Decarbonizing China with Giuliana Auinger

Business & Technology

Giuliana Auinger, Asia Head of Sustainability for Schneider Electric, discusses the challenges of sustainability and decarbonization in China.

Image via University of Hong Kong.

Below is a complete transcript of the China Corner Office Podcast with Giuliana Auinger:

Chris: Hi, everyone. Thanks so much for joining us today on China Corner Office, a podcast powered by The China Project, the New York-based news and information platform that helps the west reach China between the lines. I’m Chris Marquis, a professor at Cambridge University Judge Business School. And today’s episode features a discussion with Giuliana Auinger, the Asia Head of Sustainability for French multinational Schneider Electric. Giuliana is currently based in Hong Kong and has spent over 20 years living and working in mainland China.

Giuliana’s work, which is focused on helping companies become more environmentally sustainable and decarbonize, is certainly a very important issue nowadays, as countries around the world are increasingly addressing these issues and associated global warming. She discusses many different strategies and tactics that companies, in particular, can implement to overcome the challenges of decarbonization. In addition to using renewable energy and increasing efficiency, a significant piece of work is the fine-grain data collection and analysis needed to help companies better understand their energy usage.

This includes things like IoT tags to accurately measure which systems are more or less efficiently processing and further the important human processes that are essential to creating greater energy efficiency.

One area of discussion is China’s carbon commitments and progress. Given the country’s pledge to reach peak carbon in 2030 and carbon neutrality by 2060, while the media frequently reports on data that conflict with these objectives, such as the continued prevalence of coal-fired power plant construction.

One of the things I really appreciated about Giuliana’s discussion is the detail she provides on many of the positive developments in this area, such as the clear focus of the government, China’s carbon market, and also how it is using tendering processes, such as reports, special trade or ecommerce zones, or even new cities to push its green agenda. But on the flip side, she also provides texture on the continuing challenges.

One general theme in our discussion is how the data collection and analysis is important to reach sustainability goals, but recent Chinese data security laws raise questions on the extent to which China and Chinese companies will be able to take advantage of this global resource to learn and improve their sustainability performance.

Also, drawing on her experience with the factory that her family has owned and operated for decades in Southern China, she questions the focus of local Chinese governments on the issue and the extent to which multinationals are truly pushing sustainability goals through their supply chains. Thanks so much for listening, and enjoy the show.

Giuliana, welcome to China Corner Office.

Giuliana: Thanks for having me, Chris. It’s great to be with you today.

Chris: Great. Well, I’m so interested to dive in and start talking about your work at Schneider, a company that is focused on circularity, sustainability, helping many companies achieve their environmental goals, things that are so front and center nowadays. I guess just to start us off, can you describe a little bit about Schneider’s business, particularly as it relates to sustainability?

Giuliana: Absolutely. So, unfortunately, we are in a podcast setting because the best way to actually describe Schneider is by playing a YouTube video. Our company’s YouTube video, it is phenomenal. When I was first sent to that clip by the executive recruitment team, that blew me away.

The first thing it says is we’re going to tell you what we don’t do, and what we don’t do is we don’t make lifts or elevators, depending on which part of the world that you come from. So bearing in mind that I cannot play that video with the audience and share that with you today, I think what I would like to do is maybe just to describe our business a little bit.

So we are in the energy management and automation business. So the best way to describe it is that we drive digital transformation by integrating different things. We integrate processes, energy technologies, connected products, controls, software, and services in order to integrate how companies or organizations manage their homes, buildings, data centers, infrastructure, industries, et cetera.

How does Schneider think about sustainability? I think we are in the energy business. We’re in the electricity business. So we do believe that energy and digital is a basic human rights. And if you look at what our generation is facing today, we are facing a tectonic shift in the energy transition and an industrial revolution.

So really, electrification is the most effective way for us to decarbonize our planet and to achieve some of these climate positive goals that we’ve set ourselves. So at Schneider Electric, our mission is to be the digital partner for sustainability and efficiency. And our company’s purpose is to empower all, to make the most of our energy and resources, bridging progress and sustainability for all.

Chris: Wow, that is really a set of ambitious and very important set of work. I’m not sure if this analogy fits, but I was thinking of like when you were talking it’s something like the Intel Inside of sustainability or carbon neutrality. 20, 30 years ago, people didn’t realize that actually computers had these things called chips, and they could actually be branded as well. And so it seems that you are really just sort of standing behind many companies in their sustainability efforts. We’d love to hear a little bit more specifics on the projects you’re working on that can illustrate those broader set of goals and principles.

Giuliana: Sure. At Schneider, we don’t call it Intel inside, of course, but we call it Life Is On. So, one of the most basic ideas, and when we say energy and access for all, is that there is a millions of people in this world today that still don’t have access to electricity, at least on a regular basis, if not at all. So the first thing we, of course, do is to encourage the access to energy. So we train up engineers in developing markets. We provide a lot of investment into the building of energy and electricity infrastructure in markets that need it.

But also globally, even in more developed parts of the world and more developed parts of where we operate our business, we set ourselves very, very ambitious sustainability goals to make sure that we play the best part we can in this decarbonization journey and really embracing our mission and our purpose right.

Chris: Okay. So on this, I guess decarbonization, environmental sustainability side, you work with companies, projects, buildings, perhaps to achieve their greater environmental sustainability. Can you provide some examples of those specific projects?

Giuliana: Yeah, for sure. So I think there are two sides of the coin. I think first is what we are trying to do ourselves to make ourselves more sustainable as a business because if you don’t start by yourself, you really cannot help others. And then we also talk about, okay, as practitioners, as sustainability, how do we then empower the ecosystem that we operate in to be more sustainable?

So if we look at what we do ourselves first at a very high level, we set our sustainability strategy every three years and report regularly quarterly on our progress. We have some very, very ambitious targets that we set up for ourselves, not just on decarbonization but across all spectrums of sustainability, including diversity and inclusion, our impact, local communities, et cetera, et cetera.

Some of the goals I can share with you that we’ve set ourselves. For example, we said we will be net-zero in our operations by 2030. We will be carbon neutral in our value chain by 2040 and net-zero in our end-to-end value chain by 2050. That’s very much in line with some of the science-based targets that some of our other companies are setting as well.

But what we notice as well by setting these long-term targets actually they don’t mean much unless we can get there. So we have also set ourselves some very ambitious short-term targets. One example would be we hope to reduce the carbon emission of the top thousand suppliers of Schneider Electric by 50% by 2025. So that’s a very active concrete project that we’re working on globally across our supply chain, trying to achieve that.

So we do a lot of this work ourselves, of course, making sure we have net-zero sites, et cetera, but at the same time, we’ve also set up a sustainability business, which is where my job comes into play within Schneider Electric.

Our mission is to help our customers accelerate on their decarbonization journey. And I know we’re going to talk a little bit more about how we think about decarbonization, et cetera, but ultimately we know that as humanity, we need to go three times faster and cut global emissions three times deeper in order to even make a dent in what we have to do to tackle climate change.

So really, our team’s mission is to help corporates get there, leveraging what we know, leveraging the technologies that are out there, and leveraging a bit of an ecosystem affect, bringing parties together to achieve that kind of results.

Chris: Great. Well, really great to hear about the Schneider Electric goals in, particularly your focus on the near term, like 2025. So many companies focus on 2040, maybe 2050, but that is actually so far in advance. It’s really unclear how to get there. Also, thought your focus around suppliers is also really important because another weakness is that many people only think about their own work, but not actually how the environmental effects of their supply chain actually lead to sort of greater carbon or environmental issues.

Giuliana: Yeah. And it’s countries and countries as well. Countries are also setting long-term goals. So it’d be interesting to see some of the short-term goals that countries are putting out there.

Chris: Yes, definitely. I very much agree and certainly want to talk about those issues, particularly in relation to China and its 2060 goals. I mean, there’s a lot of conflicting information around that, that is their 2060 goals on carbon neutrality. They have these goals, yet also widely reported is they’re still building a lot of coal-fired electrical plants, which really seems to conflict with those goals. So we’ll sort of get to that in a bit.

Before diving into that, though, I’d love to touch on something that you mentioned just right now is that you do work helping companies achieve sustainability goals, maybe net-zero. Is there a specific project that you can share with us to help illustrate that?

Giuliana: There are plenty of examples out there that I can share with you. Maybe I will start with sharing with you what are some of the levers we can pull in what we are trying to achieve from a decarbonization perspective because probably that sets a good framework for some of the discussions that we will have going forward and probably help visualize as well as to how we can help our clients.

So, we’re in the business of energy. So under the sustainability umbrella, we focus more on the decarbonization piece of sustainability. Of course, they’re all aspects within a company’s sustainability strategy that requires action. But when we talk about decarbonization and how we help our clients, we figure that there are a few levers that can pull when we want to get on a net-zero pathway.

The first one is really electrification. So if we think about the cars, mobility, the cars that we drive, the first thing we want to do is probably switch from a gas vehicle to an EV. So the same thing applies to any kind of corporate, whether it’s industrial building, et cetera. The first thing is to look at, okay, what are really fossil fuel consumptions that we’re using today that can be electrified and replaced by electricity.

Then the second thing you need to do is to look at, or the second thing we can look at is how do we reduce that energy usage? How can we be more efficient in our energy use and optimize through equipment or process reengineering or any other means to make sure we consume as little energy as possible.

Then based on the electricity that we use, hopefully, at the minimum level, we will then have to think about how do we replace the energy source? How do we replace it with fossil fuel electricity with renewable electricity? And that could be direct renewable purchases, or it can be through an integrated model, and there’s some complexities around there, but that’s the third thing or the third lever that one can pull when it comes to decarbonization.

Giuliana: Last but not least, we touched upon a little bit which is how do we engage the rest of our supply chain. So back to the vehicle example that I used. So Chris, tomorrow, if you get yourself EV, hopefully you are driving an EV already, you probably use a bike.

Chris: Actually, I don’t own a car. Believe it or not. When I moved to the UK –

Giuliana: That’s even better.

Chris: … A number of months ago, I actually sold my car in the U.S. And it’s the first time in 35 years that I actually don’t own a car.

Giuliana: That’s even better. Get on the bike. So imagine if you have your EV now, it really doesn’t help if the steel that your car is made from is still requires half fossil fuel and big furnaces to power to make the steel. So I would say these are the four key levers that one can pull when it comes to decarbonization.

So concrete examples of how we help our customers from a reduced energy use perspective. We can help them look at an enterprise holistically and say, “Okay, where are the areas?” First of all, how mature are you in energy efficiency? Are there opportunities for savings? And then, where are the area can you optimize? Whether it’s through equipment upgrade, whether it’s through process changes in your manufacturing plant, for example, or just by behavioral changes in terms of how your colleagues use your buildings or your equipment. And we can give recommendations there to help them truly optimize their energy usage.

Then another example of how we can help our clients is by looking at how to replace their energy source. Are there power purchase agreements that they can enter so that they can use renewable energy instead of fossil fuel energy? Are there carbon credits that they can purchase that will help them offset some of the purchases if they’re in locations where renewables may not be immediately available? So there are a bunch of strategies that we can apply to help customers with that as well. And so, across all the levers, there are a bunch of things we can do, and we can help customers with.

Chris: Yeah. That makes a lot of sense. The first one, I think, was around the idea of sort of understanding energy use. I think about, like, in large buildings or complexes, plants, that in itself could be just a huge challenge. Can you say a bit more about actually how you go about helping those companies understand their energy usage a bit more?

Giuliana: Sure. So if we think about… Let’s put aside thinking of a big, big building or a big neighborhood, because that is a bit complicated. But let’s just think about our homes. So every quarter, I get an energy bill from our local energy provider, which is CLP. I get a huge bill, and I want to know how do I pay less energy? There’s nothing I can do about it because there’s no way for me to know what is consuming the energy. Is it my terribly old air conditioners, which I have eight of them in my little village house? Or is it my mother who is constantly keeping the lights on in her bathroom and turning up the heater at 20 degrees Celsius? There’s no way of me knowing. And if you think about it at a micro level in a home, it’s exactly the same concept when it comes to buildings or even neighborhoods.

So, an example would be for some of the largest property developers here in Hong Kong, including Swire Properties, what we do is we help them implement connected devices across the building infrastructure so that they can really know which equipment, which floor which tenant, which equipment is actually burning the most of the electricity consumption in the building and the engineers, the facility managers can look at that data and really do something about it just like, hopefully, I can find out what is killing my CLP bill on a monthly basis.

Chris: Yeah, very helpful examples, both. I mean, we can all sort of relate to your personal example, but then also, sort of thinking about how it might apply to something like a shopping mall or a building, I mean, I think about my own sort of living arrangement, I mean, is my high bill, a result of insulation issues, the windows are bad, AC units, like you mentioned.

For your clients, I’m curious what you do with all this data. I mean, it seems like just even on the home example, there’s sort of scores of different data points to potentially collect, and that could probably number in the hundreds or thousands for some larger entity. So do you help them organize, analyze, benchmark areas improvements? How do you actually help the companies get handle around this very diverse and hard-to-understand data?

Giuliana: Yes, absolutely. We can do that. Not an issue at all. And in fact, what we find is the biggest challenge is actually not in the benchmarking or finding energy-saving opportunities. The biggest challenge is actually, how do you get the data in the first place? And when I previously shared, we can put in these devices to help you monitor energy consumption at a very minute level.

So imagine a small tag or a small hook that you can place in your kettle, in your toaster, in your air conditioning unit without any kind of big structural changes. You don’t have to triple glacier your window, and you know exactly who’s consuming or what equipment is consuming the most energy or what time of the day, or what is the outside temperature when that thing is being turned on? That’s very powerful information, but the issue is how do you get that data? For sure, I don’t have those tags in my home and which is why I’m running blind when I get my CLP bill.

So I think a lot of the time, organizations struggle with is understanding, okay, where is the data set, and how do we collect it? And this is one about technology, and I can guarantee you that the technology exists. It’s out there, and they’re actually dirt cheap these days, compared to all the other kinds of digital transformations that a corporation will go through, like an ERP replacement, for example. So they exist.

But the second thing is also people and processes. Are there strong enough commitments from a group level to get the people to think about these opportunities? How can we think about our data differently? How can we operate differently so we can get the right data in and know what’s going on in our organization. I think that’s really the hardest part and the tricky part of the equation where often clients tell us is the biggest pain point, collecting invoices? Just getting those CLP invoices. Believe it or not, it’s the hardest thing for your global company with hundreds and thousands of sites or buildings or floor areas. That’s the heart’s hardest part.

Chris: Yeah. So I can see. So the example of your mother keeps coming back into my head. I mean, when you think about some of these larger infrastructure or building management companies, they have scores of tenants. I mean, it’s sort of almost like thinking about managing a supply chain. How do you encourage your tenants or their suppliers that it’s actually in their interest to care about the environment, both for their bottom line probably, but also, for all of us sort of common humanity and safety of the planet? So could you say a little bit more about how these large, maybe building managers are working with tenants on these issues to help encourage them to be more sustainable?

Giuliana: Yeah. For sure. I think maybe I can use our own zero-carbon project that I mentioned in the very beginning as an example where we are working with our top thousands highest emitter suppliers to reduce their carbon emission by 50%.

So we started off, of course, imagine the whole program that we have to go through. The first step is to get commitment and buy-in from our suppliers first. So talking to a thousand of them and say, “Okay, this is why we want to do this. This is how we think we can achieve this together. This is what this program entails.” That’s a huge effort on its own, just the communication and getting the buy-in. Fortunately, we are very proud to say, almost every one of our suppliers has bought into the zero-carbon project and made a pledge.

The second part of the challenge is then actually helping them even understand what is their baseline GHG emissions. And that’s back to my point around data capture, but actually, before that, it’s the whole education piece. What we found is actually more than 70% of those suppliers have never even heard about GHG accounting or have an idea of how to go about it.

So what had to do very quickly was based on our expertise in GHC, accounting, and carbon, put together education programs for these suppliers that are all over the world, hours and hours and hours of training, recordings, webinars, Q&A’s to help them understand how they can baseline their own GHG emissions.

Some of our suppliers are really, really large corporates. They might be already well ahead of the game, but most of them are small, medium enterprises in markets where this whole concept of climate change and decarbonization isn’t quite mature yet. So there’s a lot of education there and then becomes the data piece. So they’re really, really small steps, very human steps. Actually, I would say that is required to make a difference.

Chris: Yeah, I think that’s a very well-made point. I mean, if you look at the media, there’s a lot of celebration of technology to get us to net-zero or even sort of importance of policy interventions. But in many cases, it is actually a very human process, with businesses having to actually change organizational systems to help move us along that path.

I’d like to shift gears a bit, actually, and turn our attention back to China a little bit as well. Earlier, we talked about the importance of goals, and they have this peak carbon 2030 goal and that carbon neutrality 2060 goal, yet the media widely reports, they’re sort of speeding up their production of coal-fired plants. I’d love to hear just a little bit about your top-of-line comment on the sustainability work in China.

Giuliana: Yeah. So this is a really tricky one, Chris. So I think before I go into answering the question, I probably should let the audience know a little bit why I even am in a position to answer anything about China? Probably to set the stage.

So, personally, I’m 50% Chinese by blood. I’m 100% Chinese in upbringing in culture. I was born in Hong Kong. My family is in the manufacturing business in China since the 70s. We’ve spent over 20 years as a family living in mainland China. And I personally have worked across mainland China for the last seven years professionally as well. So, I’ve seen China in my little universe, and that’s how I can share some of the experience. And as well as in the context of sustainability today, of course, a lot is happening in China. And I think it’s worth sharing with the audience as well.

So back to your point around, China’s environmental goals for 2030, so 2060 and 2030, and what’s happening today. I think let’s put things in a bit of a market perspective first. China is the biggest emitter by far in the world. And if we want to have a chance, a fighting chance of solving climate change, we need China on board. That’s the simple story.

However, China still heavily relies on coal, and it has an energy market that is fully controlled by the government. And what we have seen in the last few months actually, some of you may have heard about the China energy crisis. So what has happened there is there’s a constantly increasing demand for energy needs in China, especially during the winter months. We are seeing a shortage of coal in China for two reasons.

One is the government limiting domestic coal production because they want to achieve the peak of 2030. But they’re also trying to boost coal imports at the same time. So first question, net where are we with the coal consumption in China? And because of the shortage of coal, we are also seeing a rise in coal prices to a point where power companies have decided that they’re not going to produce any more power in China, which is why we are seeing some of the energy crises and factories not being able to operate, et cetera.

So there are things there that you can see really not conducive to China meeting its 2060 or 2030 goal targets. We all know that stability is a key, I guess, policy driver for China. And when you have these sporadic energy crises, that does not help with stability, and it doesn’t help with business. So they’re going to have to continue getting power generators to fire up their coal plants to make sure there is a steady supply of energy.

But then, on the other flip side, you also observe some other market dynamics at play. First of all, the relentless focus on renewables that we’re seeing in China. They’re absolutely world-leading when it comes to solar. In 2020, they have generated 250,000 megawatts of solar energy. That’s way, way, way past what the U.S. and the rest of the world combined have been able to generate. And they’re very ambitious. So there, for example, building massive solar, I wouldn’t even call it a plant. I don’t even call megastructure in the Gobi Desert to continue to boost up its solar capabilities.

Wind, they’re more than triple in terms of generation volume than any other country in the world. And they’re very ambitious. They’re aiming for 25% of nonfossil fuel energy sources by 2025. So if you look at… And the amount of times that she himself has come out talking about the importance of fighting climate change and transition to renewables. That says a lot as well. So, I think there are two sides to the coin. I wish I had the crystal ball to know what the future holds. But what I can do is just share some of these market dynamics that are at play that we observe today.

Chris: Great. Well, thanks so much for that. I appreciated you contextualizing things a bit and sharing your background, particularly your family’s background in the manufacturing industry and sort of your time living in China. And I’d love to dig into that a little bit more as well. But first, I’d like to hear some of your thoughts about the China situation. There’s a variety of sort of restrictions and laws that have come into the news recently around data, sharing of data, data privacy, having data that sort of generate in China, stay in China. This has been a lot around tech companies going public, but then also Tesla and Apple having to have their local data in local data centers. What you described were actually very data-heavy solutions to helping companies become more environmentally sustainable, and how do those China data restrictions then affect the work that you’re doing?

Giuliana: Actually, the same restrictions and concerns exist, whether they’re to do with information data, like technology platforms like Google versus Baidu, or financial platforms. The same thing happens when it comes to sustainability platforms and the data around that, unfortunately.

So we talked about the importance of data and decarbonization. And the idea is that if you are a large multinational with a footprint all over the world, what you ideally want to do is to want to be able to use technologies or platforms to create a single source of truth of your emissions or even your ESG data going beyond carbon emissions. And that means you need to integrate data from your different sites or different facilities up into the country level up into the global level. That’s the only way you know that you can accurately report out on your ESG KPIs or your ESG commitments.

However, given the data privacy or the data legislation that you mentioned that are happening in China, one of the issues it’s quite ambiguous. What is classified as restricted data is really hard for anyone corporate to be able to answer for themselves. So is your energy data restricted? That’s a question depending on the state, depending on the business that you’re in. So there are, definitely, I would say, constraints or considerations for large corporates that are operating inside and outside of China and challenges around how they can have this integrated view. And what we are seeing now is that just like a lot of things like in payments, for example, global solutions don’t necessarily work in China. So they do need to somehow be captured, used locally and may be integrated in another way instead of using a single platform.

Chris: Yeah, interesting. That does, unfortunately, seem like a constraint, but with such a big market, even with those sort of bounded conditions, like it is hopefully the MNCs, there like yourself can use the China data effectively.

Giuliana: Yeah. And in this case, exactly, even though maybe the integration of data globally isn’t as straightforward as long as there’s action on the ground. As I said, it’s really important for China and businesses in China to be part of this decarbonization journey that the entire world needs to be on. So if the data is visible and captured in China, as long as there are key actions there to decarbonize factories’ buildings, and I think we’re in a good place.

Chris: Yeah, I’m also interested in what some of the areas are that you’re more optimistic. There’s a variety of things like I mentioned China’s leading world-leading by many times in solar and wind. You read about sort of some of their pioneering carbon markets, central government funding and promotion of various green tech, can you say a little bit about areas that you might be more optimistic about and that are really actually in some ways thriving in China?

Giuliana: So I like to look back in the past sometimes to try to think about what the future can hold, Chris. So your question actually prompted me little historical experiences that I’ve experienced regarding China. The first one I remember when we first moved to China 20 plus years ago, there is still no acknowledgement of how bad plastic bags are for the world. But suddenly, overnight, China was able to implement legislation that says, “We ban plastic bags.” The next day we go to the supermarket, there are no more plastic bags. And that took years for the rest of the world to catch up to the point where we are now finally not using plastic bags in most countries.

So the other thing as well is in terms of mobile payments and just mobile itself. I remember we were so proud in Hong Kong to have the Octopus system, and we can just beep all kinds of transports, but we are stuck with that. And the rest of the world has kind of stuck with that. When nowadays, in China, you don’t need a wallet, you can just do everything on your WeChat, pay on your apps, on your WeChat mini-programs, and we are so far behind everywhere else.

So those two examples make me think that when it comes to the topic of sustainability, especially climate change, when China sets off to do something, they can get it done. They don’t have some of the infrastructure or historical baggage that other countries have. And as I said before, she himself has actively addressed climate change and has been very vocal about the targets in the past. So that actually sheds a really positive light on the pathway that China’s going.

There are also other green shoots to answer your questions. You mentioned the green electricity trading platform that has kind of… Actually, something that has been in research for over a dozen years but has recently come back up, and it’s trading, and it’s working. We are also seeing China becoming the largest manufacturer of electric cars and buses and then switching into EVs overnight. A place like Shenzhen with millions of buses. It’s just incredible.

So there are a lot of things like this. And also, for example, the tenders that we are seeing in China these days with big infrastructure RFPs that are coming out it’s all about green ports, green technology parks, green cities, green zones, and they’re asking people to bid for these tenders to develop net-zero living spaces.

So for me, these are all kind of signals that China is heading in the right direction when it comes to fighting climate change. Of course, there’s a question of speed. There’s a question of real impact. Are those respondents of those RFP sophisticated enough to really know what a net-zero port looks like? I mean, that’s a question we have to ask and something that we need to keep an eye out on, but directionally, I think we’re in a good place.

Chris: Yeah. I mean, it’s just amazing to me about all the sort of exciting work and innovation going on, new government projects, priorities, you look at the five-year plan really ambitious, but what’s your sense about things at the local level and also things like enforcement. Clearly, that’s a really important lever as well. I mean, we can create new ones and that in some ways is a little bit easier than actually making sure that the existing infrastructure is more environmentally responsible itself. So what’s your sense about how that sort of enforcement and transitioning existing infrastructure is working out?

Giuliana: Well, that’s a really tough question to answer, Chris. That’s a challenge. And unfortunately, there is not enough, at least, I don’t have enough data to back up to say, locally on the ground, is there enough incentive or carrot and stick that’s happening to encourage businesses to go in the right direction? I can only share with you something that’s in my personal experience. So, as I mentioned, my family is in the manufacturing business, small, very, very, very small business, one site, one plant in Dongguan. But we’ve been around for many years and hopefully a few more years to come.

My sister, who is the person responsible for the business nowadays, is doing a phenomenal job. And her and I actually had a conversation about this. I did say to her, “With all your big customers in Australia in the UK, and these are big, big names will see in malls that are buying your products, they’re all making these net-zero sustainability commitments, are you feeling an impact as a small supplier of one of these big multinational retailers?” And she said to me, “No,” she said, so I thought that was a really interesting answer, and so I dug further, and I’m like, “Well, okay, you’re supplying containers and containers’ worth of goods over there. So surely there is some implications.” She said, “Actually, there’s still in a stage of just communicating.”

So she has to attend a lot of supplier conferences. They’re told about their customer sustainability ambitions, but there are no concrete steps to really address how the suppliers, especially small suppliers like this, can help contribute to the bigger picture. And secondly, from a government perspective, she also said, yes, on the surface, the government will come up with legislation. For example, we are in a manufacturing business where we have to do a lot of dying of fabrics.

So the government would say, “Hey, we are going to restrict the water that pollutes our rivers. And so you need to clean all the water that comes out of your factory.” But for a small factory, like ours and our suppliers and our value chain, they just don’t have the capital to invest in the technology to clean the water, given the size of the business versus the size of the investment needed to put in such technologies. So what do companies do? They just don’t do anything. And the government doesn’t do much about it. They might come around, do some checks to shut you down, but another factory pops up somewhere else. Unfortunately, that’s reality.

Chris: Wow. Okay. That’s a little disappointing to hear. And unfortunately, we’re coming close to the end. I hate to close our discussion on such a point, but I do think it actually brings us back to what we were talking about at the beginning of our discussion. That this is really about an ecosystem. You talked about the work you’re doing at Schneider with your supply chain and goals. We, as consumers, too, are an important element in this, and we have to hold companies to account and push them to be more sustainable. Governments are an important element of this, as we’ve discussed.

There’s really no magic bullet, so to speak. It’s really up to all of us in all different stakeholders to really keep the pressure on if we’re actually going to meet these goals. And in many ways, I don’t mean to suffer from hyperbole, but really save our planet. I mean, that’s actually what the stakes are in this situation.

Giuliana: Yeah. And I think that this is the time where the big guys can do a lot more to help the small guys. So the example I was giving you is a personal family example, where we don’t see a lot of that happening locally, but these are small factories. They probably don’t make a dent in the real environmental impact that we are seeing. So as long as the big sites, the big manufacturers, the big companies are committed, those that have the capital to invest in the technologies do so, then I think there is a huge fighting chance for us to get there even for the small guys.

Chris: Okay. Thanks. Well, that gives me a little bit more hope. And so I really just want to thank you so much, Giuliana, for taking the time discussing your important work at Schneider and really how we need a system perspective globally, but then also particularly in relation to China and its goals and how those spill down to the local level to help meet our climate goals. So thank you so much for joining us on China Corner Office.

Giuliana: Thanks so much for having me, Chris. This is really fun. Thank you.