Hundreds of top companies are outpacing their governments on carbon pricing

Author:
Ilario D'Amato
Reading time: 3 minutes
15 September 2014

LONDON: Hundreds of companies around the world say putting a price on carbon is “an opportunity for their business”, among growing corporate consensus that an internationally-linked carbon market is on its way, according to new research from CDP.

The report, Global corporate use of carbon pricing, from CDP, a non-profit which incentivizes thousands of companies and cities across the world’s largest economies to measure and disclose environmental information, says over 600 companies are integrating climate risk into their strategies.

CDP submitted its annual climate change questionnaire on behalf of 767 investors, who together represent more than US$92 trillion in assets.

The research states 638 companies are “proactively planning" for climate risk and "are outpacing their governments in thinking ahead. CDP also says 150 global companies have integrated a "shadow price" into their business strategies under the expectation of an external price on carbon in the very near future.

CDP's vast mass of data shows that the biggest corporations actively recognize the risks and opportunities which come from climate change and its related regulations. 

The data also demonstrates how the business world is increasingly forecasting for and reflecting changing markets. For example, European and American companies participate in Europe's own “cap and trade” system, the EU-ETS - the biggest in the world - which covers almost half of all its emissions. The scheme is quite simple: every nation sets a ‘cap’ on its CO2 emissions, receiving free allowances; at the end of the trading period, firms can buy new 'permits' from the market or save by polluting less and selling leftover credits. Every year the cap is lowered, to achieve better energy efficiency and further cut greenhouse gas emissions.

China also recently announced its own carbon market which, once implemented in 2016, will overshadow Europe’s to become the biggest in the world.

In many cases, companies are working actively with politics: 212 companies disclose that they are directly engaging with policymakers on carbon pricing legislation, and that their corporate position is in support of these measures. 

Multinational banking and financial corporation Bank of America agrees that “policy driven carbon markets are important for providing the incentives necessary for investment to facilitate the transition to low-carbon technologies.” Even for BNP Paribas, carbon market trading “is constituting a growing tens of billions dollars market, representing a major opportunity for the Group.”

Furthermore, even though the US has no national price on carbon, 29 big American public companies, including Goldman Sachs and ExxonMobil, are now incorporating an internal "shadow" carbon price into their business decisions.

As one of the 150 companies to include a shadow price when planning new investments, tech-giant Google states: “we already include it in our data center siting analysis, so take into account this risk even before we build a data center. Also, we are carbon-neutral through the purchase of high quality carbon offsets, so in effect already include a carbon price in our operations.”

It's interesting to note some companies set a carbon price even higher then the ones set by their own governments: National Grid, for example, values carbon at £55 (US$89) per tonne - as opposed to the £18 (US$29) per tonne carbon floor price set by the UK government for 2016. The Pennon Group puts its internal range price of £52-199 (US$84-323) per ton.

However, some companies in developing countries - especially heavy emitters - continue to feel competitively disadvantaged by carbon pricing.

Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change, is a strong supporter of this system. In a recent Q&A with The Climate Group, she tweeted that “at the UN climate summit 2014 in New York, many businesses and governments are expected to strongly support a price on carbon”.

Climate Week NYC, which is convened by The Climate Group, will play a key role in achieving this important result: political leaders, high-profile businesses and civil society will converge in New York for more than 100 events that are taking place from September 22-28, focused on low carbon growth and climate change. This year, Climate Week NYC is also the collaborative space for all related events in support of the UN Climate Summit.

With less than one week to go until the summits, as UN Secretary-General Ban Ki-moon says, "now is the time to act".

Read Global corporate use of carbon pricing now.

For a full list of Climate Week NYC events, please visit ClimateWeekNYC.org and follow the conversation on Twitter using #CWNYC.

You can also see our Climate Week NYC media resources for press releases, contacts and more info.

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