BiGS Actionable Intelligence:
PARIS—Dozens of Europe’s corporate leaders acknowledged the green transition as both an environmental and economic imperative, speaking at a conference hosted by Harvard Business School’s Institute for Business in Global Society (BiGS).
Over two days of candid and often provocative discussions in October, known as “Europe’s Green Transition: A New World of Risks and Opportunities,” 70 top executives joined sustainability officers, entrepreneurs, advocates and policymakers united by the shared recognition that companies must actively pursue a green transition.
Even as many firms showcased innovative examples of how they have adapted to climate-related challenges, attendees debated the obstacles ahead, from the urgent need to overhaul business models and take on new levels of risk to the difficulties of doing so while facing fierce competition from China and the United States.
“This is the next great industrial revolution,” said Debora Spar, professor and senior associate dean at HBS and leader of BiGS. “The firms that figure this out are going to be leaders for the next generation.”
‘We don’t have the luxury to wait’
From the first words of the conference keynote address, delivered by a leading economist who laid out the stark realities of climate change, the gathering was imbued with the magnitude of the historic moment. With climate risks increasingly manifesting as systemic, catastrophic events, bold and proactive steps are essential to ensure that corporations, entrepreneurs, and other business leaders become key players in shaping climate policy, the economist said.
“If business leaders fail to act decisively,” the economist warned, “the economic and humanitarian toll will be staggering.”
European governments already have taken initiative in shaping corporate responses to climate change. The European Union’s ambitious target of a 55% reduction in emissions by 2030 compared to 1990 levels is driving a new regulatory framework that will be critical in shaping private sector progress.
Many of Europe’s largest industrial firms have responded by fervently embracing the climate imperative. Engineers are finding ways to fine-tune environmental efficiencies. Factories are making changes to reduce their carbon footprint. Green investment is on the rise.
One conference participant, the CEO of a European materials firm, said her company mandates the inclusion of carbon costs in all business plans. She told the Paris gathering that the strategy has garnered significant results: Since 2019, emissions have fallen at twice the targeted rate.
“We don’t have the luxury to wait,” the CEO said.
More investment is needed
Significant progress, however, will require exponentially more investment, on a scale to which corporations have yet to commit. That means not only money but also strategic vision, driven by ambitious corporate leadership, government support, and organizational momentum, all of which is needed to overcome the inertia that can bog down even the most well-conceived planning, conference participants said.
While companies increasingly are making net-zero commitments, a lack of standardized metrics for measuring impact remains a major roadblock. And even as firms increasingly implement climate strategies, they face growing public skepticism — even distrust — in corporate climate initiatives.
Most worrying, obstacles to progress are mounting just as environmental threats are increasingly imminent. Green alternatives remain scarce, consumer demand for them uncertain, supply chains recalcitrant, and investors skeptical, participants said. And as climate risks mount, the insurance industry struggles to adapt. Trillions of dollars in additional coverage are needed, but it is unclear how and whether companies can successfully reallocate their asset portfolios and reinsurance strategies to ensure their own financial stability.
One sustainability officer at a major tech company likened the challenge to “trying to run a marathon without knowing where the finish line is.”
Despite the substantial challenges, executives from major financial institutions and Fortune 500 companies said they face growing pressure from both investors and consumers to prioritize sustainability. A panel on climate financing strategies revealed a seismic shift in capital allocation, with green bonds and carbon credits moving from the periphery to the mainstream.
That pressure may be key to pushing past the obstacles and coming up with needed solutions.
“Five years ago, sustainable investing was niche,” said the CEO of a multinational bank, who spoke on a panel. “Today, it's a fundamental expectation.”
The paradox of regulation: hindrance or stimulant?
The European Union’s robust regulatory landscape surrounding climate issues has confronted corporations operating on the continent with significant challenges, business leaders at the conference agreed. Requirements change faster than business plans, with new rules often cramping investment decisions designed to span decades. Startups can be stifled by the huge regulatory burden, and all firms face high taxes and energy prices.
“All this regulation suffocates startups in Europe,” said an executive at a leading energy storage manufacturer. “There’s a huge regulatory burden.”
However, industry leaders agreed that well-designed, forward-looking regulatory frameworks could act as catalysts to innovation. They called for greater involvement by the business sector in constructing regulations that are more consistent.
From ideas to action
Despite the obstacles discussed, the conference closed on a note of cautious optimism. A final roundtable discussion centered on actionable strategies. Participants agreed on three key takeaways:
Transparency and accountability. Companies must move beyond rhetoric and provide tangible, trackable metrics on their climate and equity commitments.
Cross-sector collaboration. True change requires partnerships that span business, government, and advocacy groups.
Courageous leadership. Corporate leaders must be willing to take risks, even in the face of shareholder skepticism and political headwinds.
As the event wrapped up, one sentiment echoed across the gathering: The time for incremental change is over. Businesses can no longer afford to be reactive; they must be a driving force in shaping a just and sustainable future.
“We need to change the narrative that sustainability means less profit and a worse life,” the CEO of major retailer said. “That is simply not true.”