Ranks of companies setting an internal price on CO2 emissions almost triple in a year

By Daniel Cusick | 09/21/2015 08:56 AM EDT

The number of large companies placing an internal price on carbon emissions nearly tripled over the last year, from 150 to 437 firms globally, according to new data released this morning by CDP, the U.K.-based nonprofit that tracks corporate-sector greenhouse gas emissions.

They join an increasingly diverse set of firms — ranging from energy producers to financial institutions — that are making detailed financial calculations around greenhouse gases, including risk assessments of how such emissions affect their bottom lines, according the group’s 2015 carbon pricing report.

In the United States and Canada, the number of companies placing an internal cost on carbon more than doubled in 2015 to 97 firms, according to CDP. Among the latest firms to disclose carbon pricing policies are iconic American brands such as General Electric Co., General Motors Co., Campbell Soup Co., Stanley Black & Decker, and Fruit of the Loom.


Other global firms adopting carbon pricing as part of their corporate decisionmaking include automakers Daimler AG, Volkswagen AG, Nissan Motor Co. and Mazda Motor Corp.; airlines Air France-KLM, Cathay Pacific and Qantas Airways; and some of the world’s largest consumer products makers, such as Nestlé, Unilever PLC and Colgate Palmolive Co.

Carbon pricing is also growing in the utility sector, with 19 U.S. and Canadian firms publicly identifying themselves as participating in such activities, according to CDP. Among the nine U.S. utilities reporting carbon pricing activities for the first time in 2015 are Consolidated Edison Inc., DTE Energy Co., NRG Energy Inc. and the Los Angeles Department of Water and Power. In Europe, 24 power utilities are attaching a price to carbon emissions, including 16 for the first time in 2015.

A hedge for some, a financing mechanism for others

"The motivations really vary from company to company," Lance Pierce, president of CDP North America, said in a telephone interview Friday. "Certainly, there are some that are looking at this solely from a regulatory risk standpoint. They’re hedging against a future where carbon is going to have a real cost. But there are many others that are beginning to see this as a real global issue with which they will be compelled to deal."

Still others, he said, are using carbon pricing as a tool for financing emissions reduction projects and incorporating policies to make them more efficient and more resilient to climate change. Such companies, including many that operate in regions where carbon regulation and markets are already in place, "are looking at the full range of global risks and opportunities," Pierce said.

According to the CDP report, the rapid rise in the number of companies engaged in carbon pricing signals "a pivot point" for business where climate change has become a part of mainstream decisionmaking "and represents a bona-fide line item in the standard budget assumptions of successful companies."

Moreover, "as expectation builds for governments to agree a global deal on limiting greenhouse gas (GHG) emissions in Paris this December, the CDP data shows how a growing number of businesses have been diligently preparing by incorporating a price on these emissions into their every day decision making," the report said.

Big Asian companies surge in this year

While internal carbon pricing has gained popularity with business leaders on every continent, the largest surge for 2015 was among Asian companies, which went from eight reporting firms in 2014 to 93 firms this year. Among the major Asian brands engaged in carbon pricing are Japanese automakers Nissan and Mazda and suppliers like Toyo Tire and Rubber Co. Ltd., as well as telecommunications firms SK Holdings of Korea and NTT Docomo of Japan, according to CDP.

In its CDP disclosure documents, Toyo Tire executives noted that Japan’s traditional heavy reliance on coal and oil for energy have resulted in environmental taxes, prompting the company to "turn to alternative resources, or introduce more energy efficient equipment or technologies to minimize the impact on product prices."

Other U.S. firms whose carbon pricing policies are detailed in the report include major oil and gas firms, electric utilities, financial institutions and even entertainment giant Walt Disney Co., which has adopted a corporate goal of achieving zero net greenhouse gas emissions.

"Disney has found that by attaching a financial value to carbon, our businesses have an incentive to reduce their greenhouse gas emissions and to think creatively about new approaches and technology that will help reduce their carbon footprint," the company told CDP.