Together with the Vision 2030 and Targets 2020, Novartis leadership has endorsed a carbon price of USD 100 per ton (t) of carbon dioxide equivalents (CO2e), in line with the cost of climate change to society as calculated by the World Bank. Building a carbon price into investment decisions is important as it helps identify projects that will most cost-effectively reduce GHG emissions.
Leading business organizations have demonstrated that applying a price on carbon is the most effective way to reduce greenhouse gas (GHG) emissions and foster mitigation measures (World Business Council for Sustainable Development, 2014). Some countries have implemented market mechanisms to reduce GHG emissions or introduced taxes on carbon emissions. Yet, to a large extent these prices do not fully reflect the actual costs of GHG emissions and the related consequences of climate change to society.
Companies that voluntarily apply an internal carbon price can influence their decision making toward lowering their emissions and thus demonstrate they are proactively addressing risks posed by climate change. Further, companies that have set an internal carbon price can better anticipate market mechanisms and new taxes to curb emissions.
Rating agencies and socially responsible investors – such as the Carbon Disclosure Project (CDP) and Dow Jones Sustainability Index (DJSI) – are increasingly interested in how companies are using carbon pricing schemes.