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Why this company is ranked the most sustainable in the world

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U.S. Electric Country President Aamir Paul Schneider joins Yahoo Finance to discuss the importance of sustainability, holding companies accountable to ESG goals, and how U.S. Electric Country is shifting the environmental agenda.

Video transcript


JULIE HYMAN: Well, if you've watched this program, you know ESG has been a big buzzword in the investing world. And it's gained a lot of steam here in the United States, sort of catching up with where it has been in Europe. We've talked to a lot of investors about how to define ESG-- how to invest in ESG. Let's talk to a company and get sort of a corporate view on that very question.

Aamir Paul is with us now. He is Schneider Electric country president of the US. Schneider Electric, of course, big French company that he's in charge of the US operations. So Aamir, what advice are you sort of-- or what message do you want to sort of send to asset managers when it comes to how they should be thinking about ESG?

AAMIR PAUL: Well, Julie, first of all, thanks for having me. And look, this is an important topic because since 2016, we've seen about a 50% increase in investment in this space, up to $35 trillion. And if you project that out by 2025, some estimates put that at a third of assets under management will be in this category. So definitions become super important.

We often focus on a couple of things. One, the reporting standards. And increasingly, the SEC is going to get more involved. And so the rigor that you see in financial reporting has to apply in this space as well. Science-based targets are a great place to start. And what that means is companies have to invest in infrastructure to gather that data.

And initially, a lot of companies think about that as an expense. But when you think about sustainability, you're trying to be more efficient with the resources. And when you do that, you actually pay for that investment.

So I think we're going from that sort of early phase where the definition is a little opaque to a phase where is actually going to get much more precise. And the demands of reporting and disclosure are going to get even higher, which is a good thing, because we need that precision to really separate the leaders from the laggards.

JULIE HYMAN: And Aamir, so talk to us about the example then of Schneider. You know, if you think that there should be reporting of certain things-- transparency on certain things-- what should we know about? And what do we know about it, Schneider, for example, that can help inform this discussion?

AAMIR PAUL: Yeah, look, we've been on this journey for 15 years. We're really proud this year to have been named as the most sustainable company in the world by Corporate Knights which is a Canadian analyst firm. And we come at this from three perspectives.

Scope one is where we think about how we consume energy in our products-- how we consume carbon in our products. Scope two is the effect that our people have in our investment structures and how we travel in the different elements of how we operate. And Scope three is our suppliers. And I think if you use science-based targets, all of those are critically important.

So we're working on our own supply chains where we've made commitments to reduce our carbon intensity. We're working with how we invest in our infrastructure so our employees are moving from internal combustion engines to EVs. And we're investing with our partners. In fact, we have a program with their 1,000 biggest suppliers to help reduce their carbon emissions by 50%. And not only that, but we're actually creating solutions to provide that, because for most companies, the greatest carbon intensity is in their supply chains.

And one of our most relevant examples right now is we're working with Walmart. So Walmart decided they needed to create a program with all their suppliers could participate, especially smaller firms. And Walmart is working with Schneider to deploy a program that will take a billion tons of carbon out. It's called the Gigaton Program. And we're creating that platform for companies to participate.

So we're approaching that in our own solution sets using digital technologies, using digital twins. But we're also creating platforms for our customers and partners to do that

BRIAN SOZZI: Aamir, how should executives be held accountable if they don't meet ESG goals?

AAMIR PAUL: Look, I think this is the same standard as financial reporting. I think, you know, people need to be able to assess your disclosures and assess exactly how much you're contributing to the common good. Look, if you think about it, from 2030 to now, we have 33 quarters left. And that is not a lot of time. And we have to take 50% to 70% of the current carbon emissions down to meet the 1 and 1/2-degree goal.

So I think this is probably one of the most important disclosure elements. And when we talk to companies, when we talk to boards, CFOs are waking up to that. So CFOs see disclosure here as as important if not more important than financial metrics. And I think what you're seeing is now the SEC, oh, the regulators taking the same posture.

So I think it starts with understanding the current disclosure process. How are you gap-capturing that data, setting targets, which a lot of companies are doing, reporting regularly on those targets, and then making sure that you're engaging with your broader network, including your supply chain to address the impact.

JULIE HYMAN: Aamir, lastly, I want to ask, sort of to be oddly blunt, why you're here. In other words, we frequently hear from asset managers about their-- it's sort of from the other side-- their interest in ESG. We more rarely hear from companies about how they want to be portrayed in that ESG framework or how it should be defined. Why do you think it's important to be discussing this with the media or out in public?

AAMIR PAUL: Well, look, it's part of Schneider's mission. This is what we do. And in terms of solving problems for customers, we're critical on this. But more importantly than that, it's about capital allocation.

When you think about where we're investing capital, what the biggest transformations are ahead of us, whether it's green bonds or venture capital money going in, insurance companies pricing risk differently, the impact of what carbon pricing could have-- I think there is a massive opportunity for the financial industry, which ultimately directs capital, especially in our country, to participate and have a massively positive impact.

And if you think of companies, like Blackstone and BlackRock, you see a lot of large asset managers taking that position. And I think that's incredibly powerful. So I think this is obviously from our standpoint, we believe we can help customers, partners, and the industry at large. But what's even more important is that this is becoming a bigger part of the agenda.

So I think our narrative on this is, is the urgency of the issue. And like I said, 33 quarters is not very long to make the amount of change we have to make. But the exciting thing is the technology we need to make that change is available. And we need the intentionality and focus. And that's why we're here to get that message out.

JULIE HYMAN: Well, we appreciate you being here. Thanks for that. Aamir Paul, Schneider Electric country president of the US. Thanks, Aamir.

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