OUR STRATEGY TO ADDRESS CLIMATE RISKS AND OPPORTUNITIES 3/3
MAKING STRATEGIC CHOICES TO MANAGE GHG EMISSIONS REDUCTION
The Group uses an internal carbon pricing (ICP) mechanism to drive the reduction in its CO2e emissions and internalize the economic cost of its greenhouse gas emissions. This internal price depends on the scope being considered:
- For vehicle projects, the ICP notably takes into account regulations on emissions in use, such as CAFE, and CO2 -related taxation. In Europe, the carbon price is around €450/metric ton;
- For industrial installations, the ICP takes into account multiple factors such as expected changes in the energy market and CO2e emissions quotas: over half of the Group’s direct emissions are concerned by the EU-ETS quota exchange system, for which the average price in 2020 was around €25/metric ton of CO2 ;
- For the supply of parts and materials, an ICP will be introduced in the near future.
Moreover, in the company's internal process, life cycle assessments (LCA) or carbon assessments are carried out regularly to evaluate the GHG emissions of vehicles and decide between different strategic or technological options for a region or model. These include comparative LCAs of batteries, comparisons of powertrain technologies (electric, plug-in hybrid, hydrogen, LPG, NGV and biogas) and assessing the environmental benefits brought by the circular economy. The prevailing logic in these evaluations is that only those vehicles or services offering mobility with the lowest possible carbon footprint will be successful in the marketplace or be favored by regulations or taxation.
ENSURING SUPPLY CHAIN SECURITY
The Group has set up a comprehensive risk management system for its entire supply chain, from design and development to production, logistics and quality, as well as economic and financial sustainability. Managing supply chain risks, which include physical climate risks, hinges on the coordinated action of several departments (supplier risk management and control and a network of financial analysts), which work closely with operational purchasing managers in the Alliance Purchasing Organization and with other potentially impacted departments (such as engineering, manufacturing and the supply chain).