What is expected from the professional services industry in this transition?
Antoine Poincaré: Professional services, including lawyers, consultants, investors and bankers, play a critical role. Their scope 3 emissions can represent over 90% of their total emissions, meaning they can only decarbonise through their clients and/or suppliers. Take banks, for example: while they can choose to stop financing certain high-carbon projects, their overall decarbonization efforts are primarily determined by the carbon footprint of the assets and companies they finance. It’s estimated that the global banking sector is responsible for financing over $3.8 trillion in fossil fuel projects between 2016 and 2020. This highlights the crucial role financial institutions must play in steering the real economy towards decarbonization.
Inès Galichon: Each sector has its specificities, dynamics, promising innovations, suitable solutions, and pitfalls. Professional services must understand in detail the transition challenges and opportunities their clients are exposed to. This understanding is absolutely essential to better advise, serve and finance their clients, as climate transition and, more broadly, sustainability has become a business imperative which cannot be dissociated from other market considerations, risk management and business strategies. A sector’s future cannot be understood without a detailed understanding of the challenges and opportunities associated with climate change.
Why is it fundamental for these actors to educate themselves on these topics?
Inès Galichon: They are the ones who will help companies define and implement their decarbonisation roadmaps (consultants), finance them (banks, investors), insure them in the future (insurers), and provide legal advice on their transition (lawyers). However, the transition will differ from a sector to another – not the same climate risks, nor the same opportunities or viable short-term alternatives. Professional services providers need to understand these specificities to push their clients towards transforming their business models, and better understand their new needs in terms of financing, investment, insurance and legal advice. This knowledge is crucial for them to better support their clients in a highly uncertain and increasingly changing environment.
Antoine Poincaré:
“Climate transition won’t happen with minor adjustments”
For equity investors, for instance, understanding how to influence or redirect the strategy of a company they finance—or partly own—is vital. A recent study(1) shows that companies aligned with Net Zero pathways could see their valuations increase by up to 10%, while those lagging could face devaluations of 30% or more.
Where should they start this education process?
Inès Galichon:
“They should start by understanding the current situation and know the existing solutions”
Identify where CO2 emissions come from in a sector, which part of the value chain is most exposed to climate risks, and which types of players are involved. They also need to understand how a company in a given sector can decarbonise, what concrete steps it can take in the short, medium and long term, whether these are at hand measures to reduce its carbon footprint, or a deeper strategic repositioning involving the development of new business activities.
Antoine Poincaré: Additionally, delving into sector-specific transition plans will help identify each sector’s resource needs. This is crucial for what we call “closing the loop,” which involves combining the needs of each sector to ensure we have the resources to meet them collectively. Questions like whether we will have enough renewable energy, biomass, green hydrogen, or metals to decarbonise all sectors and countries simultaneously need to be addressed. Competition for some resources will be fierce, and every business leader must keep this in mind and prepare potential “Plan Bs.” For example, the global demand for lithium, essential for batteries, is expected to increase by over 500% by 2050(2). Companies need to start thinking now about alternatives and supply chain resilience.
A final word ?
Inès Galichon: “Acceleration”. Educating people on decarbonisation is essential for a company to transition. This knowledge must be disseminated rapidly and widely within organisations because time is running out and the transition requires the mobilization of all employees.
Antoine Poincaré: “Collaborative”. The Net Zero School by Blunomy and AXA exemplifies the collaborative efforts needed to equip teams with the necessary tools and knowledge for understanding and driving the sustainable transition of their value chains.
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1- McKinsey report, The Net Zero Transition, 2022
2- BloombergNEF, IEA, World Bank Minerals report, 2020
How to make a difference with the Zero Net School
The Net Zero School is a unique e-learning programme co-developed by @Blunomy and @AXAClimate, offering a multi-media educational experience to understand how 12 sectors can really transition towards Net Zero.
