Corporates Embrace Internal Carbon Pricing as Key Climate Strategy

Companies around the world are assuming a crucial role in the global effort to reduce greenhouse gas emissions. Increasingly, businesses are adopting internal carbon prices as a tool to drive investment towards low-carbon technologies and energy efficiency measures.

A Growing Trend:

According to the non-profit organisation CDP, more than 2,000 companies have either reported using internal carbon prices to assess emissions from their operations or are planning to implement this approach within the next two years. Among them are 226 of the top 500 global companies listed in the FTSE Global All Cap Index, with a collective market capitalisation of over US$27 trillion.

Leading the Way:

Prominent consumer and technology giants, including Unilever and Microsoft, have embraced internal carbon pricing to steer their operations away from carbon-intensive practices and work towards achieving net-zero emissions. As companies recognise the various climate risks they face, such as operational, reputational, credit, and market risks, mitigating these risks becomes essential to accessing capital and maintaining investor confidence. The World Bank has highlighted that investors are already divesting from fossil fuel-related assets and will likely avoid investments that may become non-viable in the coming years.

The adoption of internal carbon pricing by a growing number of companies highlights their commitment to addressing climate change and aligning their business strategies with sustainability goals. By incorporating the costs associated with carbon emissions into their decision-making processes, these corporations are demonstrating their determination to transition towards cleaner and more sustainable practices. With investors increasingly prioritising climate risk management, internal carbon pricing serves as a valuable tool to reduce emissions, enhance operational efficiency, and ensure long-term business resilience. As corporates continue to play a crucial role in the race to combat climate change, their commitment to internal carbon pricing signifies a significant step towards a more sustainable and low-carbon future.

twitterlinkedin