E3: A new management model in a world in permacrisis

E3 is a management model developed by Nexans that combines Economy, Environment and Engagement in order to:

• break down silos;
• reduce complexity to generate greater performance;
• better contribute to the ecological transition;
• make a choice to support collective action.

By reducing complexity, E3 transforms simplicity into a performance driver and builds the company’s profitability without choosing growth.

This systemic model combines the Environment, Engagement and Economy dimensions instead of pitting them against each other. It is a unique way of breaking down silos. The E3 tool focuses on measuring performance based on three KPIs, what we call ROCE 3: Return on Capital Employed, Return on Carbon Employed, and Return on Competence Engaged.

Then, the model categorizes the company’s manufacturing facilities according to the entire range of financial performance criteria, environmental impact and level of employee commitment. An action plan is then developed for each plant based on their unique situation.

Each site is required to adhere to the E3 model, which emphasizes the importance of the three above-mentioned dimensions.

And this methodology can be applied to all companies, both in the manufacturing and the service sectors.

ECONOMY: Simplify to amplify

The “Economy” part of the E3 model is focused on optimizing financial performance while also taking into account the other two dimensions of the model (environment and engagement). The economic segment of E3 includes key performance indicators (KPIs) such as Return on Invested Capital (ROIC), which measures how effectively a company is using its capital to generate profits.

In addition to ROIC, the E3 model also includes KPIs related to cost management and operational efficiency, such as cost per unit produced and asset utilization. By monitoring these KPIs and striving to improve them, companies using the E3 model can optimize their financial performance while also reducing their environmental impact and improving their social engagement.

One of the key advantages of the E3 model is that it allows to identify which of their operations are "value burners" - i.e., those that are not generating sufficient profits or that have a high carbon footprint - and to take action to address these issues. For example, a company might decide to divest from a low-performing operation or invest in new technologies to reduce the carbon footprint of a high-emissions operation.

By focusing on financial performance within the context of the larger E3 framework, companies can achieve a more holistic approach to sustainability that balances the needs of the environment, society, and the economy.

Volume is no longer our focus. Bringing value to our services and solutions is our top priority. To increase the value we are bringing to our customers, we have reduced our portfolio from 17,000 to 4,500 strategic customers, to better serve them, to build partnerships that drive value.

ENVIRONMENT: From greenwashing to green acting

The “Environment” part of the E3 performance model focuses on measuring the environmental impact of Nexans' operations and promoting sustainable practices across the company. The environmental segment is measured by the Environmental Return on Carbon Employed (ERCE) KPI, which measures the carbon emissions associated with the production process of a product and its use by the customer.

Nexans aims to reduce its carbon footprint and promote sustainable practices by setting targets for reducing its greenhouse gas emissions and increasing the use of renewable energy sources. The company has committed to reducing its carbon intensity by 30% by 2025 and achieving carbon neutrality by 2050.

To achieve these goals, Nexans has implemented several initiatives to reduce its environmental impact, including:

• Increasing the use of renewable energy sources in its operations, such as wind and solar power.
• Developing products and solutions that are more energy-efficient and have a lower carbon footprint.
• Implementing sustainable practices across the entire value chain, from raw material sourcing to end-of-life product.
• Reducing waste and promoting recycling and circular economy practices.

The E3 performance model also takes into account other environmental factors such as water usage, waste generation, and air pollution, and encourages the adoption of sustainable practices in these areas as well.

By integrating the environment piece into its overall performance model, Nexans aims to promote sustainable practices and reduce its environmental impact while still maintaining its economic and human performance.