Honeywell’s Commitment to Sustainability Reaps Rewards

Honeywell International Inc. is a true conglomerate in every sense of the word. The company, founded over 100 years ago and headquartered in Charlotte, North Carolina, boasts a global workforce exceeding 100,000 employees. Its four main areas of business – aerospace, Honeywell building technologies (HBT), performance materials and technologies (PMT), and safety and productivity solutions (SPS) – include a dizzying range of products comprising everything from ubiquitous home technologies like thermostats to aviation fuel.

Honeywell’s history in China dates back to 1935 when the company opened their first franchise in Shanghai. Today, all of Honeywell’s four strategic business groups are represented in China, with its Asia-Pacific headquarters in Shanghai. The company has over 50 wholly owned enterprises and joint ventures in more than 30 cities across the country. Notably, in terms of China strategies, Honeywell has long been ahead of the curve. The company has for many years placed a large focus on localization, a strategy now being increasingly adopted by other multinationals looking for success in the competitive China market. The strategy, says Honeywell’s China President, William Yu, is simple. “Our strength is in our local for local strategies, or what we call here, East-for-East. That means ensuring that we are sourcing and manufacturing from the region in which we are based and having strong local R&D capabilities to develop solutions and meet the needs of the local market.”

William Yu first joined Honeywell in 2017 as Vice President and General Manager of Honeywell’s PMT Asia Pacific business. In February 2022, he was appointed as President of Honeywell China after five years with the company. To most, his appointment comes as no surprise – Yu has played a pivotal role in the company’s organic growth in the Chinese market, and during his tenure overseeing PMT Asia operations, the business grew by more than 50% in two years. Yu, whose impressive career previously saw him in senior roles at security company Allegion and industrial manufacturer Ingersoll Rand, says that Honeywell brings a unique corporate culture to the table. Specifically, Yu identifies three main factors contributing to the company’s success, “One is the culture of innovation, we work on cutting-edge technologies in so many different areas, from oil and gas to aerospace, we have great technologies and great offerings. Second, is what we call the Honeywell Operating System (HOS), we have a strong management operating system that facilitates growth. Finally, I’d have to say, it really comes down to hard work. We are committed to delivering results to our customers, shareholders, and the communities we work with.”

Global Sustainability Commitments

Yu is quick to reiterate the importance of both the US and China markets for Honeywell. In fact, he says one of the most important things the company does is promote collaboration between the US and China, especially in the field of sustainability. In 2021, Honeywell announced its climate commitment to reach carbon neutrality in both facilities and operations by 2035, well ahead of the 2050 target of many other organizations. While achieving carbon neutrality in just over a decade might sound like a daunting, even unrealistic, goal, Honeywell is well on its way to achieving its target. In a recent interview with Barron’s, Honeywell Global Chairman and CEO Darius Adamczyk even ventured to claim that, “Honeywell has more sustainable solutions for the future of the planet, than I believe any other company out there.” Yu is also confident, saying the company is on track. “When we make commitments, we always deliver. We are famous not only for our financial gains, but also for social responsibility.” He adds, “As China President, I work closely with my colleagues here to move us forward and try to expedite progress in sustainability where we can.”

Yu highlights Honeywell’s global approach to its climate goals, saying “We use the same process globally, not only in the US, not only in China, but across the global array to reach our neutrality goals.” He adds that key to this global strategy, are Honeywell’s new technologies that support sustainable development, which are pivotal when it comes to helping both the US and China reach carbon-zero. As Honeywell has a large presence in both the US and China, Yu says it is in a unique position to push the net-zero agenda forward. “Our carbon neutrality target is consistent with the sustainability initiatives launched by the US, China, and many other countries. We have the unique position and opportunity to shape a more sustainable future together with our partners.” The partners he mentions include local governments, government agencies, suppliers, and customers across the globe. Yu says that Honeywell is more than ready to, “leverage the network and technologies we do have, develop what we don’t have, and then work with our partners to commercialize those sustainable technologies.”

Honeywell’s network of partners and customers puts the company in a powerful position to implement meaningful change. Yu describes a trickledown effect resulting from three prongs of the company’s environmental efforts. First, he says, they have evaluated internal operations, sharing that, “We are in a situation where we are not only working on improving our own internal operations, but those internal operations are actually changing the products and services we offer to our customers. This is a huge way we can help our customers.” Besides internal operations, Yu notes that the second piece of the puzzle comes from new product development, “About 60% of our new products are related to improving the environment and social outcomes. So, we are increasingly using our operations as a laboratory for innovators to advance their research and development to improve our products through test cases.” The third and final element, Yu says, is the emission reduction in Honeywell’s own facilities’ operations. In this endeavor, the company tries turns to self-sustaining solutions where they can, he says, “We turn to Honeywell products and services whenever possible. We are both a technology and solution provider, so we are able to offer a variety of products, technologies, and solutions globally to help society in combating climate change.” Yu cites a case study of one such solution: “We have developed a great technology called Solstice. It’s a line of low global warming potential refrigerants for use in everything from cars to air conditioning products. That product line of sustainable refrigerants, blowing agents, and aerosols alone have resulted in a potential reduction of more than 260 million metric tons of carbon dioxide into the atmosphere.” Yu puts the enormity of that number into perspective, “That’s the equivalent of eliminating the potential emissions from around 56 million cars in one year.”

In the short term, Yu says they are working with larger customers to integrate solutions and technologies like Solstice into their operations. To make that shift, many customers require changes in some of their processing steps. Yu makes the case that this is in the customer’s own interest, “Maybe in the short-term people will see a small cost increase. But looking at how much money governments spend on trying to clean up the environment and combat climate change – that’s a huge amount.” He continues, “If you consider the broad economic impact, green reduces costs across the board. Green means lower cost, green means better.”

East-for-East, East-to-Rest

As President of Honeywell China, Yu plays a fundamental role in Honeywell’s global operations. China has emerged to become Honeywell’s second largest single market and largest growth market. Currently, the company is working to help China realize its dual carbon targets. In China, Yu describes how Honeywell is working on procuring Green Factory certifications. China’s Green Factory Initiative, Yu explains, lays out stringent and detailed requirements for factories looking to be certified. One of Honeywell’s factories in Jiangsu province has already received a green certification from the central government, and now, Yu reveals, as of late March 2022, they are working on developing four more (Honeywell currently has 20+ factories in China), “We are actively working with the central government to understand the requirements and working internally to identify where we have gaps. From there we have our list of actions.”

Unlike many other multinationals, Yu says Honeywell’s operations were relatively minimally impacted by the onset of the COVID-19 pandemic in early 2020. He credits the company’s East-for-East strategy – which it began implementing in 2004 – with helping to mitigate the effects of the pandemic. While admitting there are still challenges, he calls Honeywell’s operations in China “very manageable.” He goes on, “With East-for-East, for so many years, we’ve been manufacturing in China, sourcing from China, developing offers specifically for China. Now this strategy is really beginning to pay off when it comes to addressing the challenges brought on by COVID-19.” Paying off might be an understatement. Over the last year, Yu says that the company has experienced double-digit growth in China, he remarks “Even with the challenges, we’re growing and we’re healthy.”

According to Yu, COVID-19 has not only reinforced Honeywell’s East-for-East strategy, but expedited the expansion of an East-to-Rest approach. He explains, “I spent two years outside China, and when I returned I really appreciated how good our supply chain in China is. I realized we should leverage that solid supply chain in other markets.” For him, that means working with Chinese partners to expedite and source products for the rest of the world. Now, he says, “We not only need to maintain East-of-East, but expedite East-to-Rest.”

With East-to-Rest, Yu explains, Honeywell is not looking to supplant existing suppliers, but to reinforce a stronger safety net. He offers a hypothetical example, “If we only have a single source of supply for a product, now we are actively trying to find alternative suppliers in China. Not only for China, but for the rest of the world. I don’t want to replace anyone, I want to have a backup.” As COVID-19 has disrupted global supply chains and manufacturing, Yu points to supporting evidence in the fact that Honeywell factories in China have maintained relatively stable production thus far.

Fueling the Future

An important product area in Honeywell’s current line of sight is its Ecofining Technology. This technology, pioneered in 2013, converts non-edible natural oils, animal fats, and other waste feedstocks into Honeywell Green Diesel. Since 2016, Honeywell has also been producing sustainable aviation fuel (SAF) using the same method. With products like Solstice and Ecofining already available on the market, Yu says his job now is to work with manufacturers and government agencies to introduce the offering in China. He’s excited at the prospect, calling it a win-win solution. “It’s very good for us, but more importantly to our customers, and most importantly for the environment.”

It would appear Yu and his team are succeeding, as proven by a recently announced joint project between Honeywell and Oriental Energy to build a SAF production facility in Guangdong province. Yu shares that, “When the plant is finished it will be among the world’s largest SAF production facilities using inedible natural oils – or as they’re called in Chinese, 地沟油 (dìgōu yóu)– with an annual output capacity of one million tons.” When the project is completed, these feedstocks will help to reduce lifecycle greenhouse gas emissions by approximately 80% compared to traditional fuels, or by 2.4 million tons each year. Yu is optimistic that the new facility will help meet the growing demand for SAF, saying, “Currently the demand is mainly from Europe, but we expect demand to grow from the US and other countries, including China.” Usefully, SAF is produced to blend seamlessly with petroleum-based jet fuel at the commercial scale, meaning the Ecofining fuel doesn’t require any modifications to current aircraft technologies. Yu cites an active, operational example, stating that as of December 1, 2021, United Airlines flew a commercial flight from Chicago to Washington DC powered by 100% SAF produced by Honeywell Ecofining technology. As he says, “This is real, it’s not on paper, it’s not in the lab, it’s real and it’s already happening in the world.”