In January 2023, Professors Willy Shih and Mike Toffel led more than 40 HBS MBA students on site visits to witness the energy transition and innovative sustainable production activities throughout Denmark and the Netherlands, in their new Immersive Field Course (IFC). This is one of 13 student essays posted on the HBS Business and Environment Initiative’s Blog that highlights their reflections. Learn more about this IFC course on Decarbonization and Sustainable Production by watching this five minute video summary.
Visit Date: January 5, 2023
Twelve days, sixteen site visits. Hard hats, clean rooms, 2000 degree incinerators. We came to Denmark and the Netherlands in the dead of winter to learn what best-in-class companies were doing to transform their operations for a lower-carbon future. One of our most striking realizations from the trip was the interconnectedness between the different companies we visited and the challenges they collectively face to meet planetary needs for decarbonization.
Grundfos operations and climate targets
Day three of the trip transported us from a focus on renewable energy and power generation to sustainable product manufacturing at Grundfos, the largest pump manufacturer in the world, headquartered in Bjerringbro, Denmark. Grundfos shared the same ecosystem of energy, material, and waste flows with other companies we visited. For example, Grundfos pumps installed in Denmark are powered every day by energy from Port Esberg’s wind turbines and pump water being treated in the Kalundborg Utility plant we visited. Moreover, Grundfos pumps are used to power those same sites – such as in wind turbines’ nacelles that convert wind to electricity, and in district energy systems that pump hot water through piping systems to heat homes and businesses. We also spotted Grundfos pumps on manufacturing lines for Arla’s dairy production and Lego’s iconic bricks!
Upon arrival at the company’s headquarters facility, Grundfos leadership gave us a high-level overview of the organization, structure, key priorities, and sustainability targets. Most notably, Grundfos seeks to be carbon neutral by 2050. Since 99% of the pump’s overall carbon footprint is from the electricity used to power them while they’re in use (which counts as Grundfos’ Scope 3 carbon emissions), Grundfos has historically focused on improving its pumps’ energy efficiency, which they’ve increased – by 83% since 2000. The company has also focused on reducing carbon emissions of its pumps by initiating a take-back program to disassemble pumps at their end of life in order to recycle the scrap materials. For this program to be successful, Grundfos recognized the importance of circular design to be embedded within its design, engineering, and manufacturing processes so that pumps can be separated and broken down into subcomponents. To enable easier recycling, the company embeds sustainable design, and their product engineering teams work to ensure new products are compatible with recycling and take-back programs.
Next, we toured the Grundfos factory floor, which was an amazing opportunity to see in-person their vertical assembly for advanced manufacturing process. This layered approach is quite rare due to its complexity, but has enabled Grundfos to achieve manufacturing efficiencies beyond those of its competitors and further supports its investments in its recycling programs. Our tour included visiting with the team responsible for disassembling used pumps coming back from the field, which entailed their stripping each pump down to its subcomponents and then either recycling these components externally or reincorporating the material back into the Grundfos supply chain. Although the scale of the recycling program is still in its pilot phase and volume is low, the future potential is significant for Grundfos and its customers in terms of cost savings and sustainability targets!
Key takeaways
We left Grundfos with several key takeaways that have given us new perspectives on sustainability.
- An “all of the above” strategy. In companies like Grundfos, where the overwhelming majority of emissions comes from a single activity, we would typically expect to see all company resources dedicated to sustainability focused on that one activity. Grundfos, however, has also dedicated resources to other areas like product take back and remanufacturing, which have a lower potential impact. When we inquired about this, company leadership said that it was a way for more people in the company to be engaged in Grundfos’s sustainability goals, while having a meaningful impact on the waste generated by the company. This inclusive approach to sustainability helps build a culture where everyone takes responsibility for the company’s impact and considers ways in which they can help drive sustainability.
- Collaboration throughout the value chain. Another insight came from our next visit that same day, which was to Arla Foods. Arla uses Grundfos pumps to move milk through its factories. When Arla was looking for ways to reduce their own emissions, Grundfos worked with them to identify areas where and how they could upgrade their manufacturing lines to use more energy-efficient pumps. By Grundfos taking an active role in reducing its Scope 3 emissions, rather than solely relying on others to do so, Grundfos was able to turn a potential liability into a competitive advantage.
- Leveraging regulation for competitive advantage. Grundfos was one of the few companies we visited that had managed to use regulation to their advantage. After achieving massive energy efficiency improvements with their latest generation of pumps, Grundfos successfully worked with regulators to increase the energy efficiency requirements of new pumps for certain applications, allowing Grundfos to have a first mover advantage and capitalize on its investments in the space. Here again Grundfos took what is typically a cost center of the organization—compliance and regulatory affairs—and turned it into a driver of growth.
Grundfos, like many of the companies we visited, is taking serious steps to reduce the environmental impact of its products and services. Their unique position at the center of many other companies has enabled them to see the landscape and take advantage of opportunities to improve their own footprint while also acting as part of the solution for its suppliers and customers.
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Read more posts in the IFC Series:
Deconstructing LEGO’s Decarbonization
Port Esbjerg: Deploying Offshore Wind
HySynergy and Crossbridge Energy
Grundfos: Innovation & Inspiration for Sustainable Product Design
Arla Foods: How Sustainable Can A Dairy Company Be?
Amager Bakke: A Look into the Future of Waste Incineration
Maersk’s Journey to Decarbonize Shipping
BTG Bioliquids: Creating Fast Pyrolysis Bio-Oil from Biomass Residue Streams
Grolsch Brewing Company: Drink Sustainably
Van den Ende Rozen: Greenhouse Rose Production