In preparation for a low-carbon economy and in anticipation of regulatory restrictions on greenhouse gas emissions, businesses are increasingly growing aware of the impact of their carbon footprint on their long-term profitability.
One strategy to improve readiness for the future is to actively monitor the level of emissions associated with the business. Many businesses, however, are going a step further and incorporating their carbon footprint as a factor in their internal decision-making today.
The Carbon Disclosure Project (CDP) released a report in September 2015 stating that 435 companies reported using an internal price on carbon as an input for planning and decision making. Only 150 companies reported doing the same in 2014.
One such initiative was Microsoft’s implementation of an internal carbon price. Profiled in The New York Times and in place since 2012, the system charges a dollar amount to business units based on their carbon emissions from operations and business travel. The fee collected is then used to make efficiency improvements and fund carbon-offset projects for the entire company.
Microsoft’s carbon fee system is a microcosm of what the implementation of an actual carbon tax could look like—the direct impact on the bottom line of business units helps make them aware of their carbon footprint and creates an incentive for its reduction. The funds make capital available for improving efficiency and investing in sustainable sources of energy.
This increased awareness of carbon emissions and an intentional move toward more efficient operations and sustainable energy sources have helped the company, over three years, reduce “its emissions by the equivalent of 7.5 million metric tons of carbon dioxide and saved more than $10 million through reduced energy consumption.”1
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