EESC X3045 Responding to Climate Change
Spring 2012
CEO2: The Climate Business Game
Introduction
Atmospheric CO2 concentration has increased from 280 ppm during pre-industrial times to 394
ppm today as a result of anthropogenic emissions, and this is thought to be causing enhanced
global warming and ocean acidification. Between 2000 and 2005, global CO2 emission from fossil
fuel burning averaged 26.4 gigatons of CO2/yr at or above the highest rates predicted by the
Intergovernmental Panel on Climate Change (Leggett & Logan, 2008). Thus, the reduction of
industrial CO2 emissions and the stabilization of atmospheric CO2 concentration are considered
to be one of the main challenges of this century (e.g. Hoffert et al, 2002, Pacala and Socolow,
2004). For example, a stabilization of atmospheric CO2 below 450 ppm requires a 30 to 85% net
reduction in CO2 emissions by 2050 (Solomon et al. 2007).
Table 1. 2009 U.S. CO2 emissions (gigagram) from fossil fuel combustion by sector
(U.S EPA 2011)
Source
Electricity generation
Transportation
Industrial
Residential
Commercial
U.S. Territories
Total
2009
2,154,025
1,719,685
730,422
339,203
223,993
41,652
5,208,981
As shown in Table 1, the main CO2 emission sources from fossil fuel combustion are the
electricity generation, transportation sector and industrial sources. There is a huge potential to
reduce emissions from these sources. The question is if this can be done in an economical way.
What You Will Do in this activity
Can you successfully run an insurance, an automotive, a chemical or a utility company while
reducing their CO2 emissions? Start with one of the four industries and then your big chance to
get in the corporate sustainability game begins!
What is CEO2?
CEO2 (http://knowledge.allianz.com/ceo2/en_ext.html) is an interactive game that puts the
player in charge of strategic decision making as the CEO of different companies. The game was
developed by World Wildlife Federation (WWF) and Allianz (financial services provider). It is
based on assessments and interpretation of scientific work and reports or other credible
resources. However, the complexity has been reduced to allow an online game platform.
What for? Why play the game?
To see if it is really possible to run a green company profitably; to impress stakeholders,
environmentalist, researchers and customers all at once; to increase profit enough to satisfy
corporate interests while lowering emissions by as close to 100 percent as possible within 20
years from 2010 to 2030; all while maintaining positive image for customers and keeping up
with the latest technological trends and innovations.
Tasks to Perform
1. Choose one of the four industry
2. Play one to two iterations of the game for the chosen industry.
3. While playing the iterations, research your chosen industry.
How do you research?
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Check the intelligence reports by dragging on option to the computer screen.
Get advise from experts by dragging an option to the telephone.
4. Take screenshots of the 2 final graphs of the most successful iteration for the chosen
industry.
5. Choose the next industry and repeat step 2-4.
Keep in mind following questions while you play the game:
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What needs to be done in order to satisfy the interests of the stakeholders and the
environmentalist?
What was your most successful strategy to reduce CO2 emissions (percent of CO2
reduction by 2030) while keeping the stakeholders happy? Explain your chosen CO2
reduction and business strategies, including new innovations, research or lobbying in
which you invested.
What are the challenges (technical, economical) each industry faces in terms of a
greenhouse gas mitigation policy?
What are the differences between the different industry sectors? In what sector, would
you invest given a strict greenhouse gas mitigation policy?
How to Play the CEO2 Game?
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Players (no need to sign in, register or give any personal information) must
first choose an industry (insurance, automotive, chemical or utility)
Then, a CEO name and company name are chosen
The CEO2 interface is simple to navigate. You, the CEO, sit in your picturesque office. On the left of
your unrealistically clean desk is a stack of folders, with your options (list of business decisions).
You have two rounds (10 years each through 2030) to make your company profitable enough to
keep your job but sustainable enough to significantly reduce the company’s CO2 emissions and
please the environmentalists. Keep in mind that you have a limited budget. You cannot
overspend! There is an obvious need to strike a balance between investments and the potential
of these investments to reduce CO2 emissions.
So What’s the Point?
Now 9. I’d made all the green decisions, focusing extensively on renewable energy production, but still
couldn’t meet the reduction targets experts say are necessary (although my 47-percent reduction would
almost certainly satisfy government mandates, especially here in the U.S., where we don’t even have any
yet).
In the end, I played CEO in the other three industries as well (Auto, Insurance and Chemical), each with
their own unique set of challenges and options, as well as unknown risks, changing government
regulation and market changes. The utility sector was the most difficult in which to reduce emissions
significantly while maximizing profit (in a later try, I managed 63-percent reductions while returning an
only slightly smaller profit margin, primarily through carbon capture investment and balancing wind with
solar power plants).
The Takeaway for Green Business Advocates
Of course, CEO2 is over-simplified and it’s not going to make a successful CEO out of all of us (but if only
Tony Hayward had played three years ago!). It does, however, offer a unique glimpse into the challenges
facing global industry, with adamant, nigh-insatiable stakeholders and environmentalists pulling and
pushing on all sides. Caught in the middle will be your customers and the people — most likely in the
developing world — to be first and most drastically affected by climate change-related catastrophes.
What’s most interesting is that most of us playing the game are not actually CEOs, but the direct
customers of corporations in these industries. We get a glimpse of the larger game, and hopefully some
ideas of how and where to put our dollars to good use in the coming decades. The goal is to make leaders
of green-minded CEOs and to help make the CEOs successful so that our planet can be successful.
Such, I believe, is the goal of CEO2: The Climate Business Game, and in relaying that message informatively,
aesthetically and palatably the game itself succeeds as well.
References
Hoffert, M. I., et al. (2002), Advanced technology paths to global climate stability: energy for a greenhouse
planet. Science, 298, 981-987.
Leggett, J. A. & Logan, J. Are carbon dioxide emissions rising more rapidly than expected? Congressional
Research Service Report RS22970 (2008).
Pacala, S., & Socolow, R. (2004), Stabilization wedges: solving the climate problem for the next 50 years
with current technologies. Science, 305, 968-971.
U.S. Environmental Protection Agengy (2011), Inventory of U.S. greenhouse gas emissions and sinks:
1990-2009, EPA 430-R-11-005.