Lessons for business: shifting from analysis to readiness More than 80% of businesses questioned expect to be impacted by new carbon pricing regulations in the next five years. For these companies, the ability to identify risks and opportunities of new carbon market policies and stay ahead of expected change is critical. EY identifies several steps that can be implemented to adapt to this changing environment: 1. Embed carbon risk and opportunity assessment in 3. Commit to reduction targets corporate strategy Once monitoring and assessment processes are in place, Building a comprehensive climate change strategy set targets for the reduction of carbon emissions across is necessary to ensure that climate-related risks and the business. In addition, companies may seek to purchase opportunities are taken into account. Implementing cleaner sources of power, such as renewable energy. a corporate-wide carbon approach is key to reducing the exposure to climate risk, by reconsidering existing 4. Communicate on results and progress investments, prioritizing emission reduction actions, and screening opportunities for greater energy efficiency and Report on business progress against targets and seek innovative low-carbon technologies. verification of performance. Communicating achievements internally and externally will provide company stakeholders 2. Establish a carbon reporting process with the knowledge that risks and opportunities are being appropriately managed. Setting up a monitoring, reporting and verification (MRV) framework across the value chain enables companies 5. Set an internal carbon price to identify baseline carbon emissions and to monitor performance over time. Developing internal reporting Several companies have already implemented an internal processes before regulatory requirements are established carbon price in strategic planning and project finance to help has proved beneficial to companies that were ahead of the guide decision-making on carbon-intensive projects such as market, for instance in adapting to cap-and-trade schemes. power plants. This can be useful to anticipate the carbon cost risk and reflects the impact of expected policy developments, for instance by anticipating an emissions trading scheme. Acknowledgments EY wishes to thank the following individuals Jean-Pierre Clamadieu and organizations for their consideration and Chairman of the Executive Committee and CEO input during the preparation of this report: Solvay James Close Jose Manuel Entrecanales Domecq Climate Group Director of Policy and Finance Chairman and CEO World Bank Group Acciona Lila Karbassi (in association with Jayoung Gérard Mestrallet Park) Chairman and CEO Head of Environment and Climate Engie ‘ UN Global Compact Shifting the carbon pricing debate I 17