Just last week, I penned an article on Flex, which recently joined the Science Based Targets initiative (SBTi), a coalition of companies who have committed to achieving the standardized emissions targets put forth by the Paris Agreement. In that article, I outlined some of the specific goals and took a look at Flex's results thus far in the realm of sustainability.
This week, I want to turn my attention to how Flex plans to achieve these goals. I’m hopeful other companies in the contract manufacturing space like Foxconn and Jabil will take notice as I believe many companies are behind. I recently had a chance to talk with Flex's Kyra Whitten, VP, Corporate Marketing, Communications, & Sustainability and President, Flex Foundation, and Mario Ochoa, VP, Corporate Real Estate, Facilities, & Workplace Services, in more depth about Flex's plans. Let's dive in.
To understand what Flex has undertaken, it's helpful to know the size and scope of the company. The fact alone that Flex manufactures products separates it from many other tech companies with solid sustainability plans. One can imagine it would also make meeting its goals a little more complicated, given the raw materials and energy that manufacturing facilities consume (versus, say, an IP company that specializes in licensing). The San Jose-based manufacturer currently operates in 30 different countries. Its facilities (where much of the reductions will occur) total approximately 45 million square feet, including offices, design centers, logistics centers and manufacturing sites. All of these things considered, my first question was how on earth is Flex going to hit its ambitious scope one and scope two GHG emissions goals? Ochoa responded to my question with an adage—the only way to eat an elephant is to quarter it into pieces. Eating an elephant runs slightly counter to the idea of environmental conservation and stewardship. However, it's still a good strategy: take a big, intimidating project, and break it into bite-sized pieces. In Flex's case, three distinct "bites."
#1: Use less power and upgrade the infrastructure
The first point of order is a no-brainer—Flex will strive to use less power by upgrading its factories and other infrastructure to make it more efficient. Reducing power consumption directly translates to cutting emissions, though the trick, of course, is maintaining the same output. That's where upgrading the infrastructure comes in. Ochoa says Flex will be looking at upgrading many components and processes within its organization to make its facilities more efficient—air conditioning, lighting, electrical distribution, production equipment, and more. Ochoa considers this to be essential for Flex to cut harmful emissions without limiting its output.
#2: Utilize renewable resources for power generation
Second, Ochoa says Flex will focus much more intensively on using renewable resources for power generation on its campuses. Ochoa shared that Flex will be focusing predominately on solar energy, noting that the country has already deployed more than 20 megawatts of solar energy systems across its footprint over the last ten years. Ochoa says Flex plans to double that amount over the next ten years, giving the company the ability to generate its renewable energy.
#3: Buy renewable energy
While I did not see specific numbers and percentages, Ochoa noted that these first two approaches will still not present enough opportunities to neutralize its carbon output thoroughly. For that reason, Flex's third strategy is purchasing renewable energy to make up the deficit. Ochoa shared that Flex plans to do forward purchase agreements where the power is generated to offset the power taken from the utilities. Additionally, Ochoa says Flex will work with customers and suppliers to invest in these kinds of projects in underserved markets.
Ochoa noted, and I agree, that there is no "silver bullet" strategy that will work in every single country Flex operates in, or for that matter, in every worksite. Some countries, instead of sharing the same agenda of a carbon-free, sustainable economy, want to go in the opposite direction. Flex may have to get creative in its combination of the three strategies listed above, investing in long-term plans to generate energy on-site while buying renewables to offset things in the meantime.
Also potentially complicating things is that Flex set the cap on its carbon emissions from its baseline in 2019. If the company proliferates and grows, Flex may have to act even more aggressively to offset its emissions. Ochoa noted that any new companies Flex brings into its fold need to come already carbon-neutral or have plans in place to avoid falling behind. Every year the company fails to keep its emissions under the cap, it will roll over to the next year and make it that much more challenging to meet the end targets of the SBTi.
The investment Flex is making to achieve these targets is not insubstantial. Whitten shared that the company expects it to be in the $100M+ ballpark, though Flex will build many of these changes into its regular refresh maintenance. Furthermore, some of these investments will happen incrementally over time instead of being absorbed all at once (hence the ten-year timeline).
As we wrapped up our discussion, Ochoa stressed Flex's intent to bring every individual, all 160,000 people of its workforce, on board with the program and its vision. Flex plans to do this by educating its employees and implementing programs that encourage employee participation and contribution. This is an intelligent approach, even if its results are somewhat intangible and hard to measure. Cisco comes to mind when I think of other companies that encourage their employees to align with its vision of corporate social responsibility.
While there is another contract manufacturer in the SBTi (Celestica), Whitten noted that Flex is the only one with a complete set of accepted goals spanning scopes 1, 2 and 3. As far as I see it, this makes Flex a (if not the) leader in environmentally sustainable tech manufacturing. Will Flex meet its goals? And then some? Time will tell, but I'd say its three-part strategy is the right mixture of focus and flexibility to achieve some actual results it can be proud of.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.