Carbon Risk and Opportunity
How Smart Businesses Use Carbon Management to Improve Bottom Line
Feb 3, 2009
Carbon management is not just the newest corporate buzzword. It is the sum total of actions that a business must undertake to account for liabilities and opportunities surrounding their greenhouse gas emissions.
Some of the activities that comprise carbon management include:
- shrinking the corporate carbon footprint
- carbon risk assessment of existing operations
- “going carbon neutral”
- obligatory greenhouse gas emissions reporting
- carbon monitoring for Annual Reports
- emission reduction projects for additional revenue
- carbon credit registration and sales
Why Today’s Businesses Need Carbon Management
The economy is changing. The climate is changing. Awareness that business-as-usual must change is universal. The CO2 equivalency has arrived as a basic commodity in the new carbon economy.
In this new economy, businesses will find that greenhouse gas emissions become a revenue stream or liability. No matter what the scenario, companies need to include a carbon budget, carbon risk management, and carbon annual reporting in their business plans.
The upside of is that by minimizing carbon liability through emission reductions, companies can turn those reductions into income by quantifying, marketing, and selling them as carbon credits.
The Benefits of a Rigorous Emission Reduction Strategy
The benefits of integrating carbon management into comprehensive business strategies are immediate. Businesses that take charge of their greenhouse gas emissions enjoy a marketing advantage and a greening of their image. By accounting for their liability, they can begin to mitigate risk and control it. Companies that take early action to manage their carbon footprint can turn emission reductions into a positive by increasing income through carbon credits. Businesses that wait to be regulated will suffer, as their emission reductions will show up only on the cost side of the ledger.
CO2 Risk and Liability
Governments throughout the world have levied a price for carbon. Whether it’s done with strict caps on emissions or through a tax, businesses will be on the hook for their greenhouse gas emissions. Accounting for emissions, identifying reduction opportunities, and then tracking actual emission reductions will be common business practice within the next 2 to 5 years.
In addition to obligatory reductions, other stakeholders are pressuring corporations to be accountable for their carbon footprint. Insurance companies, local community regulators, corporate shareholders demand carbon reporting. In fact, many Fortune 500 companies include greenhouse gas accounting in their standard Annual Reports.
Who Needs Carbon Management
- businesses that might be eligible for carbon credits (emission reductions)
- businesses that have carbon liability (emitters)
- businesses that want to go carbon neutral (pioneers/early adopters/green marketing)
- businesses that are accountable to shareholders, community, or other stakeholders
Top corporations are improving their bottom line by showing leadership with regards to climate change. Integrating carbon management into their every day operations allows companies to identify and control liability and in some cases realize income from emission reductions. Carbon is a valuable commodity. Today's businesses must track and control it if they want to survive in the new carbon economy.
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