The Impact of Environmental Transition on Business Models

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An article by Benoit Ranini, President of TNP Consultants, published in the white paper “How to build a sustainable future?”.

Global warming is the greatest challenge we face

Never before in human history has a problem mobilized so many human, scientific, and financial resources. However, even if most countries are committed to carbon neutrality, the global peak in carbon emissions has not yet been reached. Emissions are falling rapidly in the European Union and the United States, but continue to rise in China, India, and Africa.

The Role of Regulation

The European CSRD (Corporate Sustainability Reporting Directive), which provides a framework for extra-financial reporting, aims to help companies transform their business models. It evaluates whether environmental and social risks, impacts, and opportunities are properly integrated into corporate strategies. The CSRD marks the beginning of a transformative process for companies, requiring a shift from a volume-growth model to a regenerative one.

France has begun to understand the stakes with the Anti-Waste Circular Economy Act and climate laws.

For instance, to combat planned obsolescence, the French government has introduced a reparability index that scores products, like smartphones or vacuum cleaners, out of 10 based on their refurbish ability. Optimistically, 80% of steel, aluminum, glass, and plastics will eventually be recycled. Manufacturers are focusing on eco-design to minimize material consumption. They aim to reclaim and process all end-of-life products, and unnecessary packaging will be eliminated.

But to turn this vision into reality, we need to change our mindsets. The success of the circular economy relies primarily on our behavior: opting to rent rather than own, and to repair rather than discard.

The Shift in Business Models

Since the 19th century, industrialization has led to a significant reduction in consumer goods prices. This trend is likely to reverse in the coming years. Renting will become more attractive than buying as goods become less disposable and more durable. The automotive industry illustrates this shift; cars are increasingly leased rather than bought outright.

Private financial capital is crucial for financing the transition. Financial consortia and major corporations are better positioned to accelerate the climate transition, having greater access to capital and the ability to negotiate favorable terms with suppliers. Together with manufacturers, the finance sector must develop new financial instruments that make leasing viable.

The economy of use accelerates the energy transition by promoting services over products, shifting from selling ownership to usage-based models. This approach, currently more prevalent in B2B, could extend to various sectors, replacing the volume-driven model with a service-oriented model committed to product efficiency, countering planned obsolescence.

New Value Chains

Selling services transforms the traditional value chain. Instead of identifying a customer need, designing a product, procuring materials, and then marketing, a service-based approach starts with understanding the customer’s needs and desired environmental outcomes. Operations transform from occasional to ongoing engagement, fostering long-term, trust- based relationships.

Clients delegate parts of their value chain, ensuring guaranteed results and focusing on their core activities. The supplier becomes a strategic solution provider, aligning all stakeholders towards a common efficiency goal. This not only minimizes resource and energy use but also strengthens partnerships.

For example, Michelin now sells not tires, but kilometers traveled, saving significant raw materials annually, especially through reconditioning.

Similarly, Decathlon is experimenting with rental models in various markets to dramatically reduce its environmental footprint by a factor of ten.

However, this transition requires companies to prioritize long-term gains over short-term profits, as sustainability demands a shift back to long-term considerations, often at the expense of immediate returns.

Benoit RaniniPresident