Replacing millions of submersible diesel pumps with sustainable solutions, an ambition for Grundfos
Grundfos A/S, the world’s biggest pump manufacturer in terms of value and volume, is aiming to be a major catalyst in sustainability by solving water challenges and climate change issues. In an interview with The Hindu, Mads Nipper, CEO & global president, Grundfos, said the Danish company, by supplying energy efficient pumps, can help reduce 50% of energy consumed by water pumps globally.Edited excerpts:
What do you see as potential threats to environment and what can Grundfos do about it?
I personally believe that the world’s two biggest potential risks right now are climate change and water challenges. And even we are not a huge company, we are only $4 billion. It is fascinating to think how we have good chances to be one of the world’s most important companies in addressing water and climate change challenges. 10% of the world’s electricity is consumed by pumps and that can be reduced to half with the existing technology.
Many other water problems that people are facing are solvable.
The technical solutions are here. My dream is that Grundfos becomes a catalyst for other companies to structurally start addressing those challenges.
We are a water and energy efficient company that happens to be the biggest pump manufacturer of the world.
How challenging are climate change and water scarcity and as a company, how are you addressing it?
As per the global risk report by the World Economic Forum, six out of the 10 greatest risks faced by humanity are directly related to climate change and water. These are the biggest risks humanity faces. There, of course, will be wind turbines and solar panels creating substantially more renewable energy. But for the next 10 to 20 years, it will be incredibly important to combat climate change. Digital solutions to not only optimise the pumps, but also the systems in which those pumps are seated will have a huge potential. On water, our role will be to bring solutions and technologies that can make these work a lot better, and find new business models that can make water much more accessible.
India has seven to 10 million diesel submersible pumps, which is a disaster, because diesel-driven pumps are not reliable and are polluting. So, how can we be a catalyst to replace all that with sustainable solar power solutions? We can’t do that ourselves, but can help the government find business models for that. Those are the kinds of ambitions we have.
The same thing is in sub-Saharan Africa. There are hundreds of millions of people living without access to basic water. But they all have mobile phones. So, how we can create a micro payments ecosystem to make clean water available to those who essentially pay symbolic fees for accessing clean water. Investing in those business models and working with partners is some thing we can do through technology.
How challenging was it to turn the company around?
At Grundfos, technology has been developed at one place in the world, up here. We decided to spread out. So, more R&D is now happening in India, China and the U.S. In 2013-14, when Grundfos had profits declining for five years in a row, the short-term task was to get that back to a decent level. Not that we had greedy owners, but if you want to invest for the long term, you need to have decent earnings. So, the first two years for me was very much about getting to know Grundfos and not just the product, but also spirit and the soul of the company, and then it was to make it relatively a classic financial turnaround.
And the future is about strengthening the current business of pumps. But building much more on top of that is the digital journey. Digitalisation will play a huge role.
Your company is 85% owned by the Foundation. How about your spending on charity?
The Foundation has in its charter that to be a good owner, we must spend on water research and water access for the world’s poorest and for education and local society. We give between $20 and $30 million every year in charity. I am happy and proud that Grundfos makes solutions that do really good things. And, we can make some money in doing it. Our Foundation, Bills Gates and Melinda Gates Foundation and Tata Trusts do a great thing through charity.
In Africa, we supplied water to almost a million people. It made a huge difference to the families when they got access to water. When women and girls do not spend five hours to fetch water, they will have time to go to school and do productive things. We got paid for our services, but in the process helped changed lives.