Investments for Carbon Footprint Reduction: An Instructional Case*

Abstract

This instructional case explores strategic decision-making at CarCompany (CarCo), a large automaker that is transitioning to battery electric vehicles. CarCo aims to reduce the carbon dioxide (CO₂) emissions at their own sites and at suppliers' sites. The challenge is to select a group of CO₂ reduction initiatives that achieves the objectives set by CarCo's management while staying within budgetary restrictions. Another challenge is renegotiating some CO₂ reduction initiatives with suppliers so that greater overall CO₂ reductions can be achieved. Finally, decentralization of objectives and budgets for CO₂ reductions needs to be considered. CarCo's Sustainability Manager, Julia Neumann, has been asked to select from the list of proposed projects and present her recommendations to CarCo's board. In this case, students need to apply rigorous analyses on the basis of cost-benefit analysis, justify their decisions, and think outside the box. They are asked to assess how existing evaluation techniques can be used and adapted to CO₂ emissions. The case delves into the complexities of the transition to cleaner production processes and the expanding network of suppliers, employees, and other stakeholders that need to be involved in the process.