Companies as custodians of the world for future generations

The climate crisis is forcing businesses to rethink priorities. Alongside profit, companies are increasingly having to consider the environmental costs of doing business. ABB is one of the companies benefiting from this development, thanks to its long-standing commitment to sustainability.

Peter Voser, this year marks the 50th annual meeting of World Economic Forum in Davos. As a representative of the largest industrial company in Switzerland, what are you expecting from this event?

First and foremost, the expectation is that this meeting of the most important representatives of business, politics and academia will lead to greater collaboration. In recent years, tried-and-tested paradigms and successfully established structures have been called into question, which is something we should all be concerned about. Once again, discussions are focused more on tariffs and unilateral action than on global collaboration. All that is despite the fact that we are confronted with climate change: a problem that we can only solve together on a global level.

Aren’t businesses by definition competitors above all else?

Even competitors can pursue overarching objectives together. On one hand, the digital transformation is shortening innovation cycles dramatically, meaning that partnership structures need to be more agile and fluid than in the past. On the other, the “Davos Manifesto” drafted in 1973 states that companies have an obligation to act as “trustees of the material universe for future generations”. As we try to define new objectives and values for businesses and governments this year, we must also deal with the question of how to achieve a global consensus on the use of new technologies and ways to prevent a technology war driven solely by competitive forces.

The theme of this year’s WEF is “Stakeholders for a Cohesive and Sustainable World”. Is that just an appeal to politicians or can major corporations like yours also contribute to a more sustainable world on their own?

Most decidedly so. When a company like ABB invests $23 billion in developing new technologies between the signing of the Paris Agreement and 2030, it plays an essential role in shaping the world of tomorrow. In Davos, for example, we will be working with Ericsson to demonstrate the potential of 5G technology, which will be the next decisive move in the digital transformation of industrial processes. This technology could spark a global revolution and transform countless sustainable innovation models into scalable solutions.

Are companies really the right agents for change on the sociopolitical stage – shouldn’t their first duty be to shareholders?

I don’t see this as a contradiction. Accepting responsibility for the environment and future generations has been both a moral imperative and an important foundation for business at ABB since it was founded. More than a century ago, we opened up new, sustainable transport possibilities with the electrification of the first railway lines. Today, we see it as our duty to shape digitalization, the energy transition and the digital transformation in a socially and ecologically responsible way. Close to 60 percent of our global revenues come from with solutions that protect the environment and combat global warming. We want to increase this percentage even further in 2020.

Won’t we have to forgo further progress or even give up conveniences we have grown used to in order to save the planet?

I’m convinced that the opposite will prove true. We know today that modernizing obsolete infrastructure, whether in industry, transport or construction, offers us the most economically efficient and practical option for reducing energy consumption and increasing comfort and convenience. In the Norwegian city of Trondheim, for instance, we are working with our customers to make the local public transport system entirely free of CO2 emissions. In this way, we are contributing to climate objectives and enhancing quality of life. And as visitors to this year’s WEF meeting will see, we have done the same thing in Davos and the surrounding area, having electrified trains, buses and mountain railways, and installed eight fast-charging stations for electric vehicles, laying the groundwork for environmentally sound, safe, convenient and affordable passenger and goods transport.

Are these developments happening fast enough? Many climate researchers are warning that we only have a few years to reverse the trend of global warming.

If we want to cut CO2 emissions by 40 percent by 2030, we have less than 4,000 days to do so. So yes, in some respects we are in a race against time and need to take maximum advantage of each and every day that is available to us. We’ve already built the technological framework for a sustainable energy transition, but the in some cases very high ramp-up costs and rigid regulatory parameters still have a restrictive effect on willingness to innovate. So policy-makers will need to create conditions that promote spending to implement these innovations as quickly as possible.

Where should these efforts start in your opinion?

First, the entire automotive industry is facing an important decision about its future direction. If it chooses to increase investment in e-mobility, this will dramatically accelerate the transition to sustainable transport. Also, sustainable supply chains for batteries will drastically cut emissions involved in the transport and energy sectors. But there is also tremendous potential to reduce emissions in the industrial sector: If all outdated electric motors around the world were replaced with new models, that alone would reduce global energy consumption by ten percent – equivalent to the power output of around 300 nuclear power plants. We are demonstrating what is possible today at our new production facility in the German town of Lüdenscheid, where we opened the first CO2-neutral factory in the world, which is also almost energy self-sufficient. Buildings have similar energy-saving potential: Accounting for nearly 40 percent of the world’s energy consumption and more than a third of all greenhouse gas emissions, implementing modern smart building solutions could bring us a lot closer to meeting our climate goals.

There’s been talk about the need for action for many years. Are you still optimistic?

In recent months, I have held talks with many government representatives, customers and investors from around the world. My clear impression is that climate change and the responsible use of resources have moved to the top of everyone’s agenda. In addition, companies are reevaluating their investments in sustainability in light of rising public expectations. Today, investment is no longer simply about increasing revenues or reducing costs. Sustainability is a competitive advantage in itself. By now, it should be clear to every CEO and every small business owner that only those who meet expectations about sustainability will be able to attract loyal customers and motivated employees from the next and future generations.

Is your company living up to these expectations?

We’re certainly making an intense effort to do so. For instance, we’ve supported the use of environmentally friendly means of transport with an eco-bonus in Switzerland for ten years now, and we have another 500 to 600 environmental improvement measures ongoing every year. In total, we will have reduced our climate-related emissions by around 40 percent this year compared with 2013. The best part is: Many of these projects were initiated by employees and everyone is actively involved. That not only boosts our credibility among customers, it is also one of the many reasons that so many of our colleagues are proud to work at ABB and why engineering graduates voted us the most attractive employer in Switzerland for three years in a row. For us, that is perhaps the most important reason to develop even more solutions for a sustainable world in the future.

About Peter Voser: Peter Voser was Chief Financial Officer of ABB from 2002 to 2004 and has been Chairman of the Board of Directors since 2015. Since April 2019, he has been interim CEO of ABB and a member of the Group Executive Committee. In March 2020, he will be succeeded as CEO by Björn Rosengren, who is currently CEO of the Sandvik industrial group.

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