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Schneider Electric drives digitalization for sustainable, long-term ESG
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Manish Pant, Schneider Electric Zone President for East Asia and Japan.
T
he unforeseen COVID-19 pandemic, reinforced by digitalization, has generated interest among Asian companies in environment, social and governance (ESG) issues, with Indonesia headed on the right track.
Schneider Electric, a global specialist in energy management and automation, said that Asia was slow in embracing ESG before the pandemic.
“The pandemic has encouraged countries and leading businesses to take more meaningful action as drivers of change, addressing problems such as climate change, water stress, access to electricity, the depletion of natural resources, pollution, shifting demographics, poverty, and inequality,” said Manish Pant, the company’s Zone President for East Asia and Japan (EAJ).
“ESG is therefore no longer a nice thing to do. It’s a key concern and expectation of many companies’ stakeholders and could soon be a regulatory obligation,” he said.
Pant and Roberto Rossi, Schneider Electric’s Cluster President Indonesia and Timor Leste, were speakers at The Jakarta Post’s Jakpost Up Close webinar on Oct. 8.
Moderated by Tenggara Strategics economics team coordinator Stella, last Friday’s webinar was themed “Sustainability and ESG in Indonesia: Where do we start?” and featured Schneider Electric's secret to success.
Operating in more than 100 countries in the world, including Indonesia, Schneider Electric has been striving to create an effective sustainability policy that matches local market conditions.
Rossi shares Pant’s view that ESG is becoming increasingly imperative today. For example, all companies listed on the Indonesia Stock Exchange (IDX) have been required to publish a Sustainability Report stince 2020.
“As such, many companies are still working to understand ESG and the principles of sustainable finance,” he said.
IDX-listed companies were also facing a shift in the investment framework, Rossi noted, as markets were starting to look beyond financial metrics and evaluating a business’s potential long-term impacts on climate change, human rights, health and safety, as well as accountability.
Continuing, he said that Indonesia had shown significant progress in achieving its long-term environmental commitments, though it was still in the early stages.
Citing President Joko Widodo’s speech at the 76th United Nations General Assembly, Rossi referred to the country’s achievements in reducing forest fires by 82 percent in 2020 compared to 2019, and in significantly reducing the rate of deforestation to its lowest level in two decades.
“The government's plan to implement carbon tax and incentives, increase the use of renewable energy and build infrastructure for electrical vehicles to reduce greenhouse gas emissions will require accommodative, clear and consistent derivative regulations,” he said.
Rossi stressed that a business could not grow sustainably if it did not contribute to the society in which it operated.
“Our generation has the unique opportunity to reconcile the paradox between progress for all and a sustainable future for our planet, thanks to a step change in efficiency,” he said. “Consumers, investors and governments all want to see meaningful action. Putting sustainability at the heart of their C-suite thinking is the only way businesses can make a difference.”
Over its 15-year sustainability journey, Schneider Electric has empowered communities where it operates through its strategy of implementing locally oriented sustainability initiatives.
The company’s initiatives in Indonesia include digital transformation programs that have been running at its factories in Batam and Cikarang since 2017.
The Batam plant is one of Schneider Electric’s Smart Factory showcases as part of its global digitalization drive, which includes factories France, China, India and the Philippines.
“Our Smart Factory in Batam has a [circular supply chain] initiative, especially on reducing and reusing raw materials,” said Rossi, with a focus on buying less and wasting less.
The factory has successfully reduced its scrap rate by 40 percent while increasing productivity and energy efficiency by 20 percent and 10 percent, respectively.
The Batam plant also has a reduce and reuse program for the cardboard boxes it uses to package products and parts. “Recycling functions at its best when it results in a direct impact on reducing the amount of waste,” he said.
According to him, the factory in Batam is recognized by the World Economic Forum as a Lighthouse of the Fourth Industrial Revolution.
Meanwhile, the company’s smart factory in Cikarang installed a rooftop solar system in 2020 that produces 224 megawatt hours (MWh), equal to 21.6 percent of the factory’s total energy consumption for cost savings of 6.4 percent. The solar system has also enabled the Cikarang factory to reduce its total carbon dioxide (TCO2) emissions from its operations by 164 tons.
As part of its initiative to promote renewable energy in the country, Schneider Electric has increased its use of clean energy, one solution for businesses to tackle operational CO2 emissions from energy use.
Rossi added that through the Schneider Electric Energy Access Asia (SEEAA) fund, the company, along with New Energy Nexus Indonesia 1 and Crevisse Partners, had invested in Xurya Daya Indonesia, an early-stage renewable energy start-up.
“The investment aims to grow Xurya’s business as an end-to-end solar energy solutions provider in Indonesia,” he said.
Digitalization and electrification
Separately, Pant highlighted how digitalization and electrification could address climate change and protect the planet’s future, with Schneider Electric fulfilling the role of a digital partner for sustainability and efficiency.
He said the company used digitalization and electrification to create technologies and solutions, “[working] with customers, partners, governments and suppliers to deploy these solutions and create a low-carbon future”.
“Digitalization is important, as it is essential to help companies lessen their reliance on natural resources and reduce their carbon emissions without sacrificing profit performance. This is instrumental to achieving sustainability targets and to driving shareholder value,” said Pant.
A company’s ability to respond to changing market dynamics is directly related to their ability to be more agile, more resilient, and more efficient through a strong digital strategy, according to him.
This is in line with the company’s vision to deliver digital solutions and strategies for sustainability that consider resiliency, energy efficiency and process efficiency altogether.
“Our customers can use Schneider Electric EcoStruxure offers to push forward their sustainability and digital strategies.”
“We believe strongly in electrification because it significantly changes the way energy is used. Our current energy system is heavily carbonized, consuming around 150,000TWh of energy yearly, with 80 percent of it coming from fossil fuels (oil, natural gas, coal).
Today, energy represents around 80 percent of the total CO2 emissions, fossil fuel reserves are not equally distributed across the globe, and it is massively inefficient when 60 percent of the fossil fuels extracted are wasted. “These issues continue to create major imbalances and risks to our planet,” Pant said.
“Now is the time for a new energy paradigm. When traditional fossil fuel-based energy uses are electrified, the efficiency gain creates net worth,” he said.
He said that Schneider Electric was leading a new all-electric renewable-based energy system and helping industries react and adapt to the deep revolution in the changing energy landscape which it called Electricity 4.0.
“Whether we’re facing crisis or calm, the pandemic has taught us that when we work together, we’re stronger for it. That’s what we’re here to do: be the digital partner for sustainability and efficiency,” he noted.
Schneider Electric has annual Innovation Summit and this year’s sixth event for Indonesia set to be held virtually on Nov. 3-4, 2021. The event will allow you to discover Schneider Electric’s end-to-end sustainability efforts, key trends shaping the future of sustainability, energy and automation. Click here for more info about the event.
