HEC4Climate: How Business Can Help Tackle Climate Change

20 November 2015

The final round table of “The 2° C Challenge” event, moderated by Claire Tutenuit, General Secretary of Entreprises pour l'Environnement, was a unique opportunity for top business leaders to discuss their commitment to act on climate change.

HEC4climate 2015 - panel discussion 2

In spite of the diversity of their career choices, the guest speakers of the closing conference of “The 2°C Challenge” all had one thing in common: they have been climate conscious for a long time, although the topic was not part of their curriculum at HEC when they were students. “When I launched Alter Eco in 1998, my fellow alumni used to ask me when I would come back to serious matters. Working in sustainability, I was considered more or less a hippie,” Tristan Lecomte laughs. “Fortunately, things have changed: now there are sustainability departments in every major company. It is good to see that the two worlds of business and sustainability are now merging and converging.” When asked about the origin of his commitment to the environment, Bruno Lafont thought back: “In the early 1990s, when I became CEO of Lafarge in an emerging market, Turkey, I discovered that one cement plant there had a very negative impact on its neighborhood. The Turkish government was pushing for improvement. I understood then that taking care of the environment was a good way to set ourselves apart from our competitors.” Emmanuel Faber shares a very similar experience: “Having been born in the French Alps, I have had a special bond with nature since childhood. Environmental concerns entered into my professional life in 1994. I was managing director of a construction equipment supplier, negotiating a contract with the Chinese government for the Three Gorges Dam. We won because our US rivals could not compete with us on the environmental section of the deal.” As for Bertrand Badré, he first dealt with climate change issues when the 7th Managing Director of the IMF, Michel Camdessus, asked him to be part of the World Panel on Financing Water Infrastructure: “I realized then that we were living in a very fragile world.”

Aligning Organizations with Sustainable Strategy

“Climate change is a crisis, but also a huge opportunity to develop entrepreneurship and create new businesses. At the same time, a growing number of large companies with renowned brands understand they have to act in favor of the environment to protect their ecosystem and the quality of their products,” Tristan points out. Danone has reduced its emissions by more than 40% from 2008 to 2014, though most of the emissions linked to the dairy and water business are indirect and thus difficult to curb. “To produce and process food we use 2.5 billion liters of water each year, and tons of plastic. So an agricultural model that supports our development is at the core of our concerns. We have used the 2°C scenario to design a climate policy which is operationally embedded in our whole organization, from the way we deal with our farmers, run our production processes, and deal with our big retailers to the way we talk to our customers. The most critical aspect is to align our organization, our governance and our incentives with this strategy.” The 40% reduction in gas emissions came out of a bold move: “In 2008, we decided overnight that one-third of the total bonus of the top 1500 managers of Danone would be linked to social and environmental aspects. It was a matter of consistency – and it was essential. The way the leadership team can embark everyone in the journey is absolutely crucial.” Bruno Lafont agrees: “When I joined Lafarge, one of the group values was respect, and part of it was respect for the environment. At that time, the chairman told me: 'If the boss is not doing what he says, nothing is possible.' His successor went to the Rio Summit because he understood climate change would become crucial for our industry. He inspired all of us. When I became CEO, I managed to set in place a process within the group where sustainability goals were determined by many executives in the company, so that these goals were not a constraint but a desire.”

Designing Innovative Products and Business Models

“If Lafarge had not made a move on climate change, the group would now be emitting an additional 30 million tons of CO2 each year, the equivalent of a small country's emissions,” Bruno explains. “First, we reduced our footprint by changing our fuel: we are now burning only 25% coal–compared to 100% twenty-five years ago. Second, the group entered the circular economy, working to reuse concrete and other materials. Third, we tried to be the most innovative company in our sector, investing in adequate research, for instance choosing to focus on concrete rather than cement.” Thanks to its research efforts, Lafarge was able to supply innovative solutions in Sub-Saharan African countries–a potentially huge market–that make home building more affordable while fighting deforestation. “We are starting to make a lot of money with sustainable innovations because they allow us to outperform our competitors,” Bruno underlines. “Sustainable development is no longer a special department in our company, it is fully part of our business,” he says with a smile. “At the World Bank Group, we have this mission of eradicating poverty and sharing prosperity, reducing inequalities between countries,” Bertrand Badré explains. “We finance projects that are implemented by companies, but we also have an influence as standard setters for the rest of the world. Climate change is about money and policies, and we are active in both areas. Now we have to shift paradigms: the public sector cannot provide the money alone. We have to join forces with the private sector, which is extremely difficult, because both are suspicious of one another. Lots of money is at stake, trillions of dollars. We have to be creative to find resources, foster private innovations, and use green bonds, for example. I am very proud of one of our products in particular: insurance against natural disasters, designed with the help of Japan for the Pacific Islands, which are hit by typhoons and tropical storms on a regular basis. Thanks to it, when Tonga and Vanuatu were hit in the last two years, we were able to put cash on the table within two weeks.” Bertrand also underlines the importance of carbon pricing: “It is the right incentive for the market to properly unleash its forces. Big companies like Microsoft, Walmart, and ENGIE have just agreed to set up a price on carbon.”

“Whatever happens in COP21, we should not to wait to act, personally or professionally,” Tristan says. “Companies like Danone and Lafarge are unfortunately still a minority,” he underlines. As a conclusion, Bruno Lafont gave business leaders willing to fight climate change a piece of advice: “There are four very simple attitudes that can help you to lead and act properly. First, observe your footprint. Second, fulfill your responsibilities. Third, act to improve the situation. Fourth, measure and verify.” Simple but efficient!

More About....

Emmanuel Faber (H.86), CEO of Danone
Emmanuel joined Danone in 1997. Appointed Executive Vice President of the Asia-Pacific region, he initiated the social business joint venture Grameen-Danone Foods, Ltd in Bangladesh and oversaw the creation of danone.communities, the first French mutual investment fund to include social businesses. In 2014, he became the CEO of Danone. Emmanuel co-chairs with Martin Hirsch the “Business and Poverty” social experimentation lab, initiated by the HEC Paris Chair in “Social Business – Enterprise and Poverty,” which aims to reduce poverty and exclusion in France. 

Bertrand Badré (H.89), Managing Director and CFO, World Bank Group 
Bertrand was Chief Financial Officer of Société Générale and Credit Agricole, managing partner of Lazard, President Chirac's personal representative for Africa at the G8 Summit in Evian in 2003, and member of the World Panel on Financing Water Infrastructure chaired by Michel Camdessus. He is now responsible for financial strategy and risk management at the World Bank Group, and contributes to international dialogue on standards and financial practices on the Financial Stability Board. 

Bruno Lafont (H.77), Co-Chair of Lafarge-Holcim
The former CEO and current Honorary Chairman of Lafarge, Bruno has held various positions within Lafarge and played a key role in expanding the group's operations in Europe, Asia, and North America. He is a member of the Executive Committee of the World Business Council of Sustainable Development, where he co-chairs the “Energy Efficiency in Buildings Project.” He also chairs the “Energy and Climate Working Group” of the European Round Table of Industrialists, and the Sustainable Development Commission of the MEDEF.

Tristan Lecomte (H.96), Founder of Alter Eco and Pur Projet
In 1998, Tristan founded Alter Eco, a leading organic and fair trade company on the French market, present in the US and Australia, which he managed for 13 years. Appointed as “Young Global Leader” by the World Economic Forum in 2008, he founded PUR Projet that same year with the ambition of helping companies regenerate the ecosystems they depend upon through reforestation and forest conservation. Since 2008, PUR Projet has developed 35 large-scale forestry projects in 30 countries worldwide in collaboration with small-scale farmers’ organizations.

The 2°C Challenge: Success for HEC Paris
The conference entitled “The 2°C Challenge, Climate is our Business,” held on October 1 at HEC Paris, was a unique opportunity for the HEC community to come together to discuss the vital issue of climate change. From noon until 9:00 PM, the campus buzzed with a vibrant forum for entrepreneurs, a series of riveting workshops, and two major conferences. Students, alumni, scientists, and economic and business leaders attended, all wanting to find tangible solutions to tomorrow's biggest environmental challenge.

Climate is our business logo 2015

This article was originally published by HEC - Hommes & Commerce Magazine

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