Manufacturers that purchase electricity in carbon-intensive countries face significant carbon costs if emissions trading or border taxes are introduced. To reduce exposure to indirect carbon costs, investors need information about the risk to manufacturers that use large amounts of carbon-intensive electricity.
Companies and their investors that do not consider carbon risks embedded in electricity purchased by energy-intensive companies may be exposed to large carbon costs under national, regional or global emission trading schemes. Trucost’s analysis of companies’ electricity consumption can help identify potential carbon risk exposures.
The report shows that companies face profit risks from carbon costs passed on through electricity prices. Electricity prices could rise by 50% in carbon-intensive countries such as China and India. Trucost’s analysis of Alcoa shows that carbon emissions trading or tariffs could cost $673 million or over 30% of its profits annually. Rio Tinto and BHP could see profits fall almost 11% if they pay for carbon costs through electricity suppliers and are unable to pass them on.
The GreenFin Summit follows a successful launch event in 2019. That invitation-only event brought together 100 corporate sustainability leaders, major public-sector pension fund executives and leading financial institutions, with over a trillion dollars of combined assets under management. The discussion broached vital topics in ESG that will be expanded upon at the 2020 Summit. Richard Mattison...