into the analysis and they can see the rock-solid benefits at the bottom, it makes the next project a lot easier.”

Ted Klee, Schneider Electric’s Sr. VP, Global Supply Chain, North America, has spent much of his 28-year career with the company pursuing better ways to understand, monitor and manage energy usage.So do Schneider Electric’s Green Teams, comprised of employee volunteers at each worldwide site who keep the practices of sustainability as integrated as possible into company culture. The Green Teams link to the larger world of sustainability by overseeing and guiding projects that involve recycling, charity work and “any other activities they can implement to make our people more happy, comfortable and engaged,” says Klee.

At a company whose policy is to “look at every stream of waste and find the best use for it,” recycling is particularly important. Each plant’s Green Team looks at their site’s waste flows and guides recycling efforts, starting with what can be recycled to how to collect it and keeping employees engaged in the programs. What cannot be reused or recycled offsite in standard fashion, such as materials other than cardboard and metal, can call for a unique approach.

“One of the toughest materials we ever had to deal with was from our thermoset injection-molding process,” says Klee. The solid byproduct “like stone” flummoxed company recycling efforts because it could not be reused, melted down for recycling or sold as is. The solution was to have the material crushed into powder, which was then combined with tar for use in road-surface materials. Klee sees this as another example of sustainability’s impact on corporate decision-making processes. “Clearly, the things you wouldn’t have thought about paying to do 20 years ago,” he says, “you’re very likely to pay to do today from an environmental aspect.”

A charitable approach
Schneider Electric culture also supports the belief that sustainability includes working to improve communities where the company operates. This has resulted in outreach programs that focus on issues like rural electrification, vocational training, carbon-reduction and others. It has also led to formation of the Schneider Electric Foundation, the purpose of which is “to get involved with associations working for the social inclusion and employability of young people,” according to an online interview with Gilles Vermot Desroches, Schneider Electric Senior Vice President, Sustainable Development. Formed in 1998 and based on an earlier company program that provided worker training in the electrical trades, the Foundation now uses its $5.4 million annual budget to fund charitable missions around the globe.

In North America, the Foundation donates heavily to the American Red Cross and local Heart Association chapters, and supports an ongoing matching-fund program for donations Schneider Electric employees make to any charity. A key focus here is the company’s partnership with Habitat for Humanity, says Klee, a member of the North American Foundation board. As an eight-year corporate sponsor, Schneider Electric donates product in-kind—load centers, disconnects, lighting and other equipment—for all Habitat for Humanity builds in the U.S., and some in Canada and Mexico. When the group prepares to build a house, it places a supply order inside Schneider Electric’s system, “and we’ll ship them that equipment for free,” says Klee.

The company has further supported this effort by sponsoring the construction of as many as 15 homes near its sales offices or manufacturing plants. “In these cases, we’ll be the lead sponsor for that build,” says Klee, which means the company provides funding and its people to the work site. “It’s one of the best employee-engagement things we do,” he adds. “It serves the same team-building function as a corporate retreat, only better. It’s also a highlight for me because after spending so much of my time trying to conserve money, [sitting on the board] is the one day a month where I get to try to spend an entire budget.”

A solar array near Schneider Electric’s Platinum-LEED-certified manufacturing facility in Smyrna, TN, supplies power to the plant and acts as a test lab for the company’s solar-inverter business.

Consistency amidst change
“Manufacturing plants are changing all the time,” says Klee, “so the things that may have made most sense five to seven years ago, you have to continually stay on top of.” He believes that extraordinary solutions are less likely to make a company sustainable than simply “applying the same practices in different ways.” This means establishing work procedures that call for consistent checks to ensure that HVAC systems are upgraded and in tune with building management systems, for example, and that the right variable speed drives are on the right sets of motors. And it’s critical, says Klee, that equipment data is not only routinely collected, but that it is put to good use. “Any energy project that you just do and then forget will soon start losing its benefit,” he says. “You can tune the building to be as energy-efficient as possible, but if you don’t continually monitor it, check it and adjust it, the benefits will go away. In our case, we always want to know how things are tracking to make sure we’re taking full advantage of the investment we’ve already made.”

Though Klee sometimes fears his staff will run out of sustainable projects to tackle, he has not had that problem. “When we go back out and restudy the plants and look at our consumption, we see what’s changed and we find a whole new list of things we can work on. Last year, for example, we came in with an additional 6% energy savings in North America. And for 2013, we’re on track for 4%,” he says. “So you just have to work harder and harder the farther down the road you get.”MT&AP

Learn more about Schneider Electric’s sustainable activities at Schneider-electric.com.