In conversation with Håkan Agnevall

7 min read

23 Nov 2021

Text

Atte Palomäki

Photo

123RF

7 min read

23 Nov 2021

Text:

Atte Palomäki

Photo:

123RF
 

 

COP26 has told us why countries, businesses and individuals need to keep the target of 1.5 degrees alive. What can leaders, businesses and consumers do to help achieve this and what is Wärtsilä doing about it? Håkan Agnevall, President & CEO of Wärtsilä talks to us about that and more.

The theme of decarbonisation is front and centre today, with climate data showing that global warming continues at an alarming rate. Modern economies are, however, based on fossil fuels. So, how do you see this much-needed and massive transformation unfolding?

We are just coming out of COP26. The 1.5 degrees Celsius Paris Agreement targets, they are alive, but they are clearly on life support. And we really need to accelerate decarbonisation. We actually have the technologies that we need to make this transition already today. But we need to create a level playing field when it comes to the financial equation between the new solutions and the old solutions. At the end of the day, we need to make significant investments in new technology. But this new technology can actually bring down the energy cost overall.

As a CEO, this is something that must occupy a lot of your time. What role do you see here for business leaders in driving this change?

As a business leader today, I really try to advocate the need for change and the need to accelerate the change. At Wärtsilä, we are trying to show to the world that technologies are already available to make the transition. And we also recognise that we are part of an ecosystem. We cannot do or trigger this transition alone. But we can work with our players in this ecosystem to make the change happen. So, being out there making the case and also showing with an engineering approach that there are pros and cons to different solutions. Because there is no one solution that fits all for all for the customer. It’s a different solution depending on where you're operating in the world or which application you have. Another element is, of course, to keep on investing in R&D and make sure that we deliver on our technology commitments.

For companies to be sustainable in the long term they need to be profitable. So, what kind of business opportunities does decarbonisation itself offer?

I think the conversation in general offers some really interesting business opportunities for many companies because the world of customers wants to go green. And it's driven both by regulatory measures, but it's also driven by demand where consumers are looking for green products or green services. Now, when you want to support your customer base, I think it's really important to engage in a dialogue about solutions that fit that particular customer. To be able to be credible in that discussion, you need to have a fairly broad product offering and discuss different alternatives. In our case, we provide that broad offering by focusing and staying cutting-edge in some of our core technologies. And then we partner up with other technology providers to complement our core offering and have a broad offering for our customers.

If we look at this green transition with the lenses of consumers, will it add costs to them?

It will increase some cost. But you need to put this in perspective. And I really like this example from Maersk, which is one of the world's biggest shipping operators. They have looked at what the actual increased consumer cost for a pair of sneakers will be if sea transport goes green. They conclude that for a EUR 100 pair of sneakers, the additional cost will be in the magnitude of a couple of cents. And I think personally that we are all prepared to pay that little bit extra to make the green transition happen.

Well, that cost level certainly does not sound excessive at all. Wärtsilä has recently launched some ambitious climate commitments –'Set for 30'. Could you outline these targets and the impact they will have?

The 'Set for 30' commitment actually consists of two targets. The first target is related to our products and there we have said that we should have a product portfolio that is ready for zero-carbon fuels by 2030. This is where we have by far the biggest impact of the CO2 footprint of Wärtsilä. But then, of course, we also need to walk the talk. So we have also said that as Wärtsilä, we will have a carbon-neutral operation by 2030. And we really think that with this ambitious target, we can show that we are part of an ecosystem and we want to play our role in that ecosystem.

And how will Set for 30 become visible in Wärtsilä’s day-to-day operations?

That's a really good question. I think it will be visible in many steps. It's about how we travel, heat our buildings, and purchase energy for our operation. It's also about our firm commitment to R&D and continuing to evolve our green technologies.

One big driver to secure a smooth transition to carbon neutrality is close collaboration across industries and geographies – involving also policymakers, investors, and even consumers. How is this done on a practical level?

It's about meeting people physically or digitally. It's about interacting, sharing thoughts and ideas and discussing. From our perspective, participating in seminars and in hearings, engaging in dialogue with all these different stakeholders. And that, I think, is a part of business and leading businesses going forward. You need to really engage actively to drive your agenda with a number of different stakeholders. It's an ecosystem. And we need to make the whole ecosystem move together.

And at Wärtsilä, we are doing something quite practical in these terms in Vaasa. Could you elaborate a bit on that?

We are really excited to inaugurate our Smart Technology Hub sometime in 2022. And this is actually a hub where we are bringing together the Wärtsilä team cross functionally. But we are also opening up new ways of working, in which we invite external parties and external partners to join us to work together and share innovative ideas. Being very hands-on is how we must work to evolve future technologies.

My final question to you is, what is the recipe that ensures a company is both sustainable and successful in its operations?

I think you could look at that from two perspectives. You can look at it from what you offer to customers and also how you execute in your internal operations. If you start with the customer offering, I think one needs to acknowledge that it's going to be a transition. There will be multiple solutions and there will be mixed solutions. It will not be a digital shift from zero to one. And it's because the solutions that we're going to implement need to be sustainable – both from a financial and environmental perspective. So, it's a gradual shift and you need to tailor your offering accordingly. On the internal operation, it's about continuous improvement. It's about setting ambitious targets and then continuously using all the good ideas within the organisation to really see how you can create sustainability in your internal operations step by step.

This interview has been abridged. To hear the complete conversation, please listen to the podcast.