Sustainability performance: How are France’s largest companies addressing climate risk?
An exclusive report from the EcoAct Group shows more CAC40 companies are adopting an internal carbon price
Two years after COP21, global greenhouse gas emissions are again on the rise in 2017. The challenge now is to move from statements of alignment with the Paris Agreement to real action towards decarbonizing our economy.
How are French companies approaching this issue? To explore the answer this question, the EcoAct Group conducted research on the climate performance of CAC 40 companies and published the findings in an exclusive report.
On October 31, a week before the opening of COP23, a UN report warned us of insufficient state commitments to climate change, otherwise known as Nationally Determined Contributions (NDCs), which would barely create one-third of the emission reductions necessary to follow a 2°C trajectory.
Two years after the adoption of the Paris Agreement, it is becoming increasingly clear that the action of public officials alone will not be sufficient to achieve the low-carbon transition. How are the pre-eminent French companies performing in this area? What role do CAC 40 companies play in decarbonizing the economy?
Legislation plays a key role in the CAC40’s Sustainable Perfrormance
With the Grenelle II law, an innovative and ambitious initiative, France has led the development of climate disclosure and risk assessment and reporting. All CAC 40 companies now evaluate the risks that climate change poses to their businesses. Most of them implement adaptation strategies to control this risk and are seizing opportunities associated with the energy transition.
Carbon pricing gaining momentum
15 of the CAC 40 companies reported using or planning to use an internal carbon price to inform their sustainability plan. While our report did not address how the prices are structured, several companies have stated how they use it in their reports. It appears that retail companies LVMH and Kering are the most engaged in carbon pricing.
Below is a brief summary of how those companies reported using a carbon price.
- LVHM - Implemented a carbon fund
- Air Liquide - Beginning to use a carbon price in their investment decisions
- Credit Agricole - Phasing in a carbon price for lending application reviews
- Societe Generale - Uses an internal carbon price to support environmental initiatives (price is set at the carbon tax price)
- Solvay - Applies a carbon price to take into account climate challenges in its long-term decision making; project called Green Square
- Veolia Environment - increasing their carbon price until 2030 to reflect vision and changes to regulation and will apply the price to investment projects
- Carrefour - Uses a carbon price to encourage and accelerate the adoption of low-carbon technologies
- Kering - Uses a carbon price in their Environmental Profit * Loss (EP&L) to give monetary value to their environmental impacts
- Total - Uses a long-term CO2 price to promote gas over coal in power generation and encourage investment in research of low-carbon technology
- Saint Gobain - Applies a carbon price to all group activities to reduce CO2 in investments
- Michelin - Experimenting with an internal price of carbon for its capital goods projects, starting at 50 Euros per tonne of CO2
- Lafargeholcim Ltd. - Uses a carbon price in their Profit & Loss
- Legrand - Includes a carbon price in operational considerations, notably investment decision processes
- Engie - Recently reviewed their internal carbon pricing method for the investment decision process, incorporating analyses of sensitivity to various price scenarios
- Atos - Committed to put a price on carbon to materially affect investment decisions
Innovation Limited with French Companies
However, CAC 40 companies seldom go beyond the first step in climate action of assessing their footprint and their exposure to risk. Companies must develop a long-term, low-carbon strategy by integrating climate issues into the heart of their business model.
Sustainability Performance: Pioneering Companies
There are some leading companies pioneering practices beyond regulatory requirements. They have identified and understood how addressing climate impacts drives performance and innovation for their businesses in the context of the low-carbon transition.
To see which of the CAC 40 companies are the most successful in addressing climate change, download our report here.