Article at a glance:
Concerns about greenhouse gases and global warming are no longer limited to environmentalists. Institutional investors convinced that carbon regulations are inevitable and insurers worried about worsening weather are demanding that executives plan for the rising cost of carbon emissions. In the absence of a global set of rules, individual governments are devising their own regulatory schemes, creating a mosaic of new guidelines. Although the impact of these trends is uncertain, managers can begin now to prepare their organizations for the changing economics to come.
The take-away
Executives should respond to investors by determining how carbon regulation will change costs and then communicating a clear response. They should also reduce emissions where possible and help shape the regulations affecting their industries as new ways to track and report the carbon dioxide emissions of a company and its suppliers appear.
This article includes the following exhibits:
- Exhibit 1: Investors, governments press for change
- Exhibit 2: Kyoto Protocol ratification status by country
- Exhibit 3: Effect of emission trading scheme on electricity prices
About the artwork:
Dan Peterman
Peterman Business Miles
This project links a year of car driving—and emitting carbon into the atmosphere—with a century of carbon stockpiling in the form of the accumulated carbon content of a tree trunk.