nVent’s Sustainability Report, Observations and Questions

The drive for “sustainability” is powering the green movement and much of the electrification initiatives that are supporting the electrical industry, culminating in sales for distributors and manufacturers.

From a more all-encompassing viewpoint, the term “sustainability” represents even broader initiatives for publicly-held companies. For most it is reflected as ESG initiatives – environmental, social and governance.

While companies tout this as the “responsible” things to address, and it can be, another reason is that shareholders, and especially institutional shareholders, have metrics that drive their investment decisions … and companies want to appease / appeal to these investors. (Yes, somewhat cynical, but this is also what stock analysts have shared.)

But there are elements of sustainability initiatives that are good for the environment, improve company processes and infrastructure, and can generate operational savings.

With this as a background, nVent shared a press release announcing results from their 2023 Sustainability Report. Their areas of focus are People, Products, Planet and Governance. They have a dedicated section of their website focused on their ESG initiatives.

Key points, according to the press release, are:

• “Increased global representation of women in management by 4%.
• Increased renewable energy consumption to 15%.
• Reduced total greenhouse gas emissions by 9%.
• Improved our safety performance, reducing total recordable incident rate by more than 20%.”

Achieved its goal, ahead of target, to make 100% of product environmental data digitally accessible to customers.

So, being curious, I asked, “Why should electrical distributors and nVent’s sales organizations (rep and direct) care about sustainability?”

The response, from Michelle Mennicke, nVent’s ESG Program Manager, was:

“With the electrification of everything and build-out of electrical infrastructure across the world, nVent and our distributors will play a key role building a low-carbon future. Our solutions support growing green and clean tech industries like renewable energy, energy storage and data centers. As these industries grow, our customers are looking for partners that can help them drive efficiency and resiliency in these critical systems. Customers pay for electricity, water use, and raw materials. Solutions that help customers use energy efficiently, minimize water use and reduce scrap and rework are good for the planet and for the bottom line. Our distribution partners and reps will share in the opportunities we have to grow with the trends of sustainability, electrification, and digitalization.

At nVent, we have seen that many of our stakeholders—including distributors, customers, suppliers, employees, and shareholders—are asking us for information on how we improve sustainability both within our company and throughout our value chain. Distributors and customers want to do business with companies that are innovative and forward-thinking. We are well-prepared to continue to evolve our sustainability practices and reporting as additional expectations, regulations and opportunities emerge, making us a better partner to all our customers who rely on our solutions.”

With this as background, I decided to read through the report learn some nVent tidbits and to identify specific elements that, IMHO, could be viewed as customer selling points:

nVent Tidbits

• Company believes its “people and culture are a differentiator”. (This is true for most / all companies, the question becomes, “to whom” and how to operationalize (or effectively communicate) this to product buyers. To distributors it can be done through thought process and implementation of strategies that improve communications, generate supply chain / operational efficiencies and effectiveness, as well as strategy development to drive sales. To contractors / end-users, the key is thoughtful product development and communication of product value proposition. The question for distributors to consider, and this is for all manufacturers, is how well does the manufacturer (or in this case nVent) do in getting its message to you / key audiences?
• “Our value propositions include providing solutions that are eco-friendly and deliver safety, resiliency and protection, energy efficiency, customer productivity and improved lifespan and serviceability.” (Distributors / reps … are you promoting these product value propositions? Consider which audiences / industries these are most pertinent for, understand the “why”, and consider working with your nVent contacts on strategies to get these specific messages communicated.)
• Achieved our goal to make product environmental data 100% digitally accessible to customers.” (I’m hearing from distributors and manufacturers that this is becoming more important to industrial customers and selected contractors (changes by type of project) are requesting this information. Kudos to nVent. Hopefully this information is finding its way into IDEA, is being provided to other industry data sources such as DDS, and is directly available to reps, distributors and on nVent’s website.)
• nVent does business in 35 countries. 49% of its business is enclosures, 33% is the in its Electrical and Fastening Solutions (EFS) group and 18% is thermal management. 40% of the business is industrial, 30% is commercial / resi, 25% is infrastructure and 5% is energy.

ESG Initiatives

(and remember, we’re focusing on things to help sell, but read the report for other info.)

• The Planet benefits ranged from reducing gas emissions, water consumption and energy (via a lighting upgrade in its factories) to increased renewable energy usage. While all are important, the percentages suggest that the savings generated, while improving profitability, are not enough to drive benefits that would accrue to the channel or customers. For instance, the LED upgrade projects is saving $2.5 million annually.)
• A benefit, as previously mentioned, is digitally accessible environmental data (assuming the information is available to the channel, is marketed to key audiences, and will be maintained.)
• One of nVent’s goals is “Ensure inclusive and equitable quality education and promote lifelong learning opportunities for al” (This could be further expanded to supporting its agents (who, after all, are their sales organization) and to its distributors. Greater participation in NAED and NEMRA training / learning initiatives, and scholarship programs, could be a good first step.)
• The company invests much energy, perhaps financial resources, into the People plank of its platform to seek input and diversity. (The question becomes, what has this meant to reps / distributors to drive creativity, responsiveness and accountability. Do these audiences feel “heard” given that they are representatives of the company?)
  • nVent is involved in NAED’s IBelongHere initiative.
• For its ESG Product initiatives, nVent is pursuing “Eco-friendly Designs” with lower environmental impact by extending product lifespan and serviceability, improving energy efficiency and reducing the demand for more materials. (Each of these have the potential to have customer benefits. The key is integrating this into nVent’s marketing and sales messaging and into training tools and ROI calculators.)
• The report highlights some key verticals for nVent – data centers, renewables, commercial buildings, power utilities, clean tech, energy storage, E-mobility, and industrial solutions. (Reading these sections may give reps, perhaps distributors, ideas to assist in their sales and marketing outreach.)

The report spends much of the 60 pages on the People section (another 15 or so are Appendix and non-reading sections!)

Overall, the report is comprehensive.

Congratulations to nVent for its achievements. From an employee viewpoint, it should be desirable. From an investor / analyst viewpoint, if ESG is an important metric, the report is beneficial and supports those entities’ investment thesis. For reps / distributors, it could be a nice “feel good”, however, in speaking with some reps and distributors, their mentality is more “action / deliverable-oriented” and were asking “what does this mean to me / how does this help me?”

There are opportunities for nVent to answer this question, communicate its message, and potentially turn its ESG initiative into a demand generation initiative.

Questions

So, as a distributor …

• How will you deploy this information to help you generate demand for nVent products?
• How can you convert this information into an ROI … into sales?

Reps …

• How could you envision communicating the value of this to your distributors?
• To contractors?
• To industrial end-users to gain specifications / sales?