June 22, 2021

Gp Delivers

The excellent automotive artisans

Valeo execs tie compensation packages to carbon pledge promises

Valeo is no small French fry, either: It’s the world’s 10th largest automotive supplier, based on its fiscal 2019 automotive parts sales of more than $18 billion, according to the Automotive News list of the top global suppliers. The company makes sensors, thermal management systems, lighting, automated driving systems and other products.

It’s a brave step on Valeo’s part, but it’s one that ought to be adopted by every corporation across our industry and around the globe.

Valeo says it will create regular internal incremental targets that each of its executives must meet, while also providing training to executives and workers alike on the need to reduce greenhouse gases, breaking the 29-year journey into manageable pieces. It says it will also encourage, implement and reward ideas that get it closer to its goal.

To be sure, Valeo’s management compensation plans will still be weighted toward the company’s overall financial performance and its share performance. But while profitability is key to doing anything sustainable, Valeo seems to also realize that profits won’t seem very important if climate change makes human life on Earth untenable.

Companies and consumers alike no longer have the luxury of believing that climate change is someone else’s problem, and incremental steps with risk-and-reward mechanisms in place to drive progress hold far more promise than do ethereal long-term goals.

Every company can start by harvesting the low-hanging fruit toward carbon neutrality: reducing energy usage and expanding the use of renewable forms of energy instead of fossil fuels. Success will hopefully breed success: Few things motivate like being part of a team all working toward the same essential goal — especially if achieving that goal is tied directly to compensation.

Give Valeo some credit for putting some real skin in the effort to slow climate change.

And then feel free to follow its example.