JOURNÉE I-TÉSÉ 2010 EFFICACITÉ DES SYSTÈMES ÉNERGÉTIQUES Les stratégies des entreprises face au changement climatique : le cas du CO2 A Managerial Perspective on the Porter Hypothesis: The Case of CO 2 Emissions Diane-Laure Arjaliès ESSEC Business School & Ecole Polytechnique Jean-Pierre Ponssard Ecole Polytechnique
Agenda The Porter Hypothesis.. Theoretical Framework.... Case Studies.... Next... 2
Agenda The Porter Hypothesis Theoretical Framework Case Studies Next 3
The Porter Hypothesis WIN-WIN SITUATION (Porter, 1990; Porter & van der Linde, 1995) Stricter environmental standards can spur innovations which enhance competitiveness and contribute to make companies more profitable. Has benefited from a growing interest among politicians and economists 4
Agenda The Porter Hypothesis Theoretical Framework Case Studies Findings Conclusion 5
Research Method and Design Scope: CO2 strategies in a limited number of large multinational companies (DuPont, Lafarge, GDF-Suez, Unilever) Information sources: Carbon Disclosure Project Published company reports Interviews of managers on goals and procedures Interviews of financial analysts Method: Construction of ideal types Case studies to illustrate the construction 6
A Two-Stage Model of Strategic Choices CO 2 Strategic Approach Beliefs Boundary No change No change STAGE 1 STAGE 2 Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and cross-functional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 7
A Two-Stage Model of Strategic Choices CO 2 Strategic Approach Beliefs Boundary No change No change STAGE 1 STAGE 2 Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and cross-functional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 8
A Two-Stage Model of Strategic Choices CO 2 Strategic Approach Beliefs Boundary No change No change STAGE 1 STAGE 2 Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and cross-functional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 9
Agenda The Porter Hypothesis Theoretical Framework Case Studies Findings 10
Application to Lafarge & DuPont DUPONT LAFARGE Headquarters location Wilmington, USA Paris, France Revenues $billion 30.5 billion 19 Employees 60 000 84 000 CO 2 emissions (Mt) from CDP 2008 9.3 108.9 Posted Target in 2008 15% for 2015/2004 (absolute value) 20% 2010/1990 (relative value) 11
Lafarge (I) Développement durable. Progrès social. Préservation de l'environnement. Ces enjeux sont au cœur de la stratégie de Lafarge depuis plus de 170 ans. Ouvrir la voie du développement durable La profonde conviction du Groupe? La performance économique ne peut s'envisager sur le long terme sans progrès social et sans protection de l'environnement. Seule la prise en compte des enjeux économiques, sociaux et environnementaux garantit la pérennité des activités de Lafarge. Depuis 1833, la stratégie du Groupe s'appuie sur 2 piliers : un développement industriel durable sur le long terme, des principes humanistes : les valeurs de respect, d'attention et d'exigence s'inscrivent dans les Principes d'action du Groupe dès 1977, avant même l'apparition du concept de développement durable. Depuis 2005, Lafarge figure chaque année parmi les 100 multinationales les plus performantes en matière de développement durable, selon l'étude «The Global 100 Most Sustainable Corporations of the World», créée en 2005 à l'initiative de Corporate Knights Inc. Éthique & gouvernance Principes d action (P.D.F - 149 Ko) Global 100 et autres organismes de notation Développement durable Voir la performance économique, les conséquences sociales de l'action de l'entreprise (au niveau des collaborateurs, des fournisseurs, des clients, mais aussi des communautés locales), les aspects environnementaux (comment rendre compatibles l'activité de l'entreprise et le maintien des écosystèmes). 12
Lafarge (II) 13
Lafarge (III) CO 2 Strategic Approach Beliefs Boundary Diagnostic No change No change STAGE 1 Awareness/Risk Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs LAFARGE Awareness/Risk Energy efficiency is a traditional core value No change in the portfolio of activities The Strategic Review Process is not directly affected CO 2 is integrated for plant decisions on fuel mix, yields ratios, additives (cement clinker ratio) Emissions are controlled for compliance with corporate goal Interactive Focus at corporate level on risks associated with ongoing and future regulation Corporate is active on cap and trade regulations issues such as eliciting cement as an exposed sector for EU- ETS, free allocations, sectoral approaches... 14
DuPont (I) 15
Dupont (II extract from Sustainability Report 2008) 16
DuPont (III) CO 2 Strategic Approach Beliefs STAGE 2 Vision/Opportunities Integration of the climate policy strategy in the firm s vision DUPONT Vision/Opportunities New vision: holistic approach to sustainability industrial and for the first time market-facing goals Boundary Diagnostic Interactive Systematic review of portfolios activities including suppliers and clients relationships (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and cross-functional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations Major changes in the portfolio move from fossil fuel technology to green technology Partnerships along the value chain Change of organizational chart and control systems, Nomination of a VP Chief Sustainability Officer, Implementation of a Sustainable Growth Review for each business Cross-functional competence centers Local champions and awards 17
Agenda The Porter Hypothesis Theoretical Framework Case Studies Next 18
Further Research The vision opportunity stage provides a framework to debug the international stalemate on climate change negotiations - The challenge is in emerging countries - Industrial emissions are largely in the hands of multinational companies - The comprehensive approach elaborated in the nineties has loss in credibility - The sectoral approaches in which States and Companies coordinate actions have gained in credibility 19
THANK YOU A Managerial Perspective on the Porter Hypothesis The Case of CO 2 Emissions Diane-Laure Arjaliès ESSEC Business School & Ecole Polytechnique diane-laure.arjalies@essec.edu Jean-Pierre Ponssard Ecole Polytechnique Jean-Pierre.Ponssard@polytechnique.edu