Environment and companies: climate transition as strategy

The final event in the series of meetings on the environmental transition of regions and their businesses, begun by Leonard in September 2019, took place online on 12 May. There to discuss how climate issues can inspire company strategy were Jérôme Stubler, Chairman of VINCI Construction, Gilles Vermot Desroches, Sustainable Development Senior Vice-President at Schneider Electric, Claire Tutenuit, General Secretary of Entreprises pour l’Environnement (EpE), and Romain Grandjean, Project Manager at The Shift Project. They were interviewed by journalist David Abiker, who handled the video meeting with great aplomb.

The climate emergency, health crisis and environmental considerations are putting companies under pressure. In a finite world where all economic activities seem to be increasingly reliant on good management of natural resources, the environment has taken centre stage over the past few years as a factor in company performance and durability.

The climate challenge is immense. Romain Grandjean sets it out at the beginning of the meeting: “To limit global warming to below 2°C by 2050, CO2 emissions have to be reduced by 5–6% a year. Most of the CO2 that is currently being released into the atmosphere comes from energy use, and that energy is 80% produced from fossil fuels.” The dominance of fossil-fired energy is even more apparent in the sectors that Leonard works in: “transport, construction and manufacturing run on fossil fuels and the scale of growth in these sectors is dependent on this factor.”

Companies show the way

In the face of repeated and increasingly urgent warnings from scientists and organisations working in the climate field, companies are mobilising. By way of an example, an opinion piece recently initiated by EpE and signed by 93 international business leaders – including Schneider and VINCI – launched a call to [make] the environment central to the economic recovery”. Claire Tutenuit added: “With the members of EpE, we are trying to turn the unprecedented health and economic crisis that we are going through – which is set to last – into an opportunity for ecological transition.”

The tone is set but action remains to be taken. As one example, The Shift Project has jointly produced a study with AFEP (a non-profit which assembles the heads of major French companies including VINCI and Schneider) that underlines the need to make the climate and low-carbon transition not just an exercise in communications or reporting, but a matter of strategy for companies. This is necessary because, to deal with the inevitable deep technological, political, economic and social disruption that is going to happen, “companies have to build thorough knowledge of the energy and climate issues that apply to their own business models”.

Are growth and transition rival sisters?

Do we have to choose between growth and transition? The answer is a firm “no” from both Jérôme Stubler and Gilles Vermot Desroches. “We have to change from compliance to action. Let’s get down to changing things in a very tangible, hands-on manner,” says Stubler. And the construction sector is packed full of tangible levers for action. They include making use of low-impact materials such as low-carbon concrete, which divides the CO2 footprint of the world’s most widely used construction material by 2 or even 3.

Gilles Vermot Desroches agrees and adds: “The much-needed economic recovery will require support. For Schneider Electric, digital technology, which is increasingly used in the energy and construction sectors, will be decisive in conducting the major shifts to come.”

Involving all stakeholders

The environmental transition of regions will not happen without customers and contractors who design and build infrastructure. “Some years back, we were being assured that customers would refuse to pay more for a building with better insulation. Then the RT2012 regulation [in France] changed perceptions and behaviour. The new regulation, RE 2020, will come into effect on 1 January 2021 and is a unique opportunity for us,” says Jérôme Stubler, underlining the crucial role of governments in inverting demand.

Claire Tutenuit is of the same opinion: “It’s necessary to stimulate both demand through standards and supply through incentives to innovate, with a regulatory framework that will help innovation. But as well as the carrot, a stick is also needed so that ecology is not left out of the picture: the stick can’t come just from each actor making individual decisions, it has to come from the public sector.” She concludes: “If it is to be just, the ecological transition needs cooperation between private-sector companies, public actors and citizens.”

EpE raises the issue of the importance of public investment, “especially when spontaneous economic models do not move in the direction of energy transition”, but also and above all of the importance of private-sector investment. Shareholders, including individual private investors, have an essential part to play: “The world of finance has realised just how big a responsibility it has towards climate management and that it has huge levers and means of action. It’s pushing companies to set out their transition schedules and trajectory,” says Tutenuit.

Generation Greta: the wind in their sales?

For Gilles Vermot Desroches, “The Millennials that companies want to attract in order to be more innovative are increasingly demanding about the choices they support; the most complicated question for companies is not how to attract them, but how to keep them.”

Also, says Jérôme Stubler, it’s “companies with the most polluting activities that need to convince talented people to participate in their transition” – and those companies are where the challenges are the greatest and the impact will be the highest.

However, he emphasises, raised awareness and the power to act is not a matter of generation: “This transition affects all of us, no matter what our age. It involves everyone as individuals or part of a company. At VINCI Construction, in our 840 business units and 30,000 projects a year, the environmental transition is taking tangible form with long-term actions, reflection, and new products and services to satisfy and anticipate customers’ needs.”

What do we do?

The VINCI Group created Leonard to tackle the challenges posed by the transformation of regions and lifestyles. Our goal is to unite a community of key stakeholders in order to build the city of the future together.