nVent Shares ESG Insights

Recently nVent released their 2022 ESG report (on 2022 activities). For those who don’t know, ESG stands for Environmental, Social and corporate Governance.

While every company strives to be a good corporate citizen, some companies have formalized their efforts into an ESG initiative and have it internally managed. Some have gone the next step of having a third party audit their initiative and rate them. This frequently culminates into a report. Many publicly held companies publish the reports as there are investors who request this information and actively invest in these companies. And yes, some private companies, and distributors such as Turtle, also issue reports.

When nVent released their report they encouraged questions, so, since they asked, I reached out with questions for Michelle Mennicke who is the ESG Program Manager at nVent where she has helped lead nVent’s ESG reporting efforts since 2019. Before moving into her current role, Michelle managed the nVent Foundation and helped execute the company’s Inclusion and Diversity initiatives.

nVent and ESG

1. A number of large electrical manufacturers, and at least one electrical distributor, have undertaken this type of initiative and shared an ESG report. Aside from the need / desire to improve the environment as well as DEI and governance issues, why was this important to nVent and what should it convey to nVent’s electrical distributors? To their customers?

Michelle: ESG has been a core part of our strategy and how we operate since the beginning. As the world becomes more sustainable and electrified, we are supporting our customers’ sustainability efforts with our products and solutions that help make their systems more efficient, more resilient and safer. At the same time, we prioritize good governance and ethics; inclusion, diversity and growth for our people; and sustainability for our planet. When customers and distributors do business with nVent, they know they are doing business with a company that looks to the future and takes sustainability and other ESG issues seriously.

2. What was the process that nVent undertook to develop the various initiatives and monitoring systems to not only ensure compliance to nVent’s objectives, but how will achievement of these objectives impact the company? Customers (distributors)” Their customers?

Michelle: When we began our ESG program we conducted a materiality assessment that surveyed our various stakeholder groups—employees, customers, distributors, investors etc.—on what issues were important to them and where we could make an impact. We updated this assessment in 2022 and plan to update it regularly in the future as part of our broader stakeholder engagement program. While these assessments help inform our ESG strategy and focus areas, we have been engaged in ESG-positive efforts since the beginning of our company. We know that our customers want products and solutions that help them drive energy efficiency, improve safety, add resiliency, and support their sustainability goals. Building these kinds of considerations into our new product introduction process was a clear step for us to take not only from an ESG perspective but from a business perspective as well.

Another example of this is our work in inclusion and diversity. We provide an inclusive work environment that drives innovation, connection and growth for our employees and business partners. We believe that diverse perspectives are key to our ability to innovate for our customers and grow. Our focus on inclusion and diversity starts at the top with our diverse board of directors and executive leadership team and is woven throughout our organization. We are an inclusion and diversity leader in the electrical industry and we are engaged in programs that make an impact outside our four walls—for example, iBelongHere is a partnership between manufacturers and distributors in the electrical industry working to make the industry more inclusive. Building diverse business relationships through our supplier diversity program and creating new business opportunities with diverse customers also supports our growth trajectory.

3. What are the key criteria to earn the silver rating from EcoVadis?

Michelle: EcoVadis assesses companies in four main categories: environment, labor and human rights, ethics, and sustainable procurement.  The bar for each of the EcoVadis sustainability ratings is updated regularly to reflect increasing expectations for corporate sustainability. nVent’s results demonstrate continuous improvement towards greater transparency and positive impacts in each of the four EcoVadis assessment categories

(Note: Here’s a link to the 4 levels of EcoVadis medals and the criteria for achieving each.)

4. It appears that much of the company’s “improvement” in the rating system can be attributed to “people” issues. While that is an admirable internal metric, what is the impact on this to customers? Did it impact customer perception relative to ease of doing business? Satisfaction? Friendliness? Or similar?

Michelle: Inclusion and diversity have a direct impact on our business. Our vision is to create and sustain an inclusive environment that fosters business growth—we are building an industry-leading, diverse, global and multicultural organization. For example, our supplier diversity program is focused on increasing the representation of diverse suppliers in our competitive supplier selection processes. We believe that partnering with diverse suppliers increases our access to talented business partners, resulting in more innovative solutions for our customers. Our inclusion and diversity initiatives are a major component of our ESG strategy and goals.

Our values and culture are also a major part of our people focus within our ESG program. One of our values is Customer First. We make it easy for customers to do business with nVent and we are tenacious about meeting customer commitments. Innovation and Adaptability, and Absolute Integrity are also part of our values. These values have a strong impact on what customers can expect when they do business with nVent. We commit to high standards of performance and demonstrate ownership for getting the job done, and we are committed to honest and ethical business practices in our dealings with customers, business partners, investors, communities and each other.

Our work in the People pillar—the “S”—in ESG is extremely important because it shapes our relationships with our customers and distributors just as it shapes our work with one another. However, we also made significant progress in our Planet and Product pillars as well, reducing our CO₂e emissions by 7% relative to 2021, increasing our renewable energy consumption, and increasing the number of products we are bringing to our customers with a positive ESG impact.

5. The report is extensive. Many I’ve spoken with feel that these reports are more focused on the financial community and/or targeted to internal communications. While these are important audiences for specific reasons, where they the primary drivers of the report, recognizing that, presumably, the initiatives would have been undertaken without the recognition. What should be the top 3-5 takeaways for nVent’s manufacturer representatives (salesforce) and its customers (distributors)?

Michelle: While investors and employees are important stakeholders for us, our materiality assessment and other feedback mechanisms certainly include customers and distributors as well. Our ESG efforts add value for our customers and distribution partners:

• We are increasing the percentage of products and solutions in our new product introduction funnel with a positive ESG impact and innovating for our customers. Our products and solutions can be used to add energy efficiency, provide resiliency and protection, improve customer productivity, increase lifespan and serviceability, drive safety, and support our customers’ sustainability goals.
• We are committed to operating ethically and sustainably. We source our materials for our products responsibly and our teams are trained on our Code of Conduct. Being a good steward of the environment is integral to how we operate and we are focused on developing highly differentiated solutions with measurable ESG impact for our customers.
• We are growing in sustainable and electrified industries like data solutions, power utilities, renewables, energy storage, e-mobility, industrial automation and more. Our products and solutions will be critical to the electrified future.

Takeaways

Thank you to nVent, and Michelle, for sharing these insights. It’s great to see a company progressing on many of these issues, for themselves as well as the greater good.

I reached out to some distributors and nVent manufacturer reps to see what this means to them. The feedback was “it’s nice”. The reps felt that it was admirable for nVent, however, they had not heard any feedback from their distributors nor felt that it added to the sales conversation … just that it was a good internal initiative. Distributors were positive from a “feels good” viewpoint for nVent but that it has no impact from a relationship or revenue generation initiative.

The revenue generation aspect, however, does tie to another topic. We recently completed a project where we solicited some eCommerce product data input for a manufacturer. One question asked, “What additional product data information would you like?” as I’ve heard some distributors ask for additional value-added information. One type was “ESG information.” Being inquisitive, I asked, “what type of ESG information?” The feedback was “I don’t know but some of our customers are asking for it.”

So, why are some customers asking? When digging further, the companies asking are typically large companies. Publicly held or could be government-oriented. The reason – they have “check boxes” for internal reporting requirements. Similar to “set asides”, either personnel, or the company, is being measured on business conducted with “like” companies. To a point this is similar to the ISO “craze” from years ago. Not a reason to undertake a formal ESG initiative, but could be a fourth tier benefit (and I remember a few years ago Southwire received a loan based upon sustainability, which is an ESG criteria given “environmental”. Southwire issued sustainability reports up till 2019.)

Congratulations to nVent on the initiative and thank you for your transparency in sharing information with us and the electrical industry.

While the precepts of ESG are probably important to your company, is issuance of this information important to you as a customer? As a rep? As an employee? As a prospective employee? (and yes, you can share feedback anonymously or email me your thoughts and I’ll “sanitize” for you.)