Preparing for the Energy Revolution in the Banking Sector

Keynote speaker at HEC’s eighth Energy Day, Patrick Perreault, did not mince his words. “As far as climate change and mobility are concerned, we all need to think out-of-the-box across all sectors.” The Société Générale Co-Head of Mergers & Acquisitions (M&A) engaged the students in the Bellon Amphitheater with a talk giving rare insight into the banking sector’s initiatives to respond to the new challenges posed by global heating. After his speech, the HEC alumnus (H96) discussed his vision on energy, climate change, and the role that banks and young graduates can play to devise new solutions to a global challenges.

Energy Day began in 2013, some 17 years after you graduated from HEC’s Grande Ecole. How would you compare attitudes towards energy today with those in your time here?

Patrick Perreault: Topics such as global warming, the shift away from carbon energy or the emergence of “new mobility” were not really on the agenda back in the Nineties! There has been a fundamental shift in the last five years.  Public scrutiny over topics like CO², greenhouse emissions and climate change has grown exponentially. And when I was here 24 years ago, well, students were broadly focused on more traditional sectors while entrepreneurship, technology and the internet were still emerging trends …

There’s been a huge acceleration recently in the convergence between societal concerns regarding the environment and the imperative for companies to enhance in concrete ways the sustainability of their operations. This is creating new challenges across the corporate world, both for so-called traditional industries and technology companies. It’s not simply a question of being competitive and profitable. Companies are being asked to deliver solutions that are also coherent with the broader societal and environmental agenda of their clients This leads not only to new constraints but also to new opportunities.

There’s increasing pressure on companies. In the automotive space, it’s very visible. Beyond buzzwords like clean mobility and smart city and infrastructure, you have companies that need to reinvent themselves to develop quickly solutions that are in line with an evolving regulatory environment and shifting consumer and societal expectations.

I spent the bulk of my career working for industrial companies or “heavy” industries. Twenty years ago, there was still a major separation between the technological and industrial worlds. But today, there is osmosis everywhere and it’s more and more intertwined.

In your talk, you discussed the environmental and geopolitical challenges associated with the use of batteries for electric vehicles. How all-encompassing is Société Générale’s vision of the footprint the battery leaves, the origins of the metals it uses, the challenges of recycling it, etc?

Patrick Perreault: Metals and minerals used in batteries include copper, graphite, cobalt, nickel and lithium.  Beyond the specific topic of batteries, there has been an increasing focus across the banking sector regarding the environmental and societal impact of mining projects being funded. ESG criteria (Environmental, Social and Governance) have become critical for the assessment of new projects. Société Générale has a specialized environmental group which reviews financing project across the natural resources space, including mining. The rise of electrification and the use of batteries thus creates specific challenges for automotive players in terms of supply chain management. “Batteries are critical to my new vehicle platforms,” they say, “but do I make sure that batteries in my car come from minerals and metals that have been sustainably extracted and processed?” Ensuring the sustainability of the entire supply chain, all the way from the mine to the recycling of batteries, will be essential to underpin the development of electrified mobility solutions.

During your speech you mentioned your involvement as a banker over the last two decades across many industries with a relatively heavy carbon footprint How are current trends around environmental protection and global warming impacting your own evolution?

Patrick Perreault: Across all industries, the environmental and social topics are inching their way up to the top of the corporate agenda. This is driven by many factors, all the way from rising regulatory constraints, heightened citizen scrutiny, specific consumer demands… and a genuine desire by many companies to ensure improved alignment between their corporate purpose and the need for enhanced environmental protection and sustainability.  In some shape or form, the topics of sustainability and environmental footprint are now relevant to most of the transactions where I am involved. Corporates are realizing that environmental and sustainability imperatives are much more than a communication angle; genuine focus on those issues is becoming essential to protect or enhance the long-term competitiveness of companies across many industries That’s the only direction they can go. And banks can be part of the solution! Take the example of the shipping sector; where more than 35 financial institutions, including Société Générale, have joined forces around the Poseidon Principles that will better enable lenders to align their fleet lending portfolios with responsible environmental impacts and to accompany shipping companies in their objective to reduce GHG emissions by 50% in 2050. This is a fantastic example!

What role do you see HEC playing in these objectives?

Patrick Perreault: Like the panelists said tonight, HEC must be at the heart of these major technological and environmental changes that are impacting the way we act both as citizens and as employees. It’s clear to me that, through their experience at HEC, many students will acquire the tools – be it in terms of finance, entrepreneurship, HR or strategy skills - to have an impact in their workplace and to develop innovative solutions to today’s corporate challenges. In start-ups, small and medium companies, large corporates, banks and advisory firms, there is an incredible need for individuals who are both equipped and motivated to tackle the rapid technological, environmental and societal shifts.

Those attending tonight are part of the solution. I graduated from HEC more than twenty years ago and it is highly motivating for me to see young graduates who are willing to rise to the occasion and to challenge the way we are doing things. It’s the sort of dynamic that is required to develop sustainable solutions and to transform challenges into opportunities for positive impact!