The COP 21 Conference is currently
making daily headlines in the media, with a large number of meetings taking
place in Paris where businesses, NGOs and players in energy transition are working
alongside the diplomatic negotiations taking place within the framework of the
UN.
It is very fortunate that many
companies are making an effort, and particularly that financial investors are
making structuring decisions for the future, where some are not hesitating to
divest from fossil fuels (Divest/Invest movement) and publicly announce it in
order to highlight their commitment to the critical goal of slowing the
acceleration of climate change caused by human activity.
Paradoxically, many businesses - or
rather many Boards of Directors - have so far failed to adjust their operating
models in order to include the fact that a transition to new sources of energy
- a strategic matter for those businesses whose carbon emissions are highest - is effectively becoming a matter of
governance. Indeed, shareholders are entitled to question the composition of
their Boards of Directors and the competence of directors who have not seen or
been able to impose strategic developments earlier in order to anticipate the
necessary investments or divestments.
While on the one hand Lafarge has set
an example for implementing a partnership with the WWF ten years ago, allowing
the conservation group to verify the progress made by Lafarge in order to
decrease its harmful emissions, on the other Volkswagen has demonstrated its
Oversight Committee's inability to realise that internally-set objectives for
growth were incompatible with the company's technical capacity for complying
with current environmental regulations in the US and Europe.
These two extreme examples make it
clear that Boards of Directors need to include these questions about energy
transition and environmental impact in all of their decisions. They need to ask
themselves whether they should call into question any activities that are
currently being performed or developed, identify the current and future risks
in relation to the development of regulations, and effectively take these risks
into account as a strategic challenge.
From questioning a number of directors
whose activities are not in themselves directly identified as the source of a
climate challenge, it seems that they view these issues as a risk and not as a
strategic challenge. They need to urgently acknowledge the fact that this
represents a strategic challenge for every company, regardless of their
business sector, and that innovation and investment are the only means of
anticipating the market and product developments that will very soon take
effect.
At the end of the 19th century,
numerous businesses were closed or bought out because they weren't able to
anticipate the industrial revolution. We have all had our eyes fixed on the
digital revolution, however the issues linked to our climate are at least as
important given the acceleration of climatic instability.
At the same time, we also need to
anticipate the consequences of the financial - and purely financial - decisions
taken 10/20 years ago by investors, management companies, banks, etc. even
while environmental questions were being asked by numerous NGOs, but were not
considered as falling under their responsibility.
Investors and financiers are waking up
a little late... however it's never too
late!
Olivier
de Guerre
PhiTrust
