Businesses must prepare for upcoming carbon pricing legislation

Most predict government will introduce emissions reduction targets in 1-3 years

TORONTO, Dec. 18, 2015 /CNW/ - As the conversation around carbon pricing heats up globally, EY discussed the topic with several financial executives at large emitters¹ in Canada. The consensus is that placing a price on greenhouse gas (GHG) emissions is the best approach to reduce emissions – and most believe the Canadian government will reach an agreement on country wide GHG emissions reduction targets in the next 1 to 3 years.

"The reality is that carbon pricing schemes are already in place in several provinces, and there will likely be a Canada-wide carbon pricing legislation soon," says Thibaut Millet, EY's Climate Change and Sustainability Services Leader. "Most large-scale businesses recognize that carbon pricing can make a real impact on reducing emissions and on the bottom line, and many around the globe are calling for harmonized, reliable and transparent methods that can be implemented with rigor and discipline."  

According to a recent EY survey, Shifting the carbon pricing debate: emerging business attitudes fuel momentum for global climate action, 48% of global executives say their company is in favor of carbon pricing. But while 72% have developed corporate emissions reduction targets, only 15% have set an internal carbon price.

"As we roll into 2016, some companies may face the reality that their business practices are not appropriate for a low-carbon economy," says Millet. "Those companies will need to carefully evaluate how to make sustainable growth compatible with this new reality. Those that don't get on board will face an uncertain future."

EY's survey finds a number of reasons why companies are already implementing carbon pricing strategies:

• To meet regulatory requirements (33%)
• Alignment with company strategy and values (29%)
• Because of a global standardization effort (19%)
• To better understand the future of carbon regulation (12%)

Carbon pricing can spur innovation 
According to EY's survey, 78% of global business leaders say that carbon pricing would foster innovation and initiatives that are beneficial to performance as well as compliance, while 81% say it would have a positive impact on investment in green growth opportunities within their business.

Preparing for regulations
As provincial and federal governments finalize their carbon pricing mechanisms, businesses will have to adapt to meet the requirements. EY identifies five steps to move to a new way of operating:

1. Embed carbon risk and opportunity in corporate strategy
2. Establish a carbon monitoring, reporting and verification process
3. Deliver on voluntary or mandatory reduction targets
4. Communicate on results and progress
5. Set an internal carbon price

For more details on preparing for carbon pricing, click here.

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¹ Organizations that have reported emissions of over 50,000 tonnes CO2eq as part of Environment Canada's Greenhouse Gas Emissions Reporting Program (GHGRP)

SOURCE EY (Ernst & Young)

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