Corporate Climate Competitiveness: Growing Your Business, Optimizing Investments, and Managing Costs

S&P Dow Jones Indices    Christopher Baldock, Teri Mendelsohn
26 Aug 2018
Categories: General Market Analysis, ESG, Investor Education

Country or region: Asia Pacific (Overall)

Summary:
Businesses that successfully decarbonize their operations in line with global energy transition commitments may be more likely to protect their license to grow and avoid increased costs from carbon pricing.


Reference URL: https://spindices.com/documents/research/research-corporate-climate-competitiveness.pdf




Abstract

EXECUTIVE SUMMARY  

There is a transition underway to a greener, low-carbon economy. Businesses that successfully decarbonize their operations in line with global energy transition commitments may be more likely to protect their license to grow and avoid increased costs from carbon pricing.

Current standard practice is to measure the financial return of project investments. Best practice during this transition, however, could be to prioritize investments that meet science-based targets (SBTs) and decarbonize operations.

Companies could evaluate investments for financial and environmental performance to achieve carbon targets and mitigate risks associated with hidden future carbon prices.

Reporting that is aligned with the recommendations of the Task Force on Climate-related Disclosures (TCFD) increases transparency with internal and external stakeholders for financially material climaterelated risks and opportunities.

Trucost’s analysis of four publicly disclosed investments intended to deliver environmental and financial returns reveals that three of them could fail to meet either or both performance targets. For example, investment in coal storage, meant to improve the condition of the coal and reduce the amount purchased and combusted, was found to have significant hidden carbon emissions. The Green Transition Tool demonstrates that this supposedly green investment turns out to be brown.

Trucost’s Green Transition Tool scenarios enable businesses to prioritize investments, consider environmental and financial performance, and report in line with TCFD recommendations.



Date of original publication:

07/11/2018


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