Increasingly companies are looking to emissions trading as a fundamental element of their climate change risk management strategy.
Emissions trading provides a flexible and financially rewarding means of reducing greenhouse gas emissions to achieve the immediate and future targets set by international and state-based regulation. More broadly however, engaging in emissions trading can be a strategic advantage to the company undertaking it, as it encourages trading companies to develop the practices and policies in place within their operations and management to minimise the risk of climate change on business performance.
While a profit can be made when selling emissions credits, the process of generating emissions credits itself provides a variety of outcomes that benefit the whole of the organisation, such as:
- minimising exposure to climate change-related business risk associated with business interruption, regulations, finance/investment choices, changing market demand, reputational and legal issues (read on),
- improving operational efficiency by encouraging organisations to reduce emissions below baseline while maintaining or improving productivity,
- establishing product differentiation by creating products that are less carbon-intensive and more attractive to evolving market needs,
- enhancing brand value by communicating the organisation’s approach to reducing their greenhouse gas emissions and therefore impact on climate change, and
- gaining access to capital and new markets with constraints on the level of emissions and carbon intensity of participating organisations’ products, services and operations.
