Approximately 40 countries and more than 20 cities, states and provinces use carbon pricing mechanisms or are preparing to implement them. Nearly 400 Caring for Climate companies from 60 countries have made clear that they want Governments to make markets work for the climate. Through the UN-supported Principles for Responsible Investment, a group of investors – representing USD 45 trillion in assets under management and often covering more than 45 percent of shareholdings in listed companies – have pledged to incorporate sustainability criteria into their investment and ownership practices and are increasingly demanding that companies strengthen responses to the risks posed by climate change.
Support for carbon pricing is shared by both the private and public sectors. From emissions trading systems to carbon taxes to legislative and fiscal frameworks to create a stable price for carbon, the mechanisms are diverse and can make a significant impact in driving down global greenhouse gas emissions. Despite progress to date, business will have to reach a new level of performance to help effectively address the climate challenge. The opportunity for companies – large and small – to lead this movement is enormous. That is why the UN Global Compact, together with UNEP, the UNFCCC secretariat, and with the support of Caring for Climate strategic partners – CDP, The Climate Group, UN Foundation and the Principles for Responsible Investment – developed the Business Leadership Criteria on Carbon Pricing.
Whether a company meets them today or commits to align over time, embracing the core elements of the criteria demonstrates good business practice and leadership in climate action. Long-term valuation of the cost of carbon emissions – coupled with responsible public policy engagement and transparency – must become a priority in corporate strategy and operations.
The Business Leadership Criteria on Carbon Pricing is designed to inspire companies to reach the next level of climate performance and to advocate for a price on carbon as a necessary and effective measure to tackle the climate change challenge. The criteria comprise three overlapping dimensions: first, setting an internal carbon price; second, responsible policy advocacy; and third, communicating on progress.