Consider an internal carbon pricing

Cost
Cost
Cost
EFFORT
EFFORT
EFFORT
IMPACT
IMPACT
IMPACT

As part of their net zero strategy, companies can use internal carbon pricing to assign a monetary value to carbon emissions. CDP's 2021 Global Carbon Price Report highlights that to implement an effective internal carbon price, four dimensions should be considered:

  • price level (height)
  • GHG emissions coverage (breadth)
  • influence (depth)
  • time.

The internal carbon price is one tool that can provide insight into the resource allocations and trade-offs the company will face in implementing its net zero strategy. As with any tool, the effectiveness of the internal carbon price will need to be evaluated over time.

For finance department, it is a good decision-making tool to understand the potential impacts of external carbon pricing schemes and regulations. ICP varies by region and sector. As a quick-win, post the calculations of footprint, you can assign USD 100 as a representative initial cost for every tonne of CO2e emitted (this is the carbon price level needed to incentivise net zero emissions by 2050 - Reuters). This would help you understand the potential exposure and impact on profit and loss statements.

Already 10 listed companies in Singapore

disclosed in 2020 that they were using or planning to use within 2 years an internal carbon price
(CDP)

nearly 50% of the world’s biggest companies

by market cap disclosed in 2020 that they were using or planning to use within 2 years an internal carbon price
(CDP)

ADDITIONAL RESOURCES

These suppliers can help you