Xylem Inc.
Leading the charge as a responsible steward of the world’s water resources
Climate change is expected to have a significant impact on water supply and quality globally. Altered precipitation patterns, increases in runoff, and rise in sea levels will challenge the availability of clean water for communities and industries across the world. Moreover, transporting, treating and using both clean water and wastewater generate significant greenhouse gas emissions.[1] In this context, Xylem Inc., a leading global water technology company, is in a unique position to improve the productivity of the water sector and “build resilience to water-related challenges associated with climate change.”[2]
Xylem, headquartered in Rye Brook, New York, was formed in 2011 after being spun-off from ITT Corporation, and has established itself as a leading developer of water technology. The company has a physical presence in over 150 locations across the world, and in 2015 had revenues of US$ 3.7 billion and approximately 12,500 employees. Its technology solutions are designed to span the entire water cycle: water productivity solutions to help customers acquire and use water more economically, water quality solutions to help customers manage and renew wastewater in an affordable and environmentally responsible fashion, and water resilience solutions to help customers manage and reduce water-related risks, including floods and draughts. The company markets and sells its products in the United States, Europe, the Asia Pacific, and internationally.[3]
Having identified the inherent linkages between climate change, water, and sustainability, Xylem has successfully made sustainability a deliberate priority. Nowhere is this more apparent than in its mission statement – “Let’s save water.” In demonstrating its commitment to advancing sustainable solutions in the water sector, Xylem has set ambitious operational goals for itself.
The company’s sustainability strategy is intertwined with its business strategy, and its sustainability goals are incorporated into its business planning process. The company has taken a four-pronged approach to climate change risk mitigation: products, operations, employees, and stakeholder engagement.
- Products: The company is focused on driving energy efficiency across its product lines. In 2015, the company replaced nine legacy pumps in its Applied Water Systems division with newer, more efficient models. Separately, the company continues to introduce new products that will enhance energy efficiency for its customers – In 2015, Xylem’s pumps and mixers that were installed in an Italian wastewater treatment plant reduced energy consumption by 65 per cent. In the United States, the company provided the technology to recycle 85 per cent of all water used in the 68,500-seat Levi Stadium in Santa Clara, California[4]
- Operations: The company has committed to, in its own operations, reducing water use by 25 per cent, greenhouse gas emission intensity by 20 per cent, and waste to landfill rates by 20%
- Employees: The company has instituted a corporate citizenship program called Xylem Watermark, through which it aims to increase employee involvement in sustainability initiatives by 15% year over year. In 2015, through the program, the company’s employees provided contributions towards ensuring adequate water supply for more than 90,000 Syrian refugees
- External stakeholder engagement: The company actively engages with external stakeholders to drive its sustainability agenda, and is a founder member of the Value of Water Coalition, which brings together leading industry players to increase awareness about water scarcity and conservation[5]
Can other companies emulate Xylem’s successful sustainability practices? Ultimately, there are a few key factors that have made Xylem’s climate change policies successful.
- Alignment with core products: Xylem operates in an industry with a high degree of technology obsolescence risk; the company has come out ahead of this with a publicly stated focus on innovation oriented towards mitigating climate change. Other companies may also choose to seek out creative ways to incorporate sustainability into their core value proposition
- Commitment to people and organization culture: The company has built a culture where sustainability is not an afterthought but a business priority. Its leaders, frontline managers and employees are held accountable for safe, ethical, environmentally responsible and forward-looking actions that support the company’s sustainability goals. This is in my view the most easily replicable, but arguably the hardest to get right, of Xylem’s sustainability practices
- Conscious oversight, monitoring, and reporting: Not only has the company set out its sustainability goals, it does so annually and publicly. It has created a Sustainability Steering Committee which includes representatives from multiple geographies, businesses, and functions within Xylem to specifically drive sustainability efforts and monitor the company’s progress.[6] Other companies can choose to adopt this approach as a means to create external and internal accountability for their sustainability goals
Overall, I believe that Xylem has differentiated itself in approaching sustainability as an integral part of its business strategy. Going forward, the company should continue to maintain its leadership as a sustainability champion by seek outing partnerships with organizations across its supply chain to align and amplify its sustainability priorities.
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[1] http://nca2014.globalchange.gov
[2] http://impeller.xyleminc.com/xylem-commits-to-american-business-act-on-climate-pledge/
[3] Company website
[4] http://sustainability.isourbusiness.org/
[5] http://sustainability.isourbusiness.org/
[6] Company website
AntelopeM, this is a very well articulated and unique blog post that I really enjoyed reading, thank you! I was glad that you mentioned some of the barriers to entry that you see with this business model as reading your post that was one of the major questions which I had, what allows this company to enjoy the lead that it currently holds in the space, both as a thought leader and as a profitable business.
One of the main fears that I would have with this business is that, to some extent, this is quite easy for large, well-funded companies to enter into the arena and to start doing, especially ones that share some of the same core competencies as Xylem and ITT. As regulation changes and more companies are forced to put actual money and innovation where there mouth is and develop sustainable practices, I worry that Xylem’s lead will start to diminish.
The, “conscious oversight, monitoring and reporting” that you mentioned in your post intrigued me as I was thinking about other potential business models or ways for Xylem to expand and to keep its competitive advantage. Perhaps there is a growing market for Xylem to move into as a consultant to businesses who, though regulatory and social pressures are feeling a need to add sustainability to their business practices, and Xylem could work with the company to find the most cost effective ways to do this. The combination of Xylem’s industry expertise and and ability to help them to implement positive changes with other companies could by Xylem’s golden ticket.
I’m curious what the potential areas for improvement are for Xylem as it relates to global climate change risk. It seems that Xylem is presently enjoying the benefits of having expertise in an industry that will be in significant need of help as climate change continues. Besides creating goals for its own operational carbon footprint and water usage, what can Xylem do better in response to this threat?
I’m also wondering how Xylem’s customers play a role in their future. I would guess that its key customers are public entities that provide drinking water and clean wastewater for its local taxpayers. Going forward, Xylem could shift its offering to target private companies that may be less price-sensitive and more willing to pay a premium for innovation than public utilities.
Great blog post! It’s encouraging to see all the progress Xylem has made towards their own sustainability goals and how the company is leading by example. I think part of Xylem’s mission going forward needs to be educating their customers on why the increased upfront investment in sustainable technologies is worth it, since these technologies are not only better for the planet, but they also deliver superior performance and have lower lifetime costs than less efficient alternatives.
I agree with you that continued innovation is key for Xylem to remain an industry leader — back in March, Xylem announced its intention to invest $300 million in water-focused research and development activities through 2018, which seems like a quite impressive amount of investment: http://www.businesswire.com/news/home/20160322005769/en/Xylem-celebrates-World-Water-Day-globe. Additionally, Xylem is acquiring Sensus (smart meter makers). With increased water regulations and scarcity, it seems like smart metering in the water industry is a big opportunity, and I’ll be interested to see if Xylem looks to acquire any other technology in the near future that can be adapted to solve challenges in the water industry: http://www.environmentalleader.com/2016/08/19/is-xylems-1-7-billion-sensus-deal-a-game-changer-for-the-water-industry/.
Thanks for the post about such an important industry: water! Xylem has been a leader in water testing, monitoring, and treatment and needs to leverage its position to generate more attention for sustainable water practices. I like Xylem’s focus on strategic partnerships to combine technology and water expertise to address the long-term availability of potable water. In addition to Xylem’s purchase of Sensus, Xylem announced last week its intention to acquire Visenti, a Singapore-based water analytics company aimed at supporting water utilities and helping them to optimize their water use[1]. Xylem’s embrace of technology sets the standard for other water testing and monitoring companies that have historically been slow to adopt technology and improve their efficacy and efficiency, companies like Hach Industries or GE Water that have been satisfied with status quo.
I also applaud the company for reaching across industries to involve other leading companies and incorporate technology to address the long-term availability of water for the United States. Earlier this year, Xylem joined with companies like Dow Chemical, Google, and others to “identify the imminent threats to U.S. water security”, calling on Congress and the White House to institute a Presidential commission to draft a water strategy for the nation and to bring overdue attention to this important topic.[2] Hopefully Xylem can continue to play an integral role in addressing efficient and sustainable water use for years to come.
[1] Xylem Acquires Singapore-based Smart Water Analytics Company Visenti, http://www.waterworld.com/articles/wwi/2016/10/xylem-acquires-singapore-based-smart-water-analytics-company-visenti.html
[2] Technology Leaders Identify Imminent Threats to U.S. Water Security and Call for Comprehensive Strategy to Map a Secure Water Future for the Nation, http://investors.xyleminc.com/phoenix.zhtml?c=247373&p=irol-newsArticle&ID=2144405