Hong Kong companies Swire, CLP putting a price on carbon to reduce emissions, drive internal change

Internal carbon pricing is a useful tool for businesses to reduce their greenhouse-gas emissions and drive behavioural change in pursuit of decarbonisation targets, according to analysts and companies.

Businesses are facing mounting pressure from investors, regulators and stakeholders to set and reach climate targets in line with global targets to stem the tide of climate change and prevent the most devastating consequences of temperature increases around the world.

Putting an internal price on carbon can help businesses and institutions measure, plan and achieve targets to reduce greenhouse-gas emissions in line with either mandatory regulations or their own voluntary goals, such as a net-zero target, according to John Sayer, executive director of Deloitte CarbonCare Asia, which provides consultancy services on sustainability and carbon strategy.

“When a price is put on carbon emissions, the external environmental cost and medium to long-term consequences of carbon emissions become an additional criteria in operational and capital-expense decisions throughout the value chain,” Sayer said.

The practice is helping companies assess climate-related risks and opportunities, according to CDP, a non-profit organisation that runs the world’s environmental disclosure system for companies, cities, states and regions.

“By attributing a monetary value to climate risks, and translating them into a uniform metric, financial decision-makers within a company are able to make the low-carbon transition an integral part of their business strategy,” according to CDP’s website.