Business strategy and critical resources: to infinity and beyond?

Purpose of this report

In recent years, human societies have been confronted with numerous supply shortages, for a variety of reasons, in resources such as electronic chips, semi-conductors, paper, wood, construction materials, aluminum, wheat and fertilizers. These supply shortages have led to economic difficulties and, in some cases, put the lives of exposed human groups at risk, as in the case of the global food crisis. They highlight the dependence of the economic world on certain resources that are essential to its functioning in its current form. 

It is highly likely that these limitations on the economy due to the availability of resources are not just a cyclical phenomenon resulting from a superposition of temporary crises. The prolonged crossing of planetary limits^[1] , the decline in stocks of raw materials, the fragmentation of globalization and the new dependencies linked to the low-carbon transformation of the economy are exposing economies to supply-side constraints. If this new situation is to be managed sensibly and smoothly, strategic planning is needed that incorporates a detailed understanding of resource dependency and physical flows in the broadest sense. 

The aim of this publication is to suggest ways of limiting the vulnerability of economic players to pressure on critical resources, by incorporating this aspect into their strategic thinking. 

This publication complements the previous publication on corporate strategy in a low-carbon world published in December 2021^[2],and echoes the article published in April 2022^[3].

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Summary of the publication

Introduction

Exposure of French and European companies to critical resource shortages

1. The necessary decarbonization of our economies could lead to increased dependence on metals
2. Declining resources and concentration of production increase the risk of shortages of these resources
3. Actions by governments and companies to limit their vulnerability to these risks
4. The limits of traditional approaches to corporate strategy in meeting these challenges

Building a corporate strategy that takes resource risks into account: a methodological approach

1. How scenario analysis is a useful tool for anticipating resource-related business risks
2. How Carbone 4's scenario analysis integrates resource limits

Conclusion