The Importance of Educating Professional Services on Transition
Inès Galichon , Partner at Blunomy and Antoine Poincaré , Climate School Director AXA Climate highlight their joint initiative, the Net Zero School — a training program designed to equip teams with the tools necessary for understanding the sustainable transition of their value chain.
What is your perspective on what companies are doing about "Net Zero"?
Antoine Poincaré:
Achieving "Net Zero" requires nothing less than a radical transformation of our economic models. It’s not just about tweaking existing operations; it’s about a full-scale overhaul. This transition hinges on four critical levers: exiting from carbon-intensive markets, optimising current activities, diversifying into greener ventures, and offsetting any remaining emissions.
Some companies have already begun to pull one or two of these levers, but few have adopted a holistic approach. To truly integrate the transition with business opportunities, companies must understand that the impact and strategies will differ across sectors. For instance, while the energy sector might focus on renewable energy adoption, the manufacturing sector could prioritise material efficiency and waste reduction.
Inès Galichon:
“After the time of Net Zero commitments comes the time for climate transition plans and concrete action.”
Indeed, many companies have made Net Zero commitments, which is a necessary first step but not an end in itself. However, very few have defined accurate, realistic, and credible action plans to achieve these goals. These four decarbonisation levers should become a compass to frame their transition strategy – questioning their business models, scaling up new business activities and accelerating the adoption of existing scalable solutions. Timing is essential because we need to halve our CO? emissions by 2030 to be Net Zero by 2050.
What is expected from the professional services industry in this transition?
Antoine Poincaré:
Professional services, including lawyers, consultants, investors and bankers, play a critical role. Their scope 3 emissions can represent over 90% of their total emissions, meaning they can only decarbonise through their clients and/or suppliers. Take banks, for example: while they can choose to stop financing certain high-carbon projects, their overall decarbonisation efforts are primarily determined by the carbon footprint of the assets and companies they finance. It's estimated that the global banking sector is responsible for financing over $3.8 trillion in fossil fuel projects between 2016 and 2020. This highlights the crucial role financial institutions must play in steering the real economy towards decarbonisation.
Inès Galichon:
Each sector has its specificities, dynamics, promising innovations, suitable solutions, and pitfalls. Professional services must understand in detail the transition challenges and opportunities their clients are exposed to. This understanding is absolutely essential to better advise, serve and finance their clients, as climate transition and, more broadly, sustainability has become a business imperative which cannot be dissociated from other market considerations, risk management and business strategies. A sector's future cannot be understood without a detailed understanding of the challenges and opportunities associated with climate change.
Why is it fundamental for these actors to educate themselves on these topics?
Inès Galichon:
They are the ones who will help companies define and implement their decarbonisation roadmaps (consultants), finance them (banks, investors), insure them in the future (insurers), and provide legal advice on their transition (lawyers). However, the transition will differ from one sector to another – not the same climate risks, nor the same opportunities or viable short-term alternatives. Professional services providers need to understand these specificities to push their clients towards transforming their business models, and better understand their new needs in terms of financing, investment, insurance and legal advice. This knowledge is crucial for them to better support their clients in a highly uncertain and increasingly changing environment.
Antoine Poincaré:?
“Climate transition won't happen with minor adjustments.”
For equity investors, for instance, understanding how to influence or redirect the strategy of a company they finance—or partly own—is vital. A recent study1 shows that companies aligned with Net Zero pathways could see their valuations increase by up to 10%, while those lagging could face devaluations of 30% or more.
领英推荐
Where should they start this education process?
Inès Galichon:
?“They should start by understanding the current situation and know the existing solutions.”
Identify where CO? emissions come from in a sector, which part of the value chain is most exposed to climate risks, and which types of players are involved. They also need to understand how a company in a given sector can decarbonise, what concrete steps it can take in the short, medium and long term, whether these are at hand measures to reduce its carbon footprint, or a deeper strategic repositioning involving the development of new business activities.
Antoine Poincaré:
Additionally, delving into sector-specific transition plans will help identify each sector's resource needs. This is crucial for what we call "closing the loop," which involves combining the needs of each sector to ensure we have the resources to meet them collectively. Questions like whether we will have enough renewable energy, biomass, green hydrogen, or metals to decarbonise all sectors and countries simultaneously need to be addressed. Competition for some resources will be fierce, and every business leader must keep this in mind and prepare potential "Plan Bs." For example, the global demand for lithium, essential for batteries, is expected to increase by over 500% by 20502. Companies need to start thinking now about alternatives and supply chain resilience.
A final word??
Inès Galichon:
“Acceleration”. Educating people on decarbonisation is essential for a company to transition. This knowledge must be disseminated rapidly and widely within organizations because time is running out and the transition requires the mobilization of all employees.
Antoine Poincaré:
“Collaborative”. The Net Zero School by Blunomy and AXA exemplifies the collaborative efforts needed to equip teams with the necessary tools and knowledge for understanding and driving the sustainable transition of their value chains.
Sign up here for a demonstration of our training programme!
The Net Zero School is a unique e-learning programme co-developed by Blunomy and AXA Climate , offering a multi-media educational experience to understand how 12 sectors can really transition towards Net Zero.
References
Strategy, Climate and ESG advisory - Farmer
1 个月Well done Inès Galichon and Antoine Poincare. There will never be enough education on transition topics and I can attest this Net Zero School is a great tool for spreading awareness & knowledge !