Air Liquide


A visit to Air Liquide’s innovation centre near Grenoble was an opportunity to learn more about some of the company’s work to develop more environmentally sustainable energy sources. Innovation has always been important to Air Liquide and the company currently spends in excess of €300 million on it every year. Grenoble is one of its six innovation centres (Tokyo, Shanghai, Delaware, Paris and Frankfurt are the others) and the only one with production capabilities.

Much of the technology being developed at Grenoble is still at the nascent stage and accounts for only a small part of Air Liquide’s activities but there are some areas where the company has already established a strong market position. The business gained an early mover advantage by partnering with the French state to develop cryogenic and hydrogen liquefaction technology for Europe’s space programme. Air Liquide believes the future of transport will involve more than one technology and that hydrogen is likely to be the fuel of choice for commercial vehicles and aviation. Management is particularly excited about the latter. The key issue for now concerns the size of the fuel tank. Whilst a hydrogen tank is only one quarter of the weight of a traditional kerosene tank, it is three times the volume. Finding space on an aircraft to fit this is therefore a major challenge. Through its partnership with Airbus, however, Air Liquide is making progress on developing a solution. By 2026, Airbus aims to have one engine out of four running on hydrogen and the technology is expected to be fully commercial a decade later.



A first one-to-one meeting with the new CEO of Ferrari, Benedetto Vigna, was a chance to get his views on a range of issues, among them electrification and the long-term outlook for the internal combustion engine (ICE). Mr Vigna is convinced that Ferrari can succeed in the electric-vehicle (EV) space, thanks particularly to the company’s world-class mechanical and electrical engineering talent, and customer demand for Ferrari to produce EVs.

There is a chance that the production of EVs may lose Ferrari some custom, but Mr Vigna thinks the business will gain many others. The average age of a Ferrari customer has declined over time, and Generation Z places greater importance on environmental factors than their predecessors. It’s important for an all-electric Ferrari to be a unique proposition when it comes to design, performance and emotion. With respect to performance, there are myriad contributing attributes, many of which are the same for ICE and EVs. For example, Ferrari Active Suspension Technology developed for the heavier-than-average Purosangue model can also be used in the EVs where battery weight is a key consideration. The process will involve a focus within the company on the parts of the car which make Ferrari unique, whilst outsourcing the production of non-core elements to partners.

Demand for Ferrari’s ICE vehicles will remain strong, however, and Mr Vigna see biofuels as key to meeting tightening environmental regulations. He believes that steps taken by Formula One to become more sustainable will help drive Ferrari’s own strategy in this area.



A trip to Inditex’s headquarters in northern Spain was an opportunity to discuss the ongoing evolution of the Zara owner’s sustainability strategy. In recent years, Inditex has worked hard to increase the sustainability of its product offering. At the core of the company’s strategy was the ‘Join Life’ label, which was attached to products that incorporated sustainable raw materials or that were manufactured in environmentally sustainable facilities. By 2022, over 60% of products qualified as Join Life.  Now, however, Inditex plan to remove the Join Life label. This isn’t because the business is retreating from its sustainability ambitions but because it wants to be known for producing sustainable products across its full offering, not just a subsection of it. The new sustainability strategy will be outlined at or around the time of the company’s AGM and will include new targets and KPIs.

During our meeting, Inditex representatives spoke enthusiastically about developments in garment recycling technology, as well as the growth in capacity of natural viscose materials, such as lyocell. Reflecting this, the company is supporting a Portuguese business which is in the process of building a huge new lyocell plant in northern Spain. Inditex also expects to be a commercial beneficiary of increasing transparency around sustainability, citing the EU’s taxonomy legislation as a potentially important competitive differentiator over time.



Supply chain risk remains a major focus for the global apparel industry and a meeting with Nike was an opportunity to discuss how the company’s approach is evolving. Nike’s strategy can effectively be broken down into three elements. The first is reducing the time between design and consumer availability. Central to this is the company’s ‘Express Lane’ initiative, which the business views as a major competitive advantage. The second element is focused on ensuring supply chain resiliency. This involves reducing manufacturing concentration risk by geography and by style of product. The third and final element is responsibility within the supply chain. On this front, Nike is pursuing a number of initiatives. One is to try and encourage higher employee retention at factories by creating a better working environment. Part of the emphasis is on gender representation and appropriate levels of health & safety. Fundamentally, a better working environment equals higher employee retention and therefore less financially material supply chain risk.

Nike is also working to ensure that its suppliers adhere to appropriate standards of conduct, which began with tier one suppliers and is now starting to migrate down to tier two, and the company also has a number of initiatives focused on raw material risk. On this latter point – a complex and highly sensitive area – trust and verification of raw materials is the key goal. How can Nike ensure there are no inappropriate raw materials working their way into its supply chain? To date, the company hasn’t wanted to communicate too widely many of the initiatives being trialed because the business is not yet in a position to scale a solution for the materials that matter most. This is an industry wide issue but Nike is showing commitment to addressing the challenges.

O’Reilly Automotive


“Culture eats strategy for breakfast” may have become something of a cliché but it remains a pithy reminder of the importance of a company’s internal working practices in driving long-term outperformance. On our many trips to America’s Midwest, we’ve always come away impressed by the culture of so many of the companies visited, with pride, humility, long tenure, and innovation often defining characteristics. One such company is O’Reilly Automotive, the Missouri-based specialty retailer of auto aftermarket parts, tools, supplies, equipment and accessories. In February, we caught up with the company to discuss a range of issues, including the role of culture in O’Reilly’s enduring success. According to the company, culture is O’Reilly’s biggest competitive advantage, and the development of human capital the organisation’s number one focus.

O’Reilly’s philosophy is to nurture talent internally and a vast majority of senior management, district managers and store managers have been promoted from within. Over 220 senior managers and over 280 corporate managers with an average of twenty and sixteen years respectively are the bedrock of the business. Every store manager reports directly to a district manager who was previously a store manager. There is a level of specialism and expertise throughout the workforce that sets the company apart from many of its peers. Customers receive a highly consulted service at an O’Reilly store, with extensively trained Professional Parts People (PSP) serving customers at dedicated counters. Having started out with one store and thirteen people in 1957, O’Reilly now has some 85,000 employees across over 5,700 stores. On this scale, maintaining a consistent culture requires hard work; however, twenty-nine consecutive years of sales and earnings growth, despite recessions and pandemics, suggests O’Reilly has been successful in its efforts. The company’s solid foundations and differentiated culture are key competitive advantages.

Engagement for Change

An engagement for change typically involves a series of one-to-one meetings and correspondence where we seek influence with a defined objective. An engagement for change will often relate to sustainability issues and our tailored approach enables us to focus on the issues or concerns material to each company. Given the rigour of our analysis before making an initial investment, we find the need for engagements for change relatively limited when compared to engagements for information.