The companies we turn to every day for electricity, transportation, consumer goods, and even electronics face risks from climate change. Most need reliable water for production processes and products. Extreme weather and temperatures can hurt their productivity and damage their supply chains and assets.
Business leaders understand that climate change can have real economic impact, and that their current business models may not be profitable in a 4-degree warmer world. They also see opportunity in innovating for a cleaner future.
Several global companies, including Google, Walmart, and Shell, have started using an internal “shadow price” on carbon dioxide emissions, a greenhouse gas that contributes to climate change, in their investment planning to help avoid risks and find opportunities that can increase energy and resource efficiency, reduce CO2 emissions, and give them a competitive edge. A few industries internally pricing emissions won’t move an entire industry to better practices, though; a sector- or economy-wide price on emissions can.
In about 40 countries and more than 20 cities, states and provinces, these companies and others also work with a formal price on emissions that is set or planned for entire sectors or economies through carbon taxes or carbon markets. That price on carbon, as it frequently referred to, sends a consistent economic signal that investing in cleaner, low-carbon growth can pay off for everyone.
Business leaders are increasingly speaking out in favor of expanding those carbon pricing policies.
More than 250 companies have already joined a statement that is being organized by the World Bank Group and partners including the World Economic Forum, UN Global Compact, and the Prince of Wales’s Corporate Leaders Group encouraging governments to explore carbon pricing methods and set their own predictable price on carbon.
Flexibility, innovation & efficiency
The energy giant GDF Suez, sees carbon pricing as a cost-effective way of addressing climate change while letting businesses choose how they lower their emissions. The France-based multinational operates on five continents in about 70 countries – some of which have carbon pricing systems in place. In positioning itself for the future, the company is aggressively developing renewable energy resources to reduce its carbon footprint, a move that has put it at the cutting edge of the energy sector.
“We at GDF Suez support carbon pricing because we believe there is a need to address risks linked to climate change, and we support action to address emissions reductions cost effectively. We are in favor of market-based approaches and emissions trading which allow business the flexibility to reduce when and where it makes the most business sense,” the company wrote in adding its name to the public statement encouraging governments worldwide to put a price on carbon.
KDF Energy of Romania, another supporter of the carbon pricing statement, writes that “carbon pricing improves the efficiency of the economy, and it is a signal for investment in low-carbon and resilient economic growth.”
Software company Microsoft, which uses shadow carbon pricing, describes similar benefits from its internal carbon fee model. It says the internal pricing mechanism provides justification to prioritize efficiency at every level of the organization. “We’ve found over time that the more we can integrate sustainability goals across the business, the better position we are in to respond to changing economic, social and environmental conditions. Our carbon fee model supports a culture of innovation and efficiency,” Microsoft told CDP for a recent report on internal carbon pricing.