Hakan Bulgurlu, head of one of the world’s biggest appliance makers, tells Terry Slavin why it's in the interests of companies to act alone on climate, even if regulators lag

A growing number of CEOs have embraced climate change as an important issue for their companies, but there are few who have gone to the same lengths to get to grips with the problem as Hakan Bulgurlu.

The chief executive officer of Turkish white goods giant Arçelik, the highest scorer in its sector on the Dow Jones Sustainability Index, joined an expedition to the top of Mount Everest two years ago to raise awareness about of the melting Himalayan glaciers among his staff of 43,000.

It was a publicity stunt, but an emotionally and physically gruelling one for the self-proclaimed “climate activist”. In a book to be published next month, A Mountain to Climb, Bulgurlu describes the devastation he felt walking past the frozen bodies of climbers who had not survived the ascent, and the challenges of dealing with altitude sickness, dehydration and exhaustion.

“I have always enjoyed physical challenges but, despite the very best training, nothing could have fully prepared me for the physical and mental adversity of climbing Everest,” he writes. "(But) I knew I needed to do something bold to grab the level of attention that this issue deserves.”

For my generation it was a question of abundance, whereas (my children’s) generation may have food security issues

Whatever attention his book garners, COP26 in Glasgow last November represented a breakthrough for the 49-year-old businessman, who is at the helm of one of the world’s biggest appliance companies.

Arçelik, which produces brands ranging from Grundig air conditioners to Beko fridge freezers and factories in nine countries, was among 45 companies awarded the prestigious Terra Carta Seal by HRH The Prince of Wales at COP26 for its work on cutting CO2 emissions in its operations and the products it makes.

More recently, Arçelik appears on the latest Corporate Knights Global 100 2022 ranking, for the second consecutive year.

In an interview at COP26, after appearing on a panel with the International Energy Agency's executive director, Fatih Birol, Bulgurlu said he became aware of the urgent need to act on climate change in 2016 when he joined the World Bank’s High-Level Commission on Carbon Pricing and Competitiveness,  and saw the climate data.

For his three young children, he says, the only thing that matters is the state of the planet they inherit, not what kind of car or house own.

“For my generation it was a question of … abundance, whereas their generation may have food security issues. It doesn’t matter what kind of material goods you give them. With rising inequality there will be no security.”

Living in Turkey, which for the past decade has sheltered millions of refugees fleeing conflict in neighbouring Syria, Bulgurlu is more aware than most of the destabilising impact of climate refugees.  
He referred to a speech made by former U.S. Vice President Al Gore at COP26, warning of 1 billion climate refugees over the coming decades and the rise of authoritarian populism around the world.

“We saw with the Syrian conflict 6 million refugees, only 1 million in Europe, and look what happened in Europe,” says Bulgurlu. “We had regime change, people like (Hungarian prime minister Viktor) Orbán in power because of the fear of refugees. I can’t even begin to imagine what will happen to the billion people (who become climate refugees). They aren’t moving for a better life. They are moving because they are hungry, and we won’t be able to stop them.”

Time is short. Everyone is taking about 2030, but it’s too abstract

While the Intergovernmental Panel on Climate Change (IPCC) has said global emissions must fall by 45% by 2030 to keep global warming to safe levels of 1.5 degress Celsius, last month at the World Economic Forum’s virtual Davos summit, United Nations Secretary-General Antonio Guterres warned that emissions are instead on track to increase by 14% by 2030.

“Time is short. Everyone is taking about 2030, but it’s too abstract” Bulgurlu said during a panel at COP26.

To concentrate minds Bulgurlu says he keeps a countdown of the time remaining, and asks his teams on a weekly basis what they have done towards helping the company meet its emissions reduction goals.

The goals, which have been validated by the Science Based Targets initiative, call for a 30% cut in emissions from its operations and supply chain by 2030 (from a 2018 base year), with emissions from the use of its products cut by 15% by the same year. Last year it revised those targets in line with a 1.5C scenario, and is now aiming for a 50% cut across all scopes. 

In its own net zero roadmap for 2050, published last year, the IEA said that to keep on track energy efficiency globally has to improve three times as fast as now, so that by 2030 global energy demand is 7% below 2020 levels.

“But energy efficiency doesn’t get the attention from policymakers that it deserves,” Birol said,adding that countries like India, Indonesia, Thailand, Vietnam and China, together home to 3.5 billion people, should be prioritising the introduction of energy efficiency standards for air conditioners.

He pointed out that the average air conditioner in Asia is two-thirds less efficient than in western markets and Japan. But with only 10% of households owning one, compared with 95% in the United States and Japan, the scope for demand to soar as incomes and temperatures rise risks undermining global efforts to cut emissions.

We need (both) regulatory and fiscal measures to ensure the cost of meeting efficiency standards is not passed on to consumers

“It’s such a serious issue, it can’t be left to CEOs,” Birol said. “We need (both) regulatory and fiscal measures to ensure the cost of meeting efficiency standards is not passed on to consumers.”  

Bulgurlu agreed on the need for countries to follow the example of Europe, which last year introduced stringent new energy labelling for consumer products.

“But Europe only represents 8% of global emissions. We manufacture in places like Pakistan, Bangladesh, India and Vietnam, where the growth in emissions is going to come from.
Companies need to take the lead, in the absence of regulation and clean up their act. They will be rewarded by consumers.”

He gives the example of South Africa, which at COP26 was promised $8.5 billion by wealthy nations to help end its reliance on coal.

When Arçelik bought the country’s leading appliance brand, Defy, in 2011,  “Almost all cooling products in South Africa were rated ‘E’, the worst offender,” Bulgurlu said. “Yet this is a country with rolling (power) blackouts” because, even though 80% of its power comes from coal, there isn’t enough electricity to meet demand.

“We decided when we bought the business to only sell A-rated appliances. Everyone said we’d lose market share … But our market share grew by 35% to 45% in five years.”

And competitors were forced to follow suit, Hakan said, calculating that the energy savings were enough to prevent two 500MW coal power plants from being built.

In a warming world, making its products the highest level of water-efficiency is equally important, Bulgurlu says. And this was the more salient issue he was trying to highlight with climbing Mount Everest.  

A World Bank study last year found that black carbon deposits from pollution are adding to the impact of climate change and speeding up the melting of the Himalayan glaciers, which feed river systems that provide water for more than 750 million people.

You realise that 30% of the glaciers are (already) gone, and in the next 10 to 15 years the rest are going to disappear

Bulgurlu admits that this wasn’t uppermost in his mind in 2019, when Arçelik acquired home appliance brand Singer Bangladesh.

“When we were buying it, we didn’t think about water risk at all,” Burgulu says. “But then you realise that 30% of the glaciers … are (already) gone, and in the next 10-15 years the rest are going to disappear”, leaving hundreds of millions without water.

Singer doesn’t sell dishwashers – yet. As in neighbouring India, people tend to wash their dishes by hand. But Bulgurlu says handwashing can use 150 litres of water, while the most efficient dishwashers he sells can do the same job using as little as 6 litres.

So, great for water security, and a big business opportunity for Arçelik, but can our over-taxed planet afford the vast volumes of plastic, steel, rare earth metals and polluting chemicals necessary to flood Asia with hundreds of millions of dishwashers, as well as air conditioners and washing machines? And that’s even before you consider pollution from all the accompanying packaging.

Bulgurlu argues that it isn’t fair for consumers in developing countries to be denied comforts and convenience that westerners have enjoyed for decades. “You can’t tell people not to own a refrigerator when we in the west own two or three,” he says.

And in a city like Mumbai, where temperatures can top 50C, access to air conditioning it’s a matter of human rights, not just fairness, he says. But those appliances need to be the most water- and energy-efficient in use, and resource efficient in how they are produced, and disposed of, he adds.   

He says Arçelik has built recycling infrastructure in Turkey, and managed to take back 1.3 million appliances between 2014 and 2020, recovering and reusing materials.

This is, of course, a tiny percentage to the 50 million appliances the firm put out into the world last year, but Bulgurlu maintains that the circularity agenda is a top priority. Significant sums of R&D are being spent of designing products to be more recyclable, and into reducing the environmental impact of its packaging, he said.

You need determination, absent of a return calculation

During the panel discussion at COP26, Bulgurlu said the company had stopped using expanded polystyrene, plastic and toxic inks in all its small domestic appliances, substituting them with recycled materials that can be recycled again, mainly cardboard.

The company has set a goal is to remove polystyrene, a leading cause of marine pollution, from all its products within the next three years, though it’s proving difficult to find suppliers for the volumes required.

“You need determination, absent of a return calculation,” Bulgurlu said. “But there’s another metric there: value for nature, and when you put that into the equation, it should have been done yesterday.”

 

This article is part of the February 2022 issue of Sustainable Business Review. See also:

Policy Watch: Why global progress on climate may hinge on Biden’s Build Back Better bill

Brand Watch: Will 2022 be the year that sustainable consumption finally takes hold?

ESG Watch: Disclosure pressures to grow as investors push for transparency and a just transition

Society Watch: Indigenous people ‘critical to tackling biodiversity loss’ in crucial year

Mastercard’s Kloberdanz on why companies have to plug the ‘trust gap’ on nature

Melting himalayas  air conditioning  Grundig  Beko  Corporate Knights Global 100  Terra Carta Seal  IEA  IPCC  SBTi  water efficiency