December 22, 2015 by Canadian Underwriter
Nearly half (48%) of global executives responding to a recent Ernst & Young (EY) survey said that their company is in favour of carbon pricing. Another 45% were “neutral” on the topic, while 7% opposed carbon pricing.
While 72% of the 116 survey respondents have developed corporate emissions reduction targets, only 15% have set an internal carbon price, EY said in a statement last week. The consensus is that placing a price on greenhouse gas (GHG) emissions is the best approach to reduce emissions – and most believe the Canadian government will reach an agreement on country-wide GHG emissions reduction targets in the next one to three years.
“The reality is that carbon pricing schemes are already in place in several provinces, and there will likely be a Canada-wide carbon pricing legislation soon,” said Thibaut Millet, EY’s climate change and sustainability services leader. “Most large-scale businesses recognize that carbon pricing can make a real impact on reducing emissions and on the bottom line, and many around the globe are calling for harmonized, reliable and transparent methods that can be implemented with rigour and discipline.”
Millet said that as 2016 approaches, some companies may face the reality that their business practices are not appropriate for a low-carbon economy. “Those companies will need to carefully evaluate how to make sustainable growth compatible with this new reality. Those that don’t get on board will face an uncertain future.”
According to the survey, titled Shifting the carbon pricing debate: emerging business attitudes fuel momentum for global climate action, there are a number of reasons why companies are already implementing carbon pricing strategies: to meet regulatory requirements (33%); alignment with company strategy and values (29%); because of a global standardization effort (19%); and to better understand the future of carbon regulation (12%).
In total, 78% of global business leaders said that carbon pricing would foster innovation and initiatives that are beneficial to performance as well as compliance, while 81% said it would have a positive impact on investment in green growth opportunities within their business.
As provincial and federal governments finalize their carbon pricing mechanisms, businesses will have to adapt to meet the requirements. EY identified five steps to move to a new way of operating: embed carbon risk and opportunity in corporate strategy; establish a carbon monitoring, reporting and verification process; deliver on voluntary or mandatory reduction targets; communicate on results and progress; and set an internal carbon price.