The Exchange: Making the energy transition real with Tamara Lundgren
After COP28, CEOs are wrestling with the need for practical action while maintaining hope in the face of disheartening climate statistics. So who better to turn to for wisdom than the recently named world’s most sustainable company, Radius Recycling?
Delivering a future with less waste and sustained natural resources, Radius Recycling puts recycled metals at the heart of progress. This organization demonstrates how, when done right, coordinated long-term action combined with short-term measures can lead to innovation.
I sat down with Tamara Lundgren—the company’s chair, president, and CEO—to learn how this 117-year-old company translates its bold sustainable vision into meaningful impact, all while honoring its heritage brand.
My favorite takeaway? That balance is key for the public and private sectors on their shared road to net zero.
Let’s dive in.
Your company recently transformed, rebranding from Schnitzer Steel to Radius Recycling. Talk to me about that journey: What’s the significance of this transition? And why now?
We are a 117-year-old company founded by an immigrant who had a vision to find value where others saw waste by recycling metals, and we are still doing that today over a century later, obviously at a very different scale and with vastly different technology.
The catalyst for the rebranding was really twofold. First, over the last several years, our global trading partners have announced specific and meaningful commitments to transition to low-carbon technologies.
And then this past January, at the World Economic Forum in Davos, we were named the world’s most sustainable company by Corporate Knights. Now, this is not a recognition we applied for. Corporate Knights applied its own analytics and reviewed 7,000 companies around the world. And while we had made its list of “most sustainable companies” before, we had not been number one.
We were honored by that and got a lot of attention for it. But the headlines were all, “Steel company most sustainable company of the world.” And our steel activity definitely did contribute: we make finished-steel products with net-zero carbon emissions and utilize recycled metals and hydropower, but our largest business is metals recycling.
Tamara, at 117 years, you really are a heritage brand. And I know that Schnitzer Steel meant a lot to the people of Portland and the Pacific Northwest. As you were writing the next chapter, how did you think about honoring the past legacy?
It is a very significant name, particularly in the Pacific Northwest and with many of our customers around the world who have been very familiar, for decades, with Schnitzer Steel.
But once our stakeholders understood both the strategy behind the name change and that while our name and our logo are changing, our core values remain the same, it was easy to see the path forward. Portland and Oregon have a very strong story as it relates to sustainability, and our name change also reinforces those connections.
What advice would you have for CEOs who are contemplating a similar change? And in particular, is there anything you think you would have done differently?
You have to have an authentic reason to do this, and for us, there were a lot of market forces that were really supportive of this transition. The interview process, internally and externally, is a great opportunity to listen and hear what people are thinking about your company, especially about the kind of impact you’re making.
Listening is crucial, external expertise is vital, and it’s important to ensure that within your organization, you identify enough influential individuals at each level. This way, when decisions are being made and once they have been made, there are people who can effectively shape and affect the communication of those decisions over time.
There really isn’t anything that I would have done differently, and the feedback since we announced the change has also been very positive.
If I now just pull back up and say ‘energy transition,’ in your view, what role could or should the private sector play?
The private sector has been responsible for making the energy transition real. I mean, it is a journey. We are at the very beginning of that journey. But look at the commitments, for example, of the auto companies beginning two years ago and what they changed about their production processes, design, and core strategies: until you have the private sector really adopting it and really changing what they do, it can’t be a reality. So I applaud the private sector for taking this issue and translating it into action.
The public sector has also been impactful, in particular with the recent infrastructure law and IRA [Inflation Reduction Act] legislation. Both have the potential to create significant support on this journey. Recent geopolitical, labor, weather, and health events have all illustrated the risks of overreliance or overconcentration.
Balance is key to successful transitions. And that probably applies to a lot of things way beyond energy transitions, but to most significant transformative transitions, balance is key.
Going forward, a collaborative partnership approach—and we are seeing a lot of that occurring right now—between both the private and public sectors is the best path forward. It can also be very motivating to set aggressive stretch goals.
These days, there’s no conversation we can have without talking about generative AI. Are you experimenting with this technology? How do you see it improving productivity for Radius Recycling?
Our business is a great example of micro- and macroeconomics. The supply flows of scrap metal represent millions of individual decisions. And demand for recycled metals is propelled by macroeconomic factors such as interest rates and GDP growth. As a result, we accumulate a lot of data that now, with generative AI, we may be able to deploy or employ to better inform buying decisions and production levels. This is a new frontier for us, and we are very excited about exploring it.
I would also say that our team is always monitoring advances in using AI for predictive maintenance and recycling technologies. So those integrated analytics or integrated advances in AI and robotics, for example, have the potential to enable us to recycle more metals from the materials that are going through our processes. And as a result, we send less to landfills. There are a lot of rising technology applications that could significantly change the efficiency of our business.
Finally, ‘uncertainty’ has become not just a buzzword but almost a permanent state for CEOs. How have you improved your personal resilience as a CEO? And in turn, how have you created a more resilient business?
You’re 100 percent right: uncertainty has always been there. It’s why strategy is such an important part of a CEO’s job. There’s a big difference today. And even in the years that I’ve been CEO, there’s been a very big difference in the speed with which information flows today and the risk of whether that information is accurate and how quickly people are able to react to that information.
For me personally, being in this commodities sector for as long as I have, scenario planning and incorporating into our company’s culture the “one eye on the telescope, one eye on the microscope” approach to operating and planning are the ways that we are able to translate “resilience” into “nimbleness.” And that is what gives us the ability to navigate through a lot of the volatility that is occurring at a quicker pace than it has in the past.
Tamara Lundgren is the chairman and CEO of Radius Recycling (formerly Schnitzer Steel). Asutosh Padhi, a senior partner and the managing partner for McKinsey in North America, is based in McKinsey’s Chicago office. He leads the firm across Canada, Mexico, and the United States and serves as part of McKinsey’s 15-person global leadership team. He is a member of McKinsey’s Shareholders Council, the firm’s equivalent to a board of directors.
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.
This interview was recorded on August 31, 2023.
This piece was originally posted on LinkedIn.com as part of Asutosh Padhi’s interview series, The Exchange.