Corporate Response

Climate change has the potential to influence corporate competitiveness and profitability and by extension, the creation and erosion of shareholder value. Future management of the carbon risk for a business will be essential as regulatory regimes and trading markets mature.

Scientific consensus is that global emissions need to be reduced by 60% by 2050 if we are to begin to stabilise CO₂ levels in the atmosphere. What is clear is that carbon is becoming part of our language, and that corporations will have to get used to counting in carbon and keeping carbon accounts.

Corporate Benefits

The corporate benefits associated with an organisation reducing their emissions or becoming carbon neutral are emerging as a tangible benefit particularly as the economy and community increasingly understand the direct impact of activities that increase GHG.

Recent examples of the corporate benefits of embarking on an emission reduction or carbon neutral program include the following:

1. Promote climate change mitigation measures through product marketing
    – Align products to community attitudes
    – Increasingly a critical factor in both competitive tenders and consumer buying decisions
2. Develop intellectual property of an emerging market which will eventually be regulated (early mover advantage) – position your organisation “ahead of the curve”
3. Demonstration of continual improvement on a companies impact on the environment (carbon footprint)
4. Minimise the impact on the bottom line through risks to operations, brand and reputation.

In the absence of a global climate change regime, most companies will forge ahead with existing programs to reduce their emissions, encourage greater energy efficiency, begin a switch to less carbon intensive fuels, and continue to develop alternative energy technologies.

The Cost of Carbon

The cost of carbon is now being factored into the decision making process of organisations and treated as a business risk factor. Organisations need to develop cost effective solutions in order to manage the carbon "value at risk" of their activities and align their commercial and environmental objectives.

Similar to existing commodity markets, markets in renewable energy and emission credits and allowances are developing to provide the structure and mechanisms that allow organisations to better manage their exposures and identify opportunities.

The concept of a business becoming carbon-neutral or producing net-zero emissions, is now a reality, through business managing and reducing direct emissions, purchasing renewable electricity and using carbon offsets to mitigate residual emissions.