Schneider Electric – spurring decarbonisation

Schneider Electric is a global leader in electrical products and systems used in energy management and automation. The company recently hosted its Capital Markets Day at the Tottenham Hotspur Stadium, a great case study for sustainable buildings. Schneider Electric partnered with Tottenham as the energy management supplier for its state-of-the-art stadium, which in 2021 hosted the first net zero football match, #GameZero.

To help the club deliver its sustainability goals, the stadium embedded Schneider’s EcoStruxure platform. The system combines electrical hardware with software to digitise and simplify electrical distribution systems. It enables analytics which feed into efficiency improvements, predictive maintenance, and safety. It also embeds cybersecurity tools which, as we wrote about here¹, are becoming increasingly critical to green infrastructure.

Building sustainability

Building emissions account for over a quarter of global emissions². While many solutions addressing renewable and efficient technology have emerged, the sector needs to do more to align with Net Zero 2050. One increasingly prevalent headwind is the perceived cost of the transformation, which was also a topic we covered recently in a blog post. A prominent example in the UK last year, was Rishi Sunak rowing back on green targets he said would impose a cost on consumer.³

In a quantitative study of building decarbonisation technologies, Schneider Electric suggests that one solution to the cost problem is increasing digitisation. This allows more flexible management of resources, for example planning usage to match periods of higher electricity supply or feeding excess capacity back to the grid from storage technology. This is particularly important as the share of renewables grows because supply becomes increasingly variable.

What’s great about the Schneider story is that the same technology can have benefits that go beyond environmental. EcoStruxure for Healthcare is one example delivering a wide range of benefits and Moorfields Eye Hospital is a good case study. The building is over a century old and EcoStruxure allowed Moorfields to integrate multiple systems and provide critical environment and power information essential to patient safety during surgeries. This led to reduced operating expenses and improved staff productivity, both valuable at a time when the health system is under such pressure.

Grid infrastructure

Another emerging area of interest for us is Schneider’s role in addressing the challenges facing the grid in the shift to electrification. We wrote about the topic in a previous article.

Schneider’s grid project with Enel illustrates how the company is contributing to solving problems such as the supply-demand imbalance and the increasing use of electricity. Enel is Italy’s largest power company and has the second largest installed generation capacity in Europe. Thanks to Schneider’s grid solutions, Enel has access to more accurate data and a system that can predict the impact of generation peaks as well as streamlining energy production. In combination that’s resulted in savings of roughly 75,000 tCO2 equivalent per year, ⁴ the equivalent of over 13,000 homes’ annual electricity use.⁵

Impact measurement

As well as being a leader in sustainable technology, we see Schneider as a leader in impact measurement and reporting. The company has developed the Schneider Sustainable Impact (SSI) program with six long-term positive impact commitments backed by 11 key indicators. Schneider also publishes a comprehensive methodology to measure emissions savings. This has several parallels with our own impact engine methodology, including a detailed analysis of what the relevant baseline for comparison should be.

Schneider is taking its expertise and deploying it with customers. The company recently published a framework for sustainability reporting for data centres. The aim is to help data centre customers develop key metrics and priorities for mitigating negative climate impacts. With the exponential growth in data centres this is becoming an increasing issue – they already account for almost 2% of global emissions⁶.

Schneider’s business touches a wide range of sustainability topics and we think the company is well placed to drive significant positive impact. Their technology leadership in these areas also supports the company’s ability to grow faster than the market while delivering attractive returns. Schneider is a great example of an investment thesis supported by positive impact, which is exactly what we look for in our portfolio.

¹https://www.whebgroup.com/our-thoughts/cybersecurity-esg-or-impact
²IEA, August 2023, https://www.iea.org/data-and-statistics/data-tools/greenhouse-gas-emissions-from-energy-data-explorer
³The Guardian, July September 2023, https://www.theguardian.com/environment/2023/sep/20/rishi-sunak-confirms-rollback-of-key-green-targets
⁴ Schneider Electric, https://download.schneider-electric.com/files?p_Doc_Ref=Customer_success_story_Enel
⁵EPA, https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator
⁶IEA, July 2023, https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks