Carbon Management
Carbon Challenge has mandated PricewaterhouseCoopers, one of the global leaders in carbon management consulting, to develop and implement a tailor made carbon management system for all our business lines.
None of us at Carbon Challenge had ever been involved in carbon management projects. Therefore we have asked our partners at PricewaterhouseCoopers, Dr. Thomas Schweiwiller / Global Sustainability Leader and Jürg Hutter / Senior Manager Sustainability Solutions and Climate Change Services, to describe what it is all about that we will have to deal with from now on.
“Climate change constitutes a serious source of business risk. Companies must urgently understand this risk, which breaks down into two basic categories: first- and second-order.
First-order risks are the result of actual changes in weather regimes, leading to for example the increased likelihood of extreme events such as hurricanes and cyclones, which can significantly disrupt normal business activity. Second-order risks are potentially even more hazardous, and relate to changes in the behaviour of a company’s stakeholders in response both to the threat and experience of climate change.
These two risks create the further issue of financial reporting and fiduciary responsibility. As companies’ vulnerability to climate change becomes clearer, pressure is mounting for them to disclose their exposure to these risks and to report on their management strategies. Governments, investors, customers, employees and suppliers are among those demanding greater transparency. Businesses that do not respond robustly to these demands may be putting shareholder value at risk, and could see the market place a discount on their share price.
Yet climate change also presents significant opportunities. The growing demand for products and services that mitigate or offset the negative effects of climate change translates into a huge market with an estimated size that reaches US$1 trillion in 2012.
Business possibilities range from new products that increase the energy efficiency of vehicles or buildings with modern technology to existing products which are sold with sufficient carbon credits to offset or neutralise emissions generated during the manufacture or use of the product. The carbon services market is the companion market to carbon products which includes not only traditional service providers (for instance, in the legal, accounting and insurance fields), but also many new carbon offset service offerings that allow companies to differentiate from competitors through increased public perception of “climate friendliness”.
As we move rapidly towards a carbon-constrained global economy, featuring a proliferation of carbon trading schemes and similar mechanisms, there is only one way to protect and enhance shareholder value. That is to design and implement a robust and effective carbon management strategy.
Understanding, managing and maximising the shareholder value that companies create or destroy as they respond to climate change, the so-called ‘carbon value’ is fast becoming a key requirement for businesses around the world.
Robust carbon management
Robust carbon management addresses the foreseeable impacts of climate change on a company’s business environment and helps organisations manage the transition to a fully carbon conscious business over the long-term. Robust carbon management requires an organisation to embrace the following key activities:
- Measure and monitor carbon emissions (carbon footprint) and abatement successes
- Have carbon emissions and abatement activities audited and independently verified
- Forecast emissions and set reduction targets
- Report carbon data internally and externally and put in place a clear carbon communication strategy with internal knowledge transfer and awareness building
- Assign costs to abatement opportunities to ascertain the true cost of carbon to the organisation
- Price carbon into investment decisions to quantify carbon exposure and minimise the potential for liability shocks
- Empower executives to oversee carbon management, drive abatement and pursue carbon management opportunities
- Track competitor responses and their impact on the business landscape
- Identify and leverage new carbon opportunities
- Review progress against targets and amend climate change strategy as necessary.
At Carbon Challenge we refer to this as ‘carbon value’: the stakeholder value that companies create or destroy as they respond to climate change. Understanding, managing and maximising this value is fast becoming a key requirement for businesses in around the world. We at Carbon Challenge take up these drivers and are committed to take serious actions.”
visit PricewaterhouseCoopers