There has been an eight-fold increase in the number of major multinationals factoring an internal carbon price into their business plans over the last four years.
That is according to research released today by CDP, which shows there are now 1,400 such companies taking part in the practice, up 11% on last year, with more than 100 in the Fortune Global 500 list.
In addition, it was found that approximately three-quarters of the energy and utilities sectors’ market capitalisation prices carbon internally, including industry heavyweights such as the National Grid, EDF and Exelon.
It is thought that the Financial Stability Board’s Taskforce on Climate-Related Financial Disclosures' recommendations, carbon pricing corridors, and science- based targets initiatives are what is driving the change.
“Changing regulation is working on a global scale, and in all regions we are seeing many businesses fast-track the low-carbon transition into their business plans,” CDP CEO Paul Simpson, said. “Carbon pricing makes the invisible, visible.”
A carbon price is a cost applied to the amount of greenhouse gases firms emit, with economists widely agreeing it is the single most effective way for countries to reduce emissions.
The number of companies internalising a carbon price in China has nearly doubled from 54 in 2015 to 102 today, with the country planning to roll out the largest emissions trading system in the world by the end of 2017.
CDP said this was likely to send a ripple across regional and global markets, with the expectation that up to a quarter of global carbon emissions will be covered by a carbon price by 2019.
Despite current uncertainty around environmental regulation following Donald Trump’s decision to take the US out of the Paris Climate Agreement, there are still 96 companies using an internal carbon price in the country.
This marks a significant increase on the 29 US firms doing so in 2014, and there are an additional 142 companies that plan to by 2019, while Canada, Latin America and Korea are also recording a rise in businesses pricing carbon.
“We have seen a significant rise over last year in the number of companies pricing their own carbon pollution in China, Mexico, Japan, Canada and the US,” Simpson continued.
“With this comes better management of risk and tracking of progress to a well below two-degree world.”
