Every day for weeks now, the images have come in from Australia as wildfires ravage a land mass twice the size of Switzerland. Scenes of charred kangaroos and koalas, flame-engulfed homes, choking smoke powerful enough to create its own weather system have brought home the potential calamity of a changing climate.
Half a world away, Siemens, the German industrial giant that has pitched itself in recent years as a corporate advocate of climate action, finds itself unexpectedly in the middle of the uproar. In recent days, young climate activists have staged protests online and at Siemens locations around the country, spurred on by none other than Greta Thunberg.
The controversy revolves around a small (by Siemens’ standards) €18 million rail contract in a part of Queensland called the Galilee Basin, home to the Carmichael Mine, the country’s biggest planned coal mine. The project will finally provide the mine a vital transport link to the coast for export, and could open up the surrounding mining region to further resource exploitation for decades.
Siemens isn’t laying down the tracks. It’s delivering the rail signaling infrastructure. But these days, conducting any business that’s connected to Australia’s coal industry is seen by climate activists as being part of the greater environmental problem—one that’s rapidly becoming an all encompassing geopolitical and economic one, too.
Welcome to climate activism in 2020.
Thunberg’s involvement is notable too. Rather than focus her efforts exclusively on lawmakers, she is now going after corporate polluters head-on for their alleged climate misdeeds. Next week, she’s off to the World Economic Forum in Davos, Switzerland to urge CEOs to de-invest in fossil fuels. On the eve of Davos, Siemens is the first big corporate scalp Thunberg and her army of supporters have claimed.
For now, the company is refusing to back out of the project, putting the company under increasing pressure from consumers and activists beyond Germany to cut ties.
Scientists believe Australian dependence on selling coal to fire foreign power grids in Asia has backfired, as the latter’s carbon emissions ultimately contribute heavily to global carbon emissions, leaving the island continent vulnerable to plagues of prolonged droughts, soaring heat and forest fires widely viewed as a harbinger of extreme climate change.
Campaigners, including Thunberg, had lobbied Siemens to abandon the controversial project, claiming rivals Hitachi Rail of Japan and France’s Alstom had allegedly ruled out working with Carmichael’s Indian operator, Adani Mining.
When pressed on the matter over the weekend, Siemens said its hands were tied, CFO-speak for a force majeure.
“There is practically no legally and economically responsible way to unwind the contract without neglecting fiduciary duties,” said Chief Executive Joe Kaeser, after convening an extraordinary meeting of his top executives to re-examine the deal, in a statement shared with Fortune. “Whether or not Siemens provides the signaling, the project will still go ahead.”
Siemens had positioned itself four years ago as the first major industrial group to commit to the goal of carbon neutrality in 2030. “We’re pumping too much CO2 into the atmosphere. One reason for these excesses is that civilization relies too heavily on fossil fuels, so it’s a good thing that climate activists like Greta Thunberg are mobilizing young people,” Kaeser wrote in October, under a LinkedIn post entitled “Concrete Steps that Companies Can Take to Protect the Climate.”
Siemens is the latest German company to be targeted by climate activists. In September, over 15,000 protesters picketed the Frankfurt auto show, helping contribute to a severe decline in visitors attending the biennial trade fair.
“This is naturally an enormous disaster for Siemens, precisely because it deliberately attempted to establish itself as a sustainable company, for example through its efforts in the field of smart cities,” said Dietmar Huber, Managing Partner of Joschka Fischer & Company, a Berlin-based strategic consultancy that advises companies on political issues like environmentalism. “Now a small, seemingly insignificant contract threatens to completely destroy any credibility it has as a company committed to tackling climate change.”
“Noisy anti-coal minority”
Cognizant of the optics, the Siemens CEO sought to deflect criticism by taking the unusual step of posting a letter sent from the Australian government, known for its close ties to the mining industry. In it, a cabinet minister urged Siemens “not to be intimidated by the noisy anti-coal minority” and warned the German group that buckling under the pressure from “bullies” would be “an insult to working people of Australia.”
Kaeser, who is seeking an extension to his CEO contract this year, added that he had not been briefed on the deal beforehand due to its miniscule size, representing not even a rounding error amid the roughly €100 billion in annual orders the company receives.
Such a statement indirectly puts his Australian chief, Jeff Connolly, in the firing line as the deal was penned on Dec. 10, by which point raging brushfires had already reached the outskirts of major Australian cities like Sydney.
Moreover, the mine has been in the headlines for years. It was so controversial that environmental activists shamed roughly 60 companies— including Siemens’ next door neighbors Allianz and Munich Re—into committing they would not provide services to Adani.
Connolly did not respond to a request from Fortune for comment.
Siemens’ decision to stick it out in Australia leaves it vulnerable to charges its carbon neutrality claims are little more than empty greenwashing. Australia’s inferno has already devastated over twice as much land as the Amazon fires earlier this year in scenes that have coined terms such as “mega-blaze”.
The incident has lit up parts of the Internet. Some commentators took to social media threatening to boycott Siemens’ products, doubtless unaware that Siemens is a business-to-business (B2B) company that doesn’t sell to end consumers. Perversely, this would harm Germany’s Bosch that manufacturers Siemens white goods under license. “This is on our radar screen,” confirmed a source at the company.
It also ensures for a potentially volatile debate with investors at the February 5th annual meeting. Activists have recently taken to acquiring stock in order to lecture management on their failure to tackle climate change while holding protests outside HQ.
“For only 20 million euros, he’s willing to sell the credibility of Siemens,” tweeted Nick Heubeck, one of the FridaysForFuture—a then-15-year-old Thunberg set up FFF in the summer of 2018 “to protest the lack of action on climate change”—activists that met with Kaeser on Friday. “We will see you at the shareholders’ meeting!”
Showing their social media savvy, FFF has been plastering Twitter with the Siemens logo stamped onto images of Australian forests in flames. In the corner is the photo-shopped images of cuddly koalas and kangaroos.
Ironically the minute size of the deal may help them, as it is more difficult to argue effectively that greed was the motivating factor behind its decision.
“A commitment to contractual obligations is very important for a B2B company, a customer wants to know they can trust their partner not to jump ship at the last second,” said Manfred Abraham, CEO of brand management consultancy BrandCap. “Would you touch it now with the wildfires in Australia all over the news, no, you’d be crazy. But by only supplying rail signaling technology, it puts them at a safer distance.”
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