Hakan Bulgurlu is the Pacific U.S. regional honoree for the 2021 YPO Global Impact Award. The award focuses on YPO members making an impact outside the organization that is both sustainable and scalable, affecting people, prosperity, peace or our planet.
While more companies than ever before are integrating sustainability in their corporate strategy and performance targets, Arcelik, a global home appliances company, has gone a step further, transforming its business model toward real impact and purpose. Its chief executive officer, YPO member Hakan Bulgurlu, has been at the helm of this transformation, setting new standards for other business stakeholders while securing growth of the business beyond the next few quarters.
Founded in Turkey in 1955, Arçelik has expanded into a leading figure in the industry. The company’s consolidated turnover reached EUR5 billion in 2020. Arçelik holds a leading position in various markets including the U.K, Poland, Romania, Turkey, Pakistan and South Africa.
A personal calling driving market transformation
“The sustainability journey is a personal one for me. I grew up very close to nature, and spent a long time in Asia, where I discovered some of the most remote and untouched corners of the world — from biodiverse rainforests to coral reef ecosystems with numerous fish species,” says Bulgurlu. “Unfortunately, I also observed a massive degradation in the places where I had grown up. A few years ago, when I went with my children hoping to share the memories, I witnessed how the species had disappeared, and plastic pollution was filling the ocean.”
Those experiences reinforced his commitment to finding ways to expand the role of business in protecting our ecosystem. They are also why he believes that short-term business endeavors will become increasingly irrelevant. “As I became more aware of the impact that companies like us were having on the environment, I recognized that this wasn’t only my own passion and my own purpose. I began engaging management around it.”
Bulgurlu’s sustainability journey began early on and over time he worked on various platforms to position Arçelik as a technology innovator with a social and environmental conscience. One of those platforms is the High-Level Commission on Carbon Pricing at the World Bank, of which he became a member of in 2019, among other notable partnerships and keynote participations.
Actions around the stated vision — Respecting the World, Respected Worldwide — soon paid off. In the past five years, the company has gained global brand recognition, turning it into an industry leader in the Dow Jones Sustainability Index and the FTSE4Good Index.
“Our sustainability focus has positioned us as a disruptor of the industry, providing a key competitive differentiator,” says Bulgurlu. He adds that the turning point was when the team recognized the net positive profit and loss statement (P&L) as a result of the strategy. “Once you can prove a net positive P&L impact with something that’s good for the planet, that’s an amazing magic formula. It is then that you break the myth that anything sustainable and good for the planet must cost more.”
Innovating toward carbon neutrality
Today, Arçelik is the research and development (R&D) leader in Turkey, holding more than 3,000 international patent applications. It has also reached carbon-neutrality in global production plants with its own carbon credits — an industry first.
Some of the patented innovations include washing machines that filter out plastics shed by synthetic textiles, hybrid solar refrigerators, and ovens with parts from recycled fishnets and waste textiles.
One of the initiatives Bulgurlu is most proud of is replacing old products of customers with newer, more efficient Arçelik products. “Since 2014, we have recycled more than 1.3 million appliances, using our own recycling facilities from all brands, not just our own appliances. This has allowed us to reuse the raw materials recovered from that process, to manufacture new appliances, reducing waste and saving the energy required in production,” says Bulgurlu.
“Recycling consumer durables and consumer electronics also made us the customers’ preferred choice. If you put 10 washing machines next to each other from different brands, and one of them is made with recycled materials and with plastic water bottles, most consumers are willing to pay more for the latter. That thesis is now proven.”
Bulgurlu is also excited about the potential of the company’s current digitalization efforts to accelerate production efficiency while reducing energy. Romania Washing Machine Factory, which has been recognized as a Lighthouse Factory by the World Economic Forum, leverages technology such as artificial intelligence, advanced robotics and cognitive automation, to manufacture products that consume, on average, 28% less electricity per product compared with existing washing machine facilities. He adds, “Sustainability is the new industrial revolution.”
Leadership priorities
“We may have become the most sustainable appliance business in the world, but there’s still a very long way to go. It is an uphill battle,” says Bulgurlu. He adds that leadership demands executives see the bigger picture and act now to achieve the 2030 targets set by the United Nations Sustainable Development Goals (SDGs) and highlights the following priorities:
Show credibility: “Show people that you are genuinely passionate about sustainability. As a leader, you need to believe in it 100%. That goes beyond investing in a few solar panels, wind turbines or buying carbon credits and embracing systemic change,” says Bulgurlu. He adds that the leader must also encourage the team to live the purpose-driven message — for example by creating an environment that encourages an engineer working on the production line to come up with a new idea toward greater energy efficiency or by promoting a plant-based diet in factory cafeterias.
Take calculated risks: “Nothing comes to you without taking risks. Perhaps the most interesting thing about the times we are living through is the amount of information data available to you. So, by reading and researching, you can begin to take educated risks,” says Bulgurlu. Often, he stood alone when exploring new innovations, like investing in research to find ways to catch fiber from clothes. “At the start, this was seen as a responsibility of fast-fashion firms or yarn producers. But eventually, the R&D team came up with a filter which we patented,” says Bulgurlu. The team eventually figured out a value chain that would allow customers to replace these filters at home.
Adopt open-source technology: According to Bulgurlu, open-source innovation and unexpected collaborations across different stakeholders are key tools that leaders need to leverage into the future. “Instead of keeping your technical innovations to your company, choose open-sourcing the technology so everybody can use this,” he says. As an example, Bulgurlu recalls the case of the fiber filter when industry players initially resisted the technology — because they felt that he was taking on a problem that does not belong to the industry while adding cost — failing to see the wider environmental benefit. In 2019, Bulgurlu called for closer industry partnerships and announced that Arçelik is ready to share its technology for the greater good. Following this call, various stakeholders that work on regulations in the U.S., U.K. and France reached out to learn more about the innovation.
— Hakan Bulgurlu, CEO of Arcelik share
Focus on longevity and urgency: “As a leader, your primary responsibility to your stakeholders is to ensure the longevity and durability of the business. You have to make sure that the business gets stronger over time and that when it’s time for you to hand it to somebody else, it can continue,” says Bulgurlu. He adds that the only way of doing that is getting on the “right side of history” by urgently addressing big social and environmental problems, particularly climate change. “The ones who are not doing it today are going to disappear. The leader’s role is making that transition happen now. Waiting to become carbon neutral by 2050 is too late. It is meaningless.”
Push for more, stretch targets: While Arçelik is now carbon neutral in its global productions, Bulgurlu has set new ambitious targets. “We have committed to reduce by 30% our Scope 1 and Scope 2 emissions — generated directly by our operations in manufacturing — by the year 2030 from a 2018 base year. We have committed to reduce Scope 3 emissions that are generated from the user phase of sold products by 15% within the same time frame,” he says. “When I initially discussed with my teams and colleagues these ambitious goals, they shook their heads. But I think only by setting ambitious goals can we set an example for other companies to follow.”
Use common sense: Bulgurlu says in the end, a key driver for any business leader is common sense. “If you don’t want to see Styrofoam on your beaches, look at the packaging you use. Even if you’re a single burger restaurant, you can find ways to stop serving single-use plastics, by not using plastic straws or giving plastic forks with the takeaway. There are so many areas you can improve on immediately, no matter what size of your company.”
Stepping up in different ways
In his personal life, Bulgurlu has sought to raise awareness of the climate crisis in an unprecedented way. Through a widely viewed dangerous ascent to Mount Everest in 2019, he focused on helping raise awareness of melting glaciers because of climate change.
“Fifty percent of the glaciers in the Himalayan region are gone. At this rate, scientists predict that up to two billion people from countries like Pakistan, Bangladesh all the way up to China, will need to migrate in search for water. That scale of migration has never happened to humanity before,” he says. “COVID-19 is a pin prick. What’s coming in terms of climate crisis is a sledgehammer.”
Bulgurlu is also preparing to publish his book on the climate crisis, a project he began before the pandemic. “We need a renewed push for climate action and to raise awareness on the imminent climate crisis. Many things have changed this last year, but one thing remains the same: the absolute reality of how life on our planet is deeply connected. If we are to thrive as humans, we should be concerned about our ecosystem and respect nature.”
As he continues creating awareness of the importance of adopting climate-friendly initiatives in the post-COVID-19 economy, setting new standards for companies to measure up to, Bulgurlu adds, “The company is just a conduit. It’s a platform. And I’m very lucky to have it because it allows examples to be set. But don’t get me wrong. It also makes really good business sense.”
