Emerson’s chief sustainability officer, Mike Train joined ARC Advisory Group’s Bob Gill in a podcast discussion about Emerson’s greening of, greening by and greening with Emerson sustainability framework.
Mike leads this global environmental sustainability strategy as we drive progress within Emerson facilities and help our customers achieve their environmental, social and governance (ESG) objectives. Emerson is highly relevant to a more sustainable future with expertise, technologies, solutions and a global perspective that can help with the path forward.
For readers and listeners in the Asia region, register for the virtual July 13-15 ARC Asia Forum. The sessions will include Emerson experts discussing practice examples of digital transformation in action leading to more sustainable operations.
You can also visit the Environmental, Social and Governance section on Emerson.com for more on Emerson’s actions in driving this strategy forward.
Transcript
Bob: Hello everyone and welcome to this podcast from ARC Advisory Group. My name is Bob Gill, ARC general manager for the Southeast Asia region, and I’m based here in Singapore. And today, I’m delighted to have with me Mike Train, senior vice president and chief sustainability officer at Emerson. So a very warm welcome to you, Mike, and thanks for being with us here today.
Mike: Bob, it’s a real pleasure to join you, and thank you for inviting me. This feels like old times a little bit.
Bob: Yes, definitely. Yeah. I think the last time we talked was probably around 2005-ish I think. So it’s the last time we talked, around that time, so it’s great to still be in touch and still be talking to you.
Mike: Yeah. Thank you. Thank you.
Bob: And in fact, I see that this year marks, if I’m correct, 30 years for you working at Emerson so congratulations on that. And I know that you’ve had many roles and held senior positions at the company over this time including several years in Singapore as president of Emerson Process Management Asia-Pacific which is when we first met. Then in March this year, you were appointed as Emerson’s first chief sustainability officer. So, Mike, how did this come about?
Mike: Well, I think that’s a fair question. First of all, I will confirm the 30 years happened last Saturday so that is real. I passed that milestone. And I can tell, for the young listeners, it goes by very fast. You know, we met each other in 2005 and the years just…they go by fast. It is amazing. But it’s also fun to look back a little bit and look forward a little bit. You know, with respect to…and again, I’ve had the pleasure at Emerson, really, to be in almost every leadership-type of level of position. We had a changing of our CEO in February, David Farr. You’re familiar with David, retired, as our CEO, and Lal Karsanbhai became our CEO. And, Lal is a good friend and he organized his team, and we got into a chat about just everything going on in the world, and the sustainability topic is just permeating in everything we do, including, if you look at our portfolio, everything we do. So we had a discussion about it. He asked me if I’d consider doing it. I told him I would love to do it, so I became our first chief sustainability officer. I can tell you, it’s almost like you got sprinkle with glitter dust a little bit. It’s a very charged title in today’s world. It’s a very exciting title. And now that we have a chief sustainability officer, everybody wants to talk to me. So I like to joke but maybe it’s not so much of a joke. I get invited to the best parties now so I’m pretty happy about it.
Bob: All right, that’s really good. And I know it’s only been a few months since March, but what have been some of your key priorities and, where have you been putting your attention to over these last few months?
Mike: Yeah. You know, Bob, and I dove into this topic in earnest about two years ago part time, working with our leadership team, but now focused and dedicated to it, right? So we have other people leading the business, which is fine, and of course I stay very close to what they’re doing. But, we needed a full time focus on this and so I’ve been able, since March, to really take on that focus. I’d say initially, a couple of different things, again, because the sustainability topic is so multifaceted.
You know, it’s got a business aspect to it. It’s got novel solutions aspect to it. It’s got customer aspect to it. It’s got government aspect to it. It’s got shareholders, employees, potential employees, the board. It’s got so many different elements to it that are quite interesting. So for now, it’s like, coming and presenting our framework to everybody.
So we have a greening of Emerson, a greening by Emerson and a greening with Emerson framework, and that’s really, taking care of our own four walls. That’s, working with our customers. And then the greening with piece is really using our scale and our reach, our global reach, our technology perspective that we get to have, to work with, the governments and the research institutions and the industry groups to think about how are we going to actually do this real roadmap towards this 2050 world of net zero everybody is talking about.
Bob: Okay. So you mentioned just now the greening of, greening by, and greening with framework. So if we consider the greening of Emerson pillar of that, where are you actually starting from in terms of being a green company? And maybe you can tell us about some of your sustainability initiatives internally within Emerson.
Mike: Yeah. No, I think obviously, before we take care of the rest of the world, we need to take of ourselves and make our contribution, right? So the greening of is all about footprint, our impact, our initiatives, for what we do in our company, what we do in our four walls. And then more broadly, as you think about, people are probably familiar now with the scope one and two and three terminology, but the scope three is kind of the upstream and think of that as supply chain and logistics activities. And the downstream is, when our products are in use for 20 or 30 or 40 years, right, they’re sitting there doing what they’re doing and kind of, having the total responsibility if you will for that.
We put out our first long-term targets, actually, the first long-term target the company has ever had which was on an emissions intensity reduction target. It was off 2018 base status, so I think we published it. It was in mid… kind of late 2019 when we brought that out, a 10-year target to reduce our scope 1 and 2, the things we touch directly, emissions by 20%. And, I’ve been trying to socialize that with the company, with the employees, raising their awareness level, their knowledge level, education level.
When we put the goal out, we did it across 200 of our largest facilities, so Singapore counts as one, but you think about what we have globally from all of the factories, the larger office settings and some of the larger service center settings, and we’re doing that across 200 locations. We’ve modeled the mix of energy and emissions associated with each of those sites so it’s a very involved process as you can imagine. And then we’ve gone to work on the tough stuff, being more energy efficient in our four walls, so really doing the really…that’s the really hard work.
That’s going out and finding, prioritizing all different activities site by site by site with something we kind of call the energy treasure hunt looking for those opportunities. And we’re like any other industrial space, we have some easier to abate things. In the office, we can do things like building management systems. You can have newer HVAC systems. We can have more air compression management. And then there’s the harder to abate stuff. We use furnaces to, for example, characterize our instruments when they’re in the manufacturing process. So we’re going to have to figure out, “Can we electrify that, or do we have to come up with another solution as we go forward?” So we’re working on all of our roadmaps and then frankly our pathway to where we want to go, again, engaging our suppliers and engaging our customers in that discussion.
Bob: Right. And this is worldwide. It is world…
Mike: Worldwide. Absolutely worldwide, yes. Yup.
Bob: Okay. Okay. So, I mean extending on this topic, I mean I would imagine that a key part of your job and probably that of all chief sustainability officers is really evangelizing this issue of sustainability within the company itself and perhaps emphasizing a sense of importance to people who may believe sustainability is a fad or it’s not as important to this…let’s call it sales performance. So how are you approaching this challenge of, really emphasizing that this is not just a fashionable thing but it’s actually fundamental to the business?
Mike: Yeah. You know, I think that’s a really key question. You know, tone from the top, we can start with that as a conceptual, right, what’s important. You know, it’s been going with Lal becoming the CEO. You know, we can use this as an inflection point for a lot of the things we’ve been doing traditionally. We can challenge the things we’ve been traditionally. We can, think more modern if you want to…we’re always modernizing but really kind of challenge ourselves that way.
And I think the sustainability topic fits directly into that space. So I’ve been spending a lot of time communicating with the organization. I would say, when my position was announced and I hope because it was me also being part of that announcement, tremendous feedback from the employees. I think there are a lot of employees interested, personally passionate about this topic, so a lot of positivity, a lot of feedback from that.
But, a part of it is they want the ideas, the thoughts, how do they turn it into action, how do they progress it, so I spend a lot of time with helping them understand the ways we can go about this and also give them the context with the prioritization. You know, we have investors asking about this. We have governments asking about this. We have customers asking about this and, making sure they understand the complete context as well as the things that they can do or they can focus, and giving them permission, giving them voice, giving them the opportunities to go do things. You know, I’m three or four months into that part of the process but I think spending a lot of time on that while at the same time talking to investors, talking to customers, talking to the outside world as well.
Bob: Okay. That’s interesting because, I mean, I guess given the fact that you’re, if I could say, an Emerson guy, maybe that’s giving some advantages versus, say, bringing someone else from outside into this, into a new role, would you say?
Mike: Yeah. I would say a couple of things, one, because my familiarity of how to navigate, obviously there’s some critical things there. You know, I am a rookie in the sense of growing up in the sustainability function the way someone might have a career on that function so I’m trying to learn fast, okay? And that’s personally been very rewarding and very challenging for me and I really appreciate that and I appreciate learning.
I’ll give you an example of that. So today, I was in Ohio at a relatively new company that’s trying to figure out a way to recycle plastic number 5, polypropylene, back to an original, almost like a re-virgin state, clear pellets that can then be again turned into another product. And we announced that they’re going to use our automation as their thing. They want to be born digital. You know, not have digital transformation. They don’t want to start off that way. They want to start off digital to begin with and design their plants that way, and that type of thing, but being there and learning about the plastic side of the world which I had not had much exposure to. Just the opportunity to learn and then turn around and share that with everybody brings me a lot of joy in what I’m doing right now.
Bob: All right. So if we move on to the greening by Emerson pillar, so where do you think Emerson is currently at in terms of being perceived by customers as a company they can go to in order to improve their sustainability performance versus, by a control system or by a set of instruments and level instruments or whatever that you’re more traditionally known with?
Mike: Yeah. You know, we’ve been really fortunate I think just because of our size, our breadth, our depth of experience with our customers. I think that some of these new, novel solutions are being postulated and piloted. You know, we fortunately, maybe not out of direction but fortunately, we were sucked into a lot of those conversations and we’re able to participate in a lot of those novel solutions.
You know, a good example of that is in Abu Dhabi with ADNOC. You know, they built one of the few, so far, at scale, large carbon-capture sort of systems, and Emerson got to participate on that broadly with control systems, with valves, with instruments or with software. So we’ve been fortunate people have called upon us to be able to participate in those things. And we’ve been doing that pretty broadly.
So if you think about, the strategies of the world are going to be de-carbonization, maybe more renewables in their energy mixes, a lot of emissions management, which of course a lot of our sensing, and our control, and our software comes into play there, electrification. And in the part of Emerson, you might be a little bit less familiar with where we have all of the compression, electronics, and software for refrigeration, air conditioning, a big move towards heat pumps. We’ve done a lot of that in the Asia region, in China for example. We’ve done a lot of that in Europe and we’re doing a lot of that in North America.
Now, you replace a combustion heating process with an electrified process and then just…there’s still, I think, miles and miles or kilometers and kilometers in your sense to go with respect to energy efficiency. It’s still amazing. If you look at the U.S. energy complex, we have, like, 100 quadrillion BTUs a year of energy that goes into the system. Only about one-third of this energy comes out of the back doing the thing we intended, some action to happen. Two-thirds is wasted, lost, heat, breaks, all the other things, all the other losses in the systems, so the energy efficiency piece is still a huge thing that we can help push on as well.
Bob: So I know and many people would know that Emerson has a pretty large technology portfolio, so I would imagine by now there will be many examples of how Emerson technology is helping customers improve their sustainability performance. Perhaps for the benefit of our audience, you can highlight a couple of key ones so that they can get a flavor of the applicability of Emerson solutions in this area.
Mike: Yeah. No, I appreciate the opportunity to kind of share that. So, if you think about some of today’s novel solutions, gas created from waste, right, land waste gas or agriculture waste digester gas or water system gas, these are all examples of being able to harness something and it becomes kind of a renewable natural gas, so we’re able to, with our sensing, our metering, our final control, our compression capability from the other side of the company, combined with computing, analytics, cyber, everything else you need, we’ve been able to really give customers a one-stop shop around the technologies you need to create those renewable natural gas skids that you can land out there for grabbing that gas, cleaning it up, odorizing it, and putting it back into a pipeline system so it can travel to a customer and be consumed.
So renewable natural gas, great example. Again, Europe theater, U.S. theater, Asia theater, all theaters active in that space, the carbon-capture item I’ve mentioned before, again, uses the broad capabilities. One of the things that we’ve been working on more recently is some of the hydrogen use cases, right, everybody has been putting hydrogen into the future roadmaps. And what I presented to our investors at our investor conference, I wanted to share with them that hydrogen is not hydrogen. It’s used just four or five really distinctive use cases for hydrogen.
The first one I always think about is the blending use case. You blend hydrogen into natural gas so that you could leverage existing infrastructures. And we have trillions of dollars around the world of infrastructure…thousands and trillions of dollars around the world of infrastructure. And, being able to leverage that and carry hydrogen to places it can go by doing that blend and creating the market for hydrogen so then the people generating the hydrogen have a place to have a market is a really important use case.
The fuel cell use case, the filling, dispensing use case, the abating the really difficult industries, steel making, cement making, petrochem furnaces, these are the really hard where hydrogen kind of looks like the only strategy potentially. And then there’s kind of the nirvana use case, which is the green power case, right? You have a front end that might have hydro or solar or wind or nuclear. You use your electrolyzers, you pass the water through it, you get hydrogen, you store it in a geologic feature typically, which again, our friends in the traditional oil reservoir management business are now going to be looking for holes instead of maybe looking for hydrocarbons all the time but, storing that hydrogen in a geologic feature, it becomes a dispatchable, then you call for it, and then you could put it back through a turbine, put it on wires and send it on as electricity.
So that’s kind of the nirvana green power use case, if you will, that’s out there. So there’s these four or five different use cases, and there’s a lot of transitional activities to go along with that. One of the groups we’re working with here is doing a methane to H2 skid so that you can start to have filling infrastructure so you could have, large truck fleets or something, get their time on the road. We’re not going to wait for the green hydrogen, we need to have other methods for now to get the hydrogen so we can get the proofs of these vehicles and other activities going on. Same thing with trying to abate, doing some pilot abatement in steel plants and stuff. So to me, it’s a very exciting world right now and we’re getting to participate and really using our portfolio pretty broadly across both sides of the company.
Bob: So it sounds like there’s a lot you can do with the existing technology you have at Emerson but maybe you can expand on those capabilities by acquiring new technologies or developing even more novel capabilities that you don’t have at the moment. So to what extent is the sustainability emphasis playing into your acquisition strategy at Emerson?
Mike: Yeah. And I think we’ve already have some proof points around what we have already accomplished. So last October, we purchased the OSI business, which is a software business around managing, at the distribution side of electricity, electrons. And really, it’s kind of this advanced, when you’re trying to manage micro grids or just the sheer numbers of distributed energy resources, for the most part that are intermittent and going on and off the grid or varying on the grid constantly, the utilities or the grid operators need better technology to manage all the ons and offs that are taking place constantly.
So we bought OSI, a software business. It is the disruptor in that…call it that smart grid space. You know, even in the short time that they’ve been part of us, we’re learning a lot about their business. We’re already trying to do some cross-pollination projects with people you would know, in DeltaV land, Ovation land and some of the other software activities we have. And we’ve also been able to take them geographically around the world with some wins…we weren’t sure about that because the markets for electricity work so differently in the different parts of the world but we’ve been able to prove that people want this capability. And if you think about the future of maybe where that takes us as Emerson, there’s going to be a whole lot more signaling, probably utilities having permissions to change loads at our homes and change loads at our companies, and I think there’s going to be a whole fleet of whether it’s hardware or software that’s going to go along with that at some point. So it’s opened our eyes to some really, I think, future looking spaces as we go forward.
Bob: Okay. So would it be correct to say, right, that part of your portfolio is keeping a look out for companies like that who can bring in those new capabilities to the company?
Mike: Absolutely. And the digitalization strategy is still there, right? You know, just the digitalization and the sustainability themes really work hand-in-hand, having more data, more information, more optimization, more maximization or minimization. You know, really, they play together so I would say, absolutely closer portfolio as we look forward.
Bob: Okay, so my next point is a bit of a devil’s advocate question.
Mike: That’s okay. I like those.
Bob: Okay.
Mike: I like to share those as well and maybe we’ll get you some time, Bob, on that.
Bob: All right. But, I mean we all know that Emerson has very extensive footprints in oil and gas and the conventional power industries, so of course major contributors to greenhouse gas emissions. And, the company has made a lot of money in the last several decades from those industries, so do you see any conflict of objectives here?
Mike: You know, I think it’s a fair question and it’s great to have the dialogue in this topic. Around the world, we need to be having a dialogue on this topic. You know, when we talk about greening with the “I-N-G” part of greening, to me, that’s reflective but some companies or some industry spaces have a harder challenge than others, right? I think if you truly are concerned about the climate science and the climate change and trying to lead action, I don’t think it does us any good to chase these companies out of the public eye or be exclusionary.
You know, we need to work with them, so I think if anything, we’re going to have the opportunity to help them with their transitional moves, their being able to manage better, more responsibly. Again, they’re going to be looking for novel solutions there. They have such great capabilities around project management and construction and reservoirs and finding holes in the ground and all these other things that I think that are going to be important. Yeah, and you can see it in the speak of the companies, mostly in the oil space but in some other spaces as well that I think the commitment is there. We got to give them some time and we also got to give them all the help that we can, and I think I don’t see a conflict. I think actually, it’s kind of our mission to help steward some of that as we go forward, together, working together.
Bob: Okay. Okay. That’s an interesting comeback.
Mike: I do have one conflict in my personal side of this though.
Bob: All right.
Mike: I love driving manual shift cars. And I met with a gentleman today from, a large German car company that typically has three letters associated with it, and I told him, I said, “You know, have you seen sustainable fuels where somebody can take a CO2 from the current atmosphere, chain things together, and give me a fuel that I can put in my manual shift car?” You know, there are people working on those kinds of things so I’m still hopeful in all of this, I still have the ability to use the stick shift on my car and not do anything worse to the environment of course.
Bob: Okay. Okay. So that’s the greening of Emerson then the greening by Emerson. So that still leaves, I think, the point you mentioned earlier, greening with Emerson. So what is greening with Emerson all about?
Mike: So this is really our role, our voice, our advocacy, our partnership, our, working together, again, probably in consortia, if you want to think of it that way, with government bodies, with research, with industry, with investors to really have the dialogue about how we make actual progress. There’s been a lot of ambition expression. I’m not against that. That’s out there. The countries are going to do it again at Glasgow in November, we know that, where they’ll re-up their views of the world. But we need… You know, there’s a lot of intermediate targets.
People call out for 2030. You know, that’s eight-and-a-half years from now. In our world, that’s about two or three capital cycles away from here. So to get all of those anticipated things in the ground and operational, it’s going to require a lot of focus right now, and I think it’s going to take a lot of collaboration. I think the policy pieces, we need to learn what works. We need to learn obviously the technological challenges like hydrogen might have. We got to learn about the economics. You know, somehow you got to convert this into an economic proposition so people will support them wholeheartedly as we move forward.
So I think anytime I get the chance, you have to highlight the challenges. Rare-earth metals are a challenge. Land use, water use is a challenge. Storage of electricity is still nothing great yet. We’re working on trying to get some batteries there and pumped hydro and, there’s a few other conceptuals out there. So we still have a lot of challenges to overcome but I think we have to band together. We have to work together. We have to advocate what the real pathways will look like and, in some ways, it boils down to physics, chemistry, and behaviors. So how do we go about doing that? But being real with society and people and having those discussions so they can start to envision what the future will look like.
Bob: Okay. Any examples you can provide, Mike, of greening with partnerships in the Asia region?
Mike: In the Asia region, we have a couple of things going on. We are working with NTU locally there, the university in Singapore where you’re based. A couple of ideas there. One is around the hospitality industry would like to have a green approach, so they’ve asked us to…we’re working with the university on some thoughts around that. And again, we can come at that from different directions, the buildings, come at that from the food chain, obviously the refrigeration, cold chain, food waste, renewable energy.
So we’ve got a lot of things we can kind of bring to the party there. Jurong Island, very famous petrochemical refining complex, they want to decarbonize. We’ve been having those discussions about how we do that, how do we work collectively as broad industry and broad government to figure out what some of those solutions are. And the great part about working with the government and the universities at Singapore is when they implemented it, it impacts their whole country, right?
It’s going to be something meaningful and we can see it. You know, we can use that to demonstrate to others so that’s one local example there. But we’re working with groups in China on several things around standards, around efficiencies, around the novel solutions, and how you go about implementing those. We’re working in India with TERI, which is the energy research institute, a couple of key projects there. We’ve done a lot of work in the Australia-New Zealand theater with different groups, in Korea.
So I think there’s a lot going on in the innovation space, and I think there’s also a lot going in the policy space, you know. The policy side can be regulation, it can be incentives, it can be sponsorship by the governments. They can be customers. So I think, the governments also are thinking about their tools, right? What are their policy tools going to look like? Are they going to have a price for carbon? Are they gonna, set some intermediate milestones? So I think engaging in all of those areas and working with these different groups is really important. Again, we have a pretty unique technological perspective but also the global perspective to bring to that party.
Bob: Okay. Okay. Interesting. So greening of, greening by, and greening with, that’s the framework. Okay.
Mike: That’s the framework.
Bob: That’s the framework. Okay.
Mike: Yeah. Yeah.
Bob: So finally, Mike, as I said at the beginning, I mean you have held many senior positions at Emerson, but how does this very new role compare in terms of excitements, the opportunity to stretch your capabilities, but also have some of the complexities and challenges as you go forward from here.
Mike: You know, Bob, what’s been fun about my history is, obviously, I was in the Asia region for a total of 11 years with different assignments and different locations. You know, I led our instrumentation business at one time. I led global sales. I led automation solutions, and I served as Emerson’s president so I really got to play in all the different roles. And in some of the positions, I was close to the technology. In other positions, I was around the government leaders, the policy kind of conversations. So I’m really able to draw upon all of the history in this job so I’m really enthusiastic about this job. I’m very energized by this job.
Again, I make the joke about getting invited to the best parties but, the young people in the world are very interested in this topic. You know, I get energy from them. I try to give energy back to them. You know, I think being able to be out there and really pull upon every experience I’ve had at Emerson and put it all together and push into this job is really rewarding, really exciting. It’s probably going to be my last big job, in my career. And I think given it’s got one of these 20 or 30-year runways, it’s a little bit different than the other topics of the past that we’ve had to deal with which were shorter term in nature, so I think getting the world set up for that and there’s just so much work to do and it needs to be timely. We got to get after it.
Bob: Okay. Okay. But can I ask, have you managed to connect with and liaise with other chief sustainability officers of other companies?
Mike: I have. I have. First of all, that role is becoming very numerous and popular. It’s around. And again, like in our company, it reports to the very top parts of the company. We’re seeing it getting that elevation. We’re seeing the conversations in the boardroom. But, no, I have begun meeting fellow CSOs. You know, again, I’m a rookie in their space if they’ve kind of grown up in the space so I’m learning fast from them, but I also can bring a lot of the…obviously what I believe is the technological and the economic perspective, I’ve had…leading businesses over time. No, I think the role is important, the conversation is important. And again, I think we have the shared responsibility, help guide the world towards where we want it to be in 2050. I mean that is the goal right now.
Bob: Okay. Well, I must say, thank you. Thank you very much for your time today, Mike, telling us all about your new role and Emerson’s approach and initiatives in this whole big area here of sustainability which is not going to go away in the next couple of years, but as you say, where it leads to about several decades ahead. And, yeah, thanks very much for giving us those insights and overviews, Mike.
Mike: Bob, it’s a pleasure to participate. Thank you for asking, and I look forward to seeing you in person hopefully sometime soon.
Bob: That would be great. That would be great, and we can extend this conversation on that basis. That will be really good, Mike. So, yes, we have been talking to Mike Train, senior vice president and chief sustainability officer at Emerson.
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