Judith Wiese on Sustainability and the DEGREE framework at Siemens AG
Todd Pruzan, HBR
Welcome to the HBR Video Quick Take. I’m Todd Pruzan, senior editor for Research and Special Projects at Harvard Business Review. Today, I’m with Judith Wiese, board member, chief human resources officer, and chief sustainability officer at Siemens AG.
Siemens is a focused technology company operating worldwide, and just recently, they’ve launched new financial targets to accelerate growth. Together with this, Siemens has also announced the company’s new sustainability framework. Judith, thank you so much for joining us today.
Judith Wiese, Siemens AG
Thank you, Todd. Thank you for the opportunity.
Todd Pruzan, HBR
To kick things off, tell us what’s touched you most personally recently when it comes to sustainability.
Judith Wiese, Siemens AG
If I think about the pandemic that we’re still suffering from, on the positive side, there’s been so much empathy and collaboration around the world and creativity in terms of how to help people and how to sustain well-being and health. On the other hand, it has been very interesting to see some of the numbers that have become evident through the pandemic.
At the end of the day, only 7% of CO2 emissions have gone down while the world had practically come to a standstill from a traveling perspective. We know that this is what we need to deliver every year from an abatement perspective to really become within the boundaries of the Paris Climate Agreement. The size of the challenge has become ever more tangible, I think, in terms of what we need to do going forward.
Todd Pruzan, HBR
What are you as a company doing in terms of sustainability?
Judith Wiese, Siemens AG
I think the first thing that we probably need to talk about is what do we mean by sustainability. The way that we’re approaching things is really along the three dimensions of ESG—environment, social, and governance. We’re clearly one of the companies that have such a long heritage; we‘re almost 174 years old, and we‘ve been doing a lot through innovation and technology to influence how people live and societies live going forward.
We’ve always been very long-term oriented, and, sustainability, from a planetary and environmental perspective, has been part of our strategy, our technology, our portfolio, and our very DNA for quite some time.
We’re also not a heavy industry. We’re not steel, we’re not cement, and we think that predominantly, we have to offer solutions through the portfolio through our technology and really help our customers transform. We think that the contribution we can make as a business is through our technology, through our innovation, and through the portfolios that we already have today.
Todd Pruzan, HBR
That sounds exciting. Recently, Siemens has announced its new framework for sustainability that contains those very targets. What can you tell us about it?
Judith Wiese, Siemens AG
We thought about what it needs to entail and then said DEGREE is not only a collection of letters, but it‘s also something that talks to our approach both in the degree of ambition that we want to put out there, because we really want to accelerate how we do with our customers and to make that very measurable.
So really, putting a target system out there, but also degree in the sense of 360 degrees. It’s really an approach for all our stakeholders—whether customers, suppliers, our people, or society at large. Of course, we know that every degree counts when you think about the 1.5-degree challenge from a climate change perspective.
Todd Pruzan, HBR
That’s great. I think the name DEGREE sounds interesting, especially for a sustainability program. Can you explain a bit more about the areas that the program covers, and what’s hidden behind the name?
Judith Wiese, Siemens AG
Yes, if we just go around the six letters, D is maybe the obvious one for decarbonization and really, where the world needs to pull together. Again, we’re taking our responsibilities as a company in terms of our own operations, but really, we think we have something to offer here to customers and societies at large to help decarbonize.
The E stands for ethics, and we talk about ethics in two different ways. There’s how we conduct ourselves and the expectations that we have around business conduct, not only from our people but also partners—whether that’s suppliers or partners on the customer side or on the go-to-market side. We drive a culture of trust, a culture of values, a culture of a certain conduct that we want.
As a player and as a leader in the digital world, we think we also need to transport that into the digital world and really drive trust, cybersecurity, how data is being protected, as well. For us, that is ethics, that’s the E for ethics.
G, then, is governance. How do we really hardwire things into our management systems when it comes to ESG and sustainability? How do we make sure that things are really part of our operations-embedded tracks? We have ESG targets, for instance, also in our management LTI—our long-term incentive plans.
The way Siemens views acquisitions, for instance, sustainability is one of our strategic imperatives when we evaluate targets or candidates for acquisition.
Then comes R, for resource efficiency. This is a really important one and one that we’re still learning about collectively because as decarbonization deals with emissions and the outputs of operations, resource efficiency gives us the chance to say, “How do we influence what we take out of the environment? How can we drive better circularity? How can we drive de-materialization further?” We think we have several things to offer through our digital technology and others to our customers here.
The last two Es in DEGREE really go to our people. We’re talking about equity as in diversity, equity, and inclusion here.
Again, this is very important for us in terms of how we establish a culture, where treatment of people is equitable. And that goes to diversity targets, that also goes to equity as in, how do we allow all people to participate in Siemens through share plans? Those are the things that we subsume under equity.
The last E is very close to my heart. The last E is for employability, because in a world that is changing so fast and where digitalization also disrupts how we work and the type of work that we do, we think that the biggest gift and the biggest obligation that we have as an employer and a big company is to equip people to be resilient—to embrace change, to look positive and confidently to the world, but also to be relevant in terms of their professional skills and really make sure that we up and reskill in a way that allows people to remain relevant to the employment market. Whether that’s within Siemens or beyond shouldn’t really matter. So that’s DEGREE for you.
Todd Pruzan, HBR
Thank you for literally spelling that. DEGREE, it sounds like a very exciting plan. Can we go more into the details here? Can you elaborate on some of the specific goals of DEGREE, and what are you aiming for in the different areas of the program?
Judith Wiese, Siemens AG
Like I said, we’ve been reporting sustainability KPIs for quite some time. We have a big sustainability report that we publish every year, but here we really wanted to say, “Let’s put out target systems. Let’s not just report numbers, but let’s really put out some target systems.” So again, if I go to decarbonization, we’re committed to net zero by 2030 in our own operations. We want to be net zero with our supply chain by 2050.
In terms of resource efficiency, it is about designing our portfolio in a different way, designing our products in a different way, and using our digital technology through what we call the green digital twin as well to make sure that our portfolio is following a robust design approach. And of course, that will help our customers as well. Now, there are targets, like how do we use secondary material under resource efficiency as well?
When I go to employability, there is the health and well-being of our people. Employee assistance programs, health, and safety KPIs are in them but also, we put in learning hours as a proxy for how much learning happens in the company and to really support people on their journey of remaining relevant because that’s a muscle that we all need to train for life.
The old paradigm of going to school for so many years and then being finished and done is a myth. In a world that changes ever more, learning as a constant will be important and we want to express that through KPIs as well.
Todd Pruzan, HBR
Thank you, that all sounds impressive. But how would you respond to criticism that this is all just greenwashing?
Judith Wiese, Siemens AG
I think we have some tangible things to tell. If you allow me, I’ll speak to a few customer references and go through an example for each of the big areas of operations for Siemens. Take Mercedes-Benz. We’re working with them on their Brownfield site in Berlin to make the site and the production completely emission free.
They want to make that a blueprint for 30 of their factories around the world. We’re helping them with digitalization, with automation, sustainability, engineering. And we’re also actually helping them with upskilling and reskilling of their people. It’s our technology and our innovation that will help the customer become emission free and make sure that they take their people with them.
In the area of energy transition, I could talk to several examples where we’re helping customers with microgrids, because that allows customers to feed in much more renewable energies. If I use the Azores, the archipelago as an example, with the microgrid technology that we provided, not only has the grid become more resilient, but they have been able to put in 60% renewable energy sources compared to where they were previously and therefore reduce carbon emissions as well.
We also have the mobility area with our trains. Not only are trains in and of themselves a different way of being mobile, but our trains will also run on better battery storage and therefore be emission free. We’re working on a hydrogen train that will be launched shortly, and we’re able to recycle virtually 100%.
We’re at 95% of trains like the new Mireo Plus, as an example, that are completely recyclable at the end of their lifecycle. So those are very tangible examples and have nothing to do with greenwashing.
Todd Pruzan, HBR
Those are great examples, thank you. Other companies also say that they’re doing a lot in the sustainability direction. What sets Siemens apart from your competitors?
Judith Wiese, Siemens AG
I’ll start by saying that, in terms of mastering the challenge that we have to save this planet, there cannot be any competition. I think we’re all in this together, so we welcome every effort that other companies take, that we take, as an industry. We are not in any competition when it comes to making progress on things like climate change and tackling some of the world’s biggest issues.
Now, in terms of how that can go about, I’ve already given you some examples of how we do that through and with our customers, e.g., helping them on their journeys and really influence some of the backbones of societies and economies in what we have to offer.
If you consider the stimuli programs that are out there by countries and governments to make big shifts in terms of energy transition, mobility, industrial operations, building technology, etc., I think, with Siemens’ portfolio, we have so much to offer here that is extremely credible but at the same time, we are quite happy that we are not alone in undertaking efforts in this regard.
Todd Pruzan, HBR
That’s great. I can imagine this is also one of the reasons why you joined Siemens in the first place, is that true?
Judith Wiese, Siemens AG
So, we’re talking about technology with purpose, and I think that’s exactly the fascinating mix, isn’t it? We have such great and passionate people that know how to innovate and know how to do technology, but to know that this technology is doing something meaningful is extremely engaging for me.
So yes, absolutely, I feel very proud and honored to be part of the managing board of Siemens that I joined a year ago. If I may add, I’m a complete pandemic-recruit onboarder, so I have done most of it virtually and therefore in a very emission-friendly way, so far.
Todd Pruzan, HBR
That’s amazing. Judith, this has been a great discussion. Thank you so much for joining us today.
Judith Wiese, Siemens AG
No, thank you very much, Todd.
If you’d like to learn more about sustainability at Siemens, and the DEGREE program, please visit www.siemens.com/sustainability.