Carbon Pricing: Discover Your Blind Spots on Risk and Opportunity

• Carbon pricing risk from a growing array of new policies and taxes spurred by the Paris Agreement could lead to significant losses on a company’s financial statement.

• Carbon pricing risk could vary substantially among companies operating in the same business sectors.

• The financial risk from carbon pricing schemes depends on a company’s carbon efficiency, location of operations, business model, and the market conditions of the sector.

• Company business models and broader market conditions will also dictate whether companies are able to absorb the increased costs or pass them on to their customers.

• At present, many companies measure their carbon footprint, which is an essential first step in understanding carbon efficiency of past operations, but it has a blind spot in regard to future carbon pricing risk exposure.

• Because a significant share of carbon pricing risk could come from supply chain activities and energy-intensive products, it is essential for companies to account for carbon risk beyond their direct operations.

• Meaningful data disclosure by companies on future carbon risk, as recommended by the Task Force on Climate-Related Financial Disclosures, will help inform the decision making of investors and accelerate mainstream green finance.


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