A Conversation with Arçelik CEO, Hakan Bulgurlu on Summiting Everest and Leading Transformational Change in Climate and Sustainability.

A Conversation with Arçelik CEO, Hakan Bulgurlu on Summiting Everest and Leading Transformational Change in Climate and Sustainability.

In May 2019, Hakan Bulgurlu – CEO of Arçelik, one of the largest white goods manufacturers in the world – became one of a few thousand individuals to have reached the summit of Mount Everest. His expedition came with a purpose – to raise awareness of the catastrophic effect the climate crisis is having on our planet, to lead by example and to seek out practical solutions. Deciding to commit to the climb just 8 months before, A Mountain to Climb is Hakan Bulgurlu’s gripping account of this gruelling expedition, accompanied by factual realities of the climate crisis.

In A Mountain to Climb Bulgurlu shares the reasons why he felt compelled to take on this arduous challenge and the intensive training that followed. He recounts the realities of the climb with stark honesty and describes in surreal detail the constant strain of high altitude and lethal conditions that almost jeopardised the expedition. He describes the intense altitude training that almost suffocated him, the devastation at walking past the frozen bodies of climbers who had not survived the ascent, as well as the very real dangers of the mountain climb – rockfalls, altitude sickness, dehydration and exhaustion, to name but a few. As CEO of Arçelik, Bulgurlu is a business leader and climate activist who has driven sustainable change within his global company. During COP26, Arçelik was among 45 companies awarded the prestigious Terra Carta Seal by HRH Prince of Wales and the company is currently the highest-scored home appliances company in the Dow Jones Sustainability Index, representing the gold standard for tracking corporate sustainability.

In this interview, I speak to Hakan Bulgurlu – CEO of Arçelik about the leadership we need to make a difference in climate and sustainability. We talk about his astonishing expedition to Everest and what that taught him about life, leadership, and what it takes to really make the impossible, possible.

Q: What does leadership mean to you? 

[Hakan Bulgurlu]: Before I felt leadership was something you earned. Mount Everest, I think changed my opinion quite dramatically as there was something hierarchical about my experience on Everest because essentially you would guide through a vision and basically help execute and provide resources to teams.

When I came back from that expedition, I realised that all leadership really is, is empowering people to find their purpose, because the only way people are fully engaged and productive and happy, which I think is one of the most important things people forget, is when they are working towards a higher purpose. That higher purpose is elusive because many companies pay lip service to it and they have nice words put down on paper by expensive consultants, but if you really dig down, there is very little detail and truth to them.

In our case, I was lucky and leading by example, taking personal risk, showing humility, and essentially finding that purpose and convincing people around that purpose created a true success story in terms of at least the company that I manage.

Q:  How do you build company culture, at scale?

[Hakan Bulgurlu]: Communication is key. Very early in my career, I was close to several communications gurus who really instilled in me, the value of, and the ability of, transparency and communication.

When I decided to climb Everest, the reason was simply to draw attention to what was happening with the glaciers but also, when I talked about sustainability, it was hard to keep people’s attention. You start talking and 5 minutes later, it’s an abstract topic. The audience start checking their emails or yawning, and this really frustrated me. I felt that Everest would be something that I could weave in and keep people’s excitement and interest and that’s simply how it started.

However, the planning and the preparation, both mental, physical, diets, and talking to subject matter experts, became such a big thing over a year and with the help of Arçelik communications team, we really started communicating daily to the whole ecosystem of 45,000 colleagues around the world. They slowly and gradually got hooked on what was the preparation journey, because they couldn’t comprehend this challenge was being undertaken by a man who is the CEO one of the largest companies in the world… Being a CEO, even though it’s a very difficult job, it appears very attractive.

On the other hand, I have a young family, three very small children, and a happy family. The perception was, why on earth would this guy take this risk?  What is it about? When they can’t answer that, they keep questioning and when the whole preparation phase became very visible through social media, meaning not just the preparation, but every day they were fed bits bit by bit, what’s happening to the planet, climate, ecosystem, biomass loss, and they eventually started seeing how they could change their lives to actually be the better human beings and really be better stewards of Mother Earth. In the end, what happened is I climbed Everest, I came back, and inadvertently I had transformed everyone that works at Arçelik literally from people who are working to earn money and live their lives, to people who are working to do their best they possibly could in terms of mitigating this climate crisis and, that became the purpose. Through that communication, it was authentic.

I nearly died several times. I shared everything openly with everyone. I shared how my whole thought process and character had changed in that expedition, but also how my own purpose had completely changed.

I was going to do everything I possibly could while I manage this platform to make it the cleanest business that exists and without their help, I couldn’t do that. Before then, I would give directors to departments, and departments would allocate the Capex and execute sustainability plans, now, every engineer in every corner of the business came up with ideas on their own of what they could do. That is what really accelerated this transformation.

Q: How did you bring your stakeholders along with you on your Everest journey?

[Hakan Bulgurlu]: To bring your stakeholders and to do that, you must show that this transformation you are proposing makes good business sense.

Firstly, we started using discarded pet water bottles in our washing machine drums and that brought down the cost of the engineering plastics we use. Therefore, there was a net balance and savings. This is a great example of doing something sustainable and making more money.

We next found those low-hanging fruit. Once people started believing in this, or, for example increasing the amount of recycled plastic we use in our products, dramatically increase it over time. In the past, engineers and marketing teams used to resist this because they think the consumer doesn’t want products from recycled plastic. On the contrary, if you can show that its recycled plastic, consumers react by choosing it over other brands, so these little things go a long way, to prove to people that wait a minute, this is not a huge thing. Once you’ve made these commitments on the journey of sustainability …. cutting our scope three emissions or all emissions by 50% by 2030, we’ve already cut them 60, 70%…. a further 50%. That’s a tricky part. There you need Capex, you need shareholder alignment, and you need market alignment.

By the end of this year [2022], we’ll have 50 megawatts of solar power generation, and we are not a power company. Every surface that we have, we have prioritised Capex to install that because we, on this commitment we have made to very difficult targets, must reduce our emissions. It is a priority and why is it a priority? Many studies have shown and said that consumers would rather choose a sustainable product or service from a transformed business over others.

The real important fact is in the details, that of the consumers who responded (a big sample size), a significant percentage are willing to pay more for products and services that do right by the environment. That’s new. This is mainly the new younger generation who is feeling disenfranchised because there are these global businesses that are run by people like me, middle-aged white men who will retire in ten years, and then it can become someone else’s problem.

The young people are going to have to live in that future, and they are not part of the solution because they are not at the decision table and hence are increasingly voting with their money in that sense. I think this will increase. For us, leading the Dow Jones Sustainability Index, for example, A) allows us to be chosen by this segment over other brands. We are the commoditized industry. You go into Currys and you’ll see 20 washing machines. How do you choose which one? Well, you’ll choose the one which filters the plastic going to the ocean, has more recycled plastic, has a QR code which tells you what the carbon footprint of that product is, and how much carbon you will limit when you’re using that product. That is the one you will choose, and the brand that leads the sustainability effort, right? So, I think we’re at a turning point, and our shareholders realise that the market realises that.

Of course, when you have all these credentials which are independently verified, you can borrow at a much more attractive cost. I mean we issued a €350 million bond for a 200-basis point lower than Turkey’s sovereign borrowing costs, which is unheard of. A company in a country can borrow cheaper than that country. So, these are all net benefits of actually this transformation.

Q: Do we need to evolve impact and climate reporting?

[Hakan Bulgurlu]: You’re asking a very good question; you’ve been daring here. It’s a very complicated topic, first, because it’s different for every business. Ultimately, the business itself needs a healthy bottom line to survive. So, each business needs to decide on its own how much it can prioritise decarbonisation over its own core business. So, there’s an important distinction here.  Today Arçelik is in investing in mangrove forests in Russia and parts of Indonesia. Why am I forced to do that? To be able to reach net zero, which is not possible for a company like us (we manufacture 50 million appliances in 2019, factories around the world and sell them and consume power, and water) will not make any sense. However, I know I must do that because that’s hedging my future risks. I’m forced to buy carbon credits at a cost of today at, say, €8, but they could be €2000 in the not-too-distant future. That would put me out of business. Therefore, I need to prepare for the future of the part that I cannot decarbonise, and I need to hedge against that risk. Those actions are responsible for good management.  On the other hand, investing in a new technology that is not proven as a priority is not really something I should do. Each company is going to be a little different.

What really frustrates me is impact investing, ESG diversity, equity, and inclusion. There are all these trendy words that are trying to essentially build systems and ecosystems to guide capital and the mistake that is being made there is you’re being measured on all these things when you’re being graded, whereas actually, one thing is an absolute priority.

We are under an existential threat now as humankind. Even a simple two-cell yeast has a survival instinct and evolves fast enough to try and survive. I don’t understand why humans who are supposed to be these very complex creatures can see that we’re heading towards a very, very dangerous future which could be irreversible, and why we’re not doing absolutely everything possible now. So, when you say impact investing, prioritising, if we had a method where we could say, okay, decarbonising is the number one goal that humanity should have. And of course, it’s important to have women in management.

Of course, it’s important to have racial equality but if you start measuring all those factors and you start prioritising all those things at the same time, companies and leadership and shareholders are losing focus. We really need to solve these problems much more in a prioritisation way and now the system, impact reporting, and investing don’t allow for that, which I think is something that needs to change.

Q:  What was your change when it comes to climate? 

[Hakan Bulgurlu]:  I have always been involved in outdoor pursuits. I love the sea and have been passionate since a child in terms of nature and being in nature but living in Asia for a long time I had the chance to sail around Thailand quite a bit. And this famous beach where ‘The Beach’ (the movie) was filmed actually was a very favourite stop before that film after it became a tourist site.  I took my children there one Christmas break and I told them all these stories about this incredible beach. I was taking them to pirates, hidden treasures in a cave, and we were going to find them. I set the whole thing up then we got there, and we swam ashore. Literally, I was knee-deep in plastic. Knee deep. I mean, I could not believe it and, you know, I was walking without shoes in muck, which I had no idea what it was, and my daughter looked up and said, Why? That’s it, just why? I could not answer that question!

This is just simply growth in the Philippines, Indonesia, Thailand, and Southeast Asia, unchecked growth in consumption of single-use plastic is what it is, and it’s very easy to get in front of. It’s a big failure that we didn’t, and the damage is largely permanent, but some of it is reversible. I couldn’t answer that question.

As a company that uses tremendous amounts of plastic, really got me going. I promised myself that ten years later, I may not be at Arçelik, I may be doing something else, but I want to be able to look my children in the eye and say I did absolutely everything possible in my power to stop this and to change the system.

Today, from where I sit, we’re carbon neutral. We’re on the 1.5-degree pathway. We got awarded the Magna Carta this year by Prince Charles. I mean, the list is very long of accolades and awards, and there’s a track record of performance. But I know that we haven’t done nearly enough. And I know also we pat ourselves on the back now saying, wow, we’re great, we’re doing well. Ten years later, when I look back, I’m going to know it’s not enough. So, that journey is just beginning and as you learn more, you realise that you can do that much more. So, my task now is really multiplying the people who know what can be done in the business, so that they’re continuously moving the goalposts.

Q: How did your expedition change you? 

[Hakan Bulgurlu]: I was a boy, and I came back a man. What I mean by that is simply that I really understood for the first time what is important.

First, you are unimportant as a person – you mean as much as a speck of dust. You’re meaningless, nature will continue with or without you, you have no meaning in that sense. So what? The only thing we can really do is raise our children to be responsible, morally capable adults.

I used to think that my kids would be fine without me around. My wife is younger and has enough resources, but I realised that only I can do that job and that I need to do it properly.  I literally stopped allowing any kind of grandstanding, about how great we’re doing and only started focusing on problems and execution, and single-mindedly working on the purpose of the business, which has really brought us where we are. We are growing with the fastest growing appliance business globally, and I credit this to that transformation because what became important was the legacy of the people that are working at Arçelik, what have we managed to do and have we been able to inspire others.

Arçelik has a unique, important position in that most of our businesses are in places like Bangladesh, India, Pakistan, and South Africa, where you have no regulations. In the absence of regulations, we’re transforming this business to be cleaner. And if businesses over there are seeing what we’re managing, then it’s going to happen, the ripple effect will multiply. And that’s the biggest impact I can have in my life. Right? So I’m going to focus on that. And at the same time, of course, I’m going to focus on the bottom line because that enables me to do that. And in my personal life, I quite doggedly want to be able to look my daughter in the eye ten years later. Again, that goal post hasn’t changed, it keeps moving forward and saying, ‘I’ve done everything I could’.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.