Session 7

Business & Climate Antagonisms


Session 7 presents “Business & Climate Antagonisms” as a diagnostic of conflicts of interests between business & climate priorities.

The objective is to describe clearly the main problems faced by companies in reducing their GHG emissions. Once these central problems are clearly defined, come up with actions to overcome them, rather than addressing marginal topics.

Course Outline

3 Business & Climate Antagonisms
Workshop: apply to multiple industries

Key Learnings

Carbon Accounting

  1. Decompose the value chain: production, transport, use, end of life for a thermal and electric car.
  2. Identify the main sources of emissions and assess the associated emissions. If you do not have the info, guess :) The objective is to make a ballpark estimation.
  1. Compare: which car emits the most over its lifespan? Is the difference significant? By how much? Why?

Identify Business & Climate Antagonisms

Mechanism business model priorities business & climate are in conflicts. how to overcome them ?

  1. Business Models & Volume Strategy,
  2. Future investments & Asset Management,
  3. Product Launch & Innovation,
  4. Market & Competition

Carbon Accounting & Business Review

Business Review

  1. Head of Sales: draw a schematic P&L report for 2 products using the following parameters: set sales objectives for the years N to N+4.
  2. Head of Sustainability: define a Key Performance Indicator (KPI) for your Climate strategy, and set an objective for the years N to N+4.
  3. Limits & Observations: analyse the limits of your Climate Strategy: what are your ideas to overcome them?

What for?

  1. Better understand structural problems that organizations face, and keeps students from suggesting simplistic solutions.
  2. Help students conduct sharp analyses as the teacher team observed that students often censor themselves when they judge their conclusions too anti-business.
  3. Identify major limits of claims from companies & governments.
  4. Build relevant solutions to overcome these antagonisms.
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#1 Volume Strategies vs. Carbon Budget

Most business models create a proportional relation between revenue generation and CO2 emissions:

  • More revenue, more emissions
  • Less emissions, less revenue.

Physical limits: Remaining Carbon Budget

2019 emissions: 43 Gt CO2. At this rate, the Remaining Carbon Budget (RCB) will be gone in

  • 9 years: RCB (+1.5°C, 67%): 400 Gt CO2
  • 26 years: RCB (+2°C, 67%): 1 150 Gt CO2

#2 Assets: Sources of Income & Emissions

Assets can be both very profitable and completely incompatible with the Paris Agreement. Ex: oil rings, investments have been made, oil is ready to be extracted and markets ready to buy it.

Staying below +2°C means stopping the exploitation of many profitable assets so losing rents, suffering a massive deadweight loss of cash invested: an economic heresy.

French Banks Investments in Fossil Fuels

BNP Paribas, Société Générale, Crédit Agricole and Natixis owns enormous assets in fossil fuel industries and keep investing massively.

#3 "Eco products" & Strategies of Volume

Developing ecological products & offers while maintaining strategies of volume leads to increasing emissions !!

Ecologic offer: Pivot or classic Diversification?

Is the launch of a new ecological offer a mean to:

  • replace a polluting offer, or
  • enter a new market to increase revenue?
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Student Projects

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Pedagogical Note