The risks and opportunities for business in a low carbon world
The low carbon world is already here and it is resulting in structural changes to the global economy. If businesses are to survive they must adjust to life in this low carbon world.
Investors are beginning to demand carbon risk disclosure and some are even banding together to be more effective, for example, The Carbon Disclosure Project which began in 2002 with the support of 35 Institutional investors today has 655 Institutional investors that manage Trillion in assets backed projects. Some now report voluntarily such as Coca-Cola.
Governments, business partners, consumers, pressure groups and funds demand that companies shoulder the economic burden of climate control in response to global warming.
All major suppliers now plan to have a formail strategy for climate change which focuses on reducing their carbon footprint.
For example: Walmart, a leading retail company, has more than 100,000 suppliers and a carbon footprint of 21 million tonnes.Using preliminary macro-economic assessments, it is estimated that supply chain carbon emissions are at least 10010 times greater than the direct carbon footprint.
Apart from Walmart , other CDP supply chain members such as The Ford motor company, Dell and Nestle are encouraging their supply chain companies to report and reduce their carbon emissions.
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A tangible price on carbon is created
The cumulative effect of all these actions is the creation of a tangible price for carbon. If we consider:
- The carbon reduction schemes in place
- The number of mandatory emissions trading schemes coming on stream
- The voluntary actions being taken by developing nations
We can see this market and price emerging for carbon today. In 2010 total carbon transactions volume was 1.9 billion up around thirteenfold on 2005