The chairman of Iberdrola, Ignacio Galán, 69, believes that a strong focus on renewable energy could provide a route out of the coronavirus crisis in Spain alongside investment and prudent spending. He would also like to see a reliable, long-term legal framework to attract that investment.
Question. How have you coped during the lockdown?
Answer. Like all Spaniards. Doing most of my work remotely and worrying. My son’s wife is a doctor and became infected; her father, also a doctor, became ill too; I’ve been concerned about a number of people for one reason and another – friends, neighbors and colleagues; and about the economic crisis that is looming and the social crisis triggered by the pandemic. On the bright side, I have been married for 40 years and have never spent so much time at home, so I have been able to appreciate the joys of being with my family while working and keeping the company on track.
Q. Has it worked well?
A. I am tremendously proud of how the team at Iberdrola has coped. I’ve been in touch with all our employees around the world who are dealing with all kinds of situations. In the United States, for example, terrible snowstorms left 240,000 homes without power and we restored our service in record time while taking precautions to avoid infection. In Spain, the team is busy going to hospitals with generators as well as working in power stations and in offices. There has been no notable drop in activity – quite the contrary. The service has been faultless in all the countries we operate in and I feel very proud.
To get out of the crisis, we need to invest. Without investment there is no growth and without growth there is no employment
Q. How has your approach to work and management changed?
A. We have all had a lot to learn. If someone had told me 10 years ago that we would hold the general shareholders’ meeting in Spain, and also in Brazil, remotely, I would have said, impossible. And if I had been told that in a company like ours, 95% of the office staff would be doing their job perfectly well from their homes, I would also have thought it impossible. We have learned to work and relate to each other in a different way. I have a very direct management style that involves a lot of human contact. I spend more than half the year traveling to see people and I like to go to headquarters, substations and offices whether in Connecticut, Rio, Mexico City or Glasgow to spend time with the people working there. I’ve had to stop doing that and I miss the human warmth, which is so important for learning and getting a message across.
Q. Do you think some of the changes, such as teleworking, are here to stay?
A. I would say yes in the case of many of them and there are things we need to reflect on. Up to now, many of our work procedures were based on days, on hours worked, and I think what is happening now will help us to shift to a more task-based approach. This is easier for people out in the field, installing a transformer or checking a power station. When it comes to office work, we will have to adapt. Other sectors are already in the process of doing so.
Q. How has the current crisis changed your view of the world?
A. I have been working for 47 years. My first boss in the company Tudor was Antonio Sáez de Montagut, who was an engineer like me, and there was something he said that stayed with me. He said, “I am very old, I have lived all my life in crisis and I have only had small periods of prosperity, so learn to manage crises.” And indeed I have been through various crises in my life. For example, the turn around of the Basque Country’s shipping industry was a serious crisis that triggered a 26-27% unemployment rate with people left feeling hopeless and without a future. And we also had to turn around the aeronautical sector, which is when we set up ITP [Aero, the ninth-largest aeronautical and components company in the world]. I have lived through other crises in my life and have had to deal with them.
Q. And how should we deal with this crisis?
A. Once the virus is better brought under control, we have to continue to protect people and kickstart the economy in an ordered and gradual manner. Referring back to the reconversion in the Basque Country, we came up at the time with Plan 3R for turning around sectors that had no future – for example, moving from shipyards to flight engine factories; supporting sectors that had a future, but were in trouble, such as machine tool manufacturing; and investing in sectors of the future, such as energy, telecommunications and electronics.
Q. Is that the strategy should be used now?
A. You get out of crises by investing and not wasting money. I am obsessed with efficiency and saving. I don’t know how many billions Iberdrola has saved since I’ve run it. I am very generous when it comes to investment, which provides growth, wealth and employment opportunities. But if you spend money on something superfluous, at the end of the day what is wasted is not invested, and if you do not invest, you do not create. I always say that needless spending causes poverty while investment creates wealth, a future and employment. We must do everything possible to make investment attractive through a sound and predictable legal framework. There will be competition among member states for European funds, and the legal guarantee will ensure that investment flows into our country. Because if investment does not flow, we will not emerge from the crisis.
Q. Have you noticed a big difference in approaches to the crisis in different countries?
A. We are in countries where the pandemic has hit hard. In the United States, Brazil, the United Kingdom, France, Italy and Spain. In almost all these countries, the approach has not been too different and naturally our own protocols have been very similar. I feel very proud as, thanks to around 150 measures, regarding health, isolation and shifts, our rate of infection is about 10 times lower than the average of the countries we are operating in. We are a multinational that tries to do things by listening to everyone rather than with an order or a command. And from day one, we have been working hand in hand with the unions, who have provided us with a wide range of ideas.
Q. Is it more important to support businesses or workers?
A. It is companies that create jobs. If businesses fold, employment suffers or disappears. If you want to protect workers, companies must be protected. To get out of the crisis, we need to invest. Without investment there is no growth and without growth there is no employment. And if there is no employment, there is a social crisis. I believe strongly in the social market economy. At meetings, when results are presented, I always point out that it’s a triangle: shareholders, employees and society. If we, as managers, are not able to combine these three pivotal points, the system does not work. So what are we doing for each of them? We have advanced orders worth €4.2 billion so that our suppliers do not get rid of jobs or close down. Iberdrola employs 400,000 people worldwide. We are doing the impossible to speed up investments and we want to be hiring up to 5,000 people this year. And we have not stopped our training programs. Regarding the shareholders, we have continued to pay dividends. We have 600,000 shareholders in Spain – real people, not just ethereal beings – and if we don’t, they will lose the potential to consume and get the economy moving, which is what we need. Regarding society, we are ensuring supply and we have spent millions of euros on buying healthcare material which has been distributed where most needed, from top-of-the-range ventilators, which we have bent over backwards to get hold of, to protective clothing and masks. Regarding our tax contribution, Iberdrola pays €8.5 billion to state coffers around the world and more than €3 billion of that is paid in Spain, all of which are aspects of our social dividend.
People have seen that it is possible to live in a world without pollution
Q. How can we get the economy going again?
A. Investing-creating-investing-creating... As I said before, by transforming sectors with an uncertain future and supporting those that have better prospects despite the fact they are struggling, and attracting investment to sectors that we don’t yet have but which are the future. For example, by bringing forward the National Energy and Climate Plan scheduled for 2030. If things are done well, that could generate 300,000 jobs. An agenda of 300,000 jobs in 2030 is not the same as in 2022; we already have clean technologies and if we speed up their use we could create 300,000 jobs now. Certain rules would have to be changed to accelerate the administrative procedures, but we have to go faster because 2030 is a long way off and the problems will arrive in 2020 and 2021.
Q. How is this crisis going to affect the energy sector?
A. Not one person in a position of responsibility, whether from the European Union, or the United Nations, or from the forums I belong to, has not come to me and said that we have to come out of this crisis greener or we won’t come out at all. I think it will accelerate the new European Green Deal. What are the advantages? In the short term, we can invest without having to depend on the state budget. Almost everyone is going to ask for help from the state, but fortunately in our sector, if the balance sheets are in good shape, we have access to the financial markets without having to rely on public finances. Furthermore, Spain as a country is highly dependent when it comes to energy. If we produce more, we will be less dependent on others and our balance of payments will improve. There will also be a rich and sustainable industrial fabric for the future. The circular economy, clean energies and sustainability are the axes promoted by the EU and, together with digitalization, are the elements that will make up the future. We are going to become more competitive in renewables and intelligent networks. These are more efficient than traditional energy systems. In other words, we will reduce emissions and there will be less pollution, creating a positive cycle. If there is less pollution, there will also be fewer health problems at a time when health is a key issue. Sectors such as the automotive industry can push for electrification, and air conditioning systems can be electrified. All this could provide great opportunity for growth.
Q. Emissions have been drastically reduced during the coronavirus lockdown. Could this make people less aware of the threat of climate change?
A. I think the opposite will be true. People have seen that it is possible to live in a world without pollution. The people I talk to all say the same thing – we have never seen big cities so clean. Now that we can go out, you really appreciate being able to breathe properly. Any issue related to defending nature is not partisan or ideological, but essential in a world where cities are as densely populated as they are. It is a reality that must be addressed without delay. At the climate summits I have participated in – and I have been to many – this has primarily been a politicians’ debate, but now it is a subject for society at large to discuss. We saw this here in December [at the United Nations Climate Summit]. It was ordinary members of society that were there, pressing for things to be done differently – and they can be done differently. I recently read a report that said that the targets we have in Europe for 2030 – of 40% renewable energy – are very modest and that we could reach more than 60%. It is a path of no return. There are those who are nostalgic and want their heating and electricity to continue to come from coal and who miss the steam locomotives on the railways. But I’m afraid that is now movie terrain. There’s no place for it in day-to-day life any more.
Q. Do business leaders in other countries share your vision?
A. These are more or less common concerns; curb the pandemic, protect the people around us and reboot the economy by preventing businesses from going bust. If companies don’t survive and the business fabric is destroyed, we could have overwhelming unemployment everywhere. We belong to the European Roundtable for Industry, which is made up of Europe’s top 50 companies from sectors across the board. I am a member of the executive committee and we have an advisory group, which includes the president of the European Commission herself, Ursula von der Leyen, who has produced a number of documents for the European Commission focusing on the re-industrialization of Europe. And that undoubtedly involves the energy sector as well as the automotive and telecommunications sectors. All the reports point to the fact that we must take this opportunity to revive a European industry that is much more modern, more resilient, more efficient and more competitive, both in those sectors we already have and in those sectors we are yet to develop.
English version by Heather Galloway.