6 Analysis and Findings
6.2 Why are companies entering the field of access to energy?
The case study, interviews and field observations reveal that Schneider Electric entered the field of access to energy because of both internal and external considerations that can be sub-categorized into company resources, market characteristics, and institutional pressures. Table 9 summarizes the factors that caused Schneider Electric to reconsider its CSR practices and to enter the field of access to energy. Internal resources constituted the largest portion of the considerations. Market characteristics and institutional pressures followed way respectively.
Table 9. Factors for entering the field of access to energy
Expectations and responsibility
Index criteria (Dow Jones, Ethibel and Vigeo)
Guidelines and support (UN Global Compact, SE4A and conferences)
Institutions
Long-term market potential (Fortune at the bottom of the pyramid) Non-traditional customers
Low competition
External
Lack of development (equipment, finances and skills)
Market
In the case of Schneider Electric, the company resources rendered access to energy a field in which Schneider Electric can maximize efficiency and impact. When asked why Schneider Electric started to focus on issues such as improving access to energy, the Business Development Associate responded with, “at Schneider Electric we started working on energy efficiency in the Northern countries and access to energy activities in the Southern countries because we have the right products, know-how, engineering skills and vision.” As a global energy management specialist, access to energy is aligned with Schneider Electric’s vision, and mission. The group saw their knowledge, expertise, technical skills and competencies as
powerful levers for the field of access to energy. Moreover, R&D capabilities and relevant products highlighted the potential for the group to provide solutions. Both the Business Development Associate and Offer Creation Director emphasize the suitability of Schneider Electric’s products. Funding from the Schneider Electric foundation was also mentioned as a supporting resource for the access to energy program. The following statement by the Offer Creation Director summarizes Schneider Electric’s resource considerations.
We realized that we are energy management specialists. If our CSR activities are more aligned with our core business, we can be more efficient and simply do more with our resources. And the resources that I am referring to are all types of resources, not just financial resources. We have the right products and solutions and need to continue to create innovative offers. This can be addressed with the group’s R&D capabilities and knowledge (Offer Creation Director – Access to Energy, Schneider Electric).
6.2.2 Market Characteristics
The market characteristics specifically highlighted the potential of the field of access to energy, as the activities fall within BoP markets in developing countries. The group saw the long-term potential of securing a large customer base and attracting non-traditional customers as an attractive characteristic and that compensates the smaller returns today. Similarly, the low level of competition highlighted the possibility to gain first mover advantages and build customer loyalty as the market grows. The Offer Creation Director conveyed all aforementioned considerations, as well as the reasoning behind Schneider Electric’s three-pronged approach to improving access to energy with the following statements.
The Fortune at the Bottom of the Pyramid by Prahalad [and Hart (2002)], that is why access to energy is attractive. It is a long-term approach and if we are able to enter the market now, it has great potential in the future because right now [neither] Schneider Electric [nor] other companies are known by these people. We are not trying to sell our products and make huge margins. […] if we can make a presence in the market, [as the] people develop and progress, they will buy more Schneider Electric products because Schneider will become family to them (Offer Creation Director – Access to Energy, Schneider Electric).
We find that there are three main reasons [behind the current] access to energy problem. The first one is a lack of affordability. The poor cannot afford suitable products. However, imagine someone who does not have access to electricity. They do not sit in the dark. They use kerosene, and if they could buy a different product for the same price, they definitely will. The second one is there are not enough entrepreneurs doing business in the field and providing electricity to the villages. The third one is a lack of skills. Without skilled electricians, [there will be] no one to do installations. For these three reasons, the BipBop program has three dimensions (Offer Creation Director – Access to Energy, Schneider Electric).
6.2.3 Institutional Pressures
The institutional pressures were partially directed at general CSR activities and partially directed at specific access to energy activities. As indicated by the Business Development Associate, he feels that they have a responsibility as a multinational to engage in activities that benefit society and even more so now as the company has attracted responsible investors.
He observes that “there is a kind of social pressure for Schneider Electric to be doing access to energy activities, [but] it is not precisely formalized.” However, “Schneider Electric must [acknowledge] that as a multinational, [they] often have responsible investors who invest according to sustainability practices [and] there are big issues in society that are considered, more now than before, the responsibility of multinationals.”
Both the Business Development Associate and Offer Creation Director feel that the group was not pressured into focusing on access to energy, instead the group identified it as an appropriate avenue to maximize Schneider Electric’s impact.
There does not seem to be pressure on companies to do CSR programs on access to energy specifically. It was a voluntary decision on Schneider Electrics part to align our CSR program to focus on access to energy. In fact, Schneider Electric hopes to become a champion in sustainable development rather follow norms and pressures. If you take a look, there are many companies that are as us but do not have any such program (Offer Creation Director – Access to Energy, Schneider Electric).
We see [access to energy] as our responsibility and consider [it] a way of being more responsible in our business area (Business Development Associate – Access to Energy, Schneider Electric).
Additionally, guidelines from initiatives such as the Global Compact provide the group with insight to help shape the group’s CSR practices. Specific initiatives, such as the 2012 SE4A initiative, and related conferences also provided direct support for access to energy activities.
The Offer Creation Directors states that Schneider Electric is “benefiting from the [Sustainable Energy for All] initiative because it is helping the group take the BipBop program to the next level.” The following statement by the Business Development Manager summarizes the influence of the Global Compact and the SE4A initiative.
The Global Compact is a very broad framework in terms of sustainable development. It can provide [us with] insights on our activities. On the other hand, the International Sustainable Energy for All initiative is clearly aligned with the ambitions of the access to energy program and the group. That is why we reaffirmed our engagement by setting new goals to provide access to energy to 1 million new households before the end of 2014. Schneider Electric takes advantage of such initiatives and consortiums to exchange with other practitioners and learn. It helps finding new partners, gathering players pursuing the same goal and advocating all together to improve the conditions of creating business principles to serve the people who need it the most (Business Development Manager – Access to Energy, Schneider Electric).