Publication / 11 Jul 2017

TalkingPoints: Internal Carbon Pricing – Stress Testing Business for Climate Change Risk

Rick Lord, ESG Management and Value Creation Lead at Trucost, part of S&P Dow Jones Indices discusses the need for companies to integrating internal carbon pricing into investment decisions and new product design.

Average carbon prices could increase more than sevenfold to USD 120 per metric ton by 2030, as regulations are introduced to achieve the Paris Agreement goal to limit global warming to 2°C.

Leading companies are using internal carbon prices to gain insight into how globally diverse operations could be affected by taxes and emissions trading—and identify opportunities to capitalize on the low-carbon transition.

Many companies already disclose carbon emissions from their operations and purchased electricity, as well as value chain emissions from supplies of raw materials or use of products. Some also commit to science-based carbon targets aimed at reducing emissions in line with 2°C climate change scenarios. By integrating internal carbon pricing into investment decisions and new product design, companies can get ahead of carbon emission regulations and adapt to business in a low-carbon world, showing leadership to policy makers, investors, and customers.

Already, nearly 1,000 companies say they use an internal carbon price or plan to do so in the next two years. Companies that have already adopted an internal carbon price include Microsoft, Unilever, Swire, Mahindra, and Acciona.

Publication / 01 Mar 2019 TCFD Scenario Analysis: Integrating future carbon price risk

Trucost examines how investors can integrate future carbon price risk into portfolio analysis.

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It is becoming widely accepted that high-carbon activities present considerable threats to social, environmental, and financial stability. Carbon pricing mechanisms ­ such as emissions trading schemes, taxes on carbon or fuel, and the removal of fossil fuel subsidies ­ can help provide the incentives needed to change company behaviour.

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More companies than ever before are setting carbon reduction targets, but much greater ambition is needed to achieve the two degree goal to limit global warming in the Paris Agreement on climate change.

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