The Climate Conferences - Scope and limits of business actions

Lessons learned from Session 5, part 2

Bettina Laville, Géraud Guibert, Sandrine Rousseau, Pierre Calame, Ilian Moundib, Alexandre Rambaud, mars 2021

In the face of global warming, how can we move towards an obligation of result? This is what is at stake in this series of public debates, which will allow us to become familiar with the idea of an obligation to achieve results, to explore the various possible ways of meeting this obligation and to question the public authorities on how to assume their responsibilities in this respect.

This second part of session 5 deals with the ways in which companies can contribute to the fight against global warming.

During the third session, Gilles Berhault, General Delegate of the Foundation for Transitions, reminded us that assuming an obligation to achieve results in the area of global warming did not only concern States and very large companies, but also implied the mobilisation of all actors.

During this fifth session, the role, commitment and capacity for action of companies were discussed:

Summary of Session 5 : What about carbon taxes ? What are the benefits, difficulties and business strategies ?

What is striking in both presentations is the contrast between the dramatic nature of the findings and the modesty of the actions that are put forward. David Laurent based his presentation on the World Economic Forum’s 2020 report. In particular, he showed us two graphs taken from this report which illustrate the awareness of political and economic leaders of the scale of the problem.

The first graph crosses, for different environmental, economic, societal and geopolitical risks, the magnitude of the impact of the risk and the likelihood of their occurrence. It shows that the most important and most likely risks are environmental risks, at the top of which is «  the failure of climate action ". This is more of a systemic risk than an environmental one, since it actually crosses the risk of climate disasters with the inability of economic, societal and geopolitical actors to cope with them.

The second graph shows the links between the risks. Here again, the risk of the failure of climate action appears to be central, since it is caused by the failure of global governance and results in both climate disasters and their social consequences, in particular the forced migration of populations fleeing a situation that has become untenable. Ilian Moundib made the point by presenting a map of the world identifying the regions that in a few decades will be so hot and humid that they will be unlivable and even lethal. And he deduced that we can expect 4 billion climate refugees.

These graphs are of course important. It is undeniable that the economic world has finally taken the climate issue seriously. Business, says David Laurent, is under three combined pressures :

The European taxonomy, currently being approved, is an effort to rank economic activities according to their environmental and climate impact and {{a direct invitation to investors to move away from economic activities that are less compatible with climate preservation. Since the Paris Agreement, companies and asset managers are required to assess the risk of global warming.

But what can companies really do that is commensurate with the challenge David Laurent first notes that the Paris Agreement is an interstate agreement from which businesses are absent in law (even though the Paris Agreement very strongly invokes the role of private actors). He also notes that companies are faced with a profusion of methods, metrics (the importance of which we saw in the first session) and even objectives.

Classically, the objectives that companies set themselves fall into four categories :

In another diagram, David Laurent shows us that the business world has appropriated a discourse that was, not so long ago, the prerogative of ecologists : the economy does not exist by itself, it is embedded in society and society in turn embedded in the biosphere. However, as we saw in the first part of the session, the action of companies focuses on the energy efficiency gains of production processes, on the ecological value of its products but, at least in David Laurent’s presentation, is neither able to take an interest in the entire sector nor, a fortiori, to question lifestyles and consumption patterns.

It is also these limitations that mark Ilian Moundib’s presentation. He takes up the international criteria already mentioned, scope1, scope2, scope3, defining, from the narrowest to the broadest way, the consumption of fossil energy, while remaining within the company’s perimeter. The approach can therefore only be marginal, at least in relation to the scale of the efforts to be made by the company to comply with the commitments of the Paris Agreement: it must set itself multi-year targets (minimum five years) for reducing its fossil energy consumption and the ratio of carbon dioxide emissions to turnover, based on the best scientific knowledge available.

The final speaker, Alexandre Rambaud from AgroParisTech, approached the issue from a very different angle, that of accounting. He teamed up with Professor Jacques Richard, whose pioneering work in this field is now widely known, to develop a new accounting framework. His starting point is the observation that international accounting standards, ISFR, adopted in 2005 on the basis of the accounting used by the Americans, the very ones used by the companies mentioned in the two previous speeches, no longer correspond at all to the realities of economic life.

We must, he says, return to the very foundations of accounting. This is the purpose of the CARE - TDL method of accounting (in English : a global accounting respecting ecology and taking into account the triple depreciation of financial capital, natural capital and human capital). He reminds us that the original purpose of accounting was not to maximise the profits of financial investors but to «  represent things to be managed ". To count is above all to be accountable for one’s actions and to do so to leave traces that are opposable to us of what one has done. This is why, as we can see from the English term « accountability » which is often used to translate the concept of responsibility, accounting and responsibility for what has been entrusted to us are two sides of the same coin.

It so happens that accounting as we know it has privileged only one dimension, that of the capacity to return the capital that has been advanced (the capital is on the liabilities side of the balance sheet). For a company, being accountable for its actions means being in a position to repay the advance that was made to you and to say how it was used. But it is not only investors who make this advance, it is also and above all the planet and people.

In classical accounting, nature does not appear as something to which one has contracted a debt but as a simple factor of production or, at best, as was mentioned in the first part of the session, an « externality » that must be remedied.

By putting the three types of capital - financial, human and planetary - on the same level, nature is no longer just a variable in an equation linking the different factors of production, it is what we have contracted a debt to that we will have to repay.

On a small scale, this is what we find in agricultural accounting : we have to foresee costs for the remediation of soils, to restore them to the state of fertility that made them a factor of production. Well, » says Alexandre Rambaud, « let’s do the same thing for the climate.

We did not have time to debate this point during the session. This attractive approach is not without its problems as far as the climate is concerned, unless we imagine the obligation to achieve zero emissions at the level of each company, which is difficult to envisage. But what is difficult at the level of a company is possible at the level of a national community or Europe : this is what the obligation to achieve results with regard to the lifestyle footprint corresponds to, an obligation which engages the responsibility of governments. We find the themes discussed in session 3.



Session 5, like the next sessions, involved a mini-survey of participants :

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