The Outlook

What's the one thing businesses need to understand better about decarbonization and carbon markets?
AN: With all the international discussions around the countries' strategies to comply with their NDCs (nationally determined contributions) under the Paris Agreement, the increased pressure from investors and financial institutions for improved ESG performance on corporates, as well as the ongoing fragmentation of carbon markets, decarbonization can seem very complicated to many businesses. But success really comes down to one thing: How to turn environmental liabilities into monetizable assets.
Liabilities are your carbon emissions and the impacts on climate change in your operations. These go beyond the costs associated with carbon taxes or penalties you may have to pay under any given regulation. They affect the physical environment in which you do business and your company's assets, not to mention its reputation with customers and communities. Over time, if left unchecked, these risks will end up impacting your company's competitiveness, ESG scores, cost of capital and, as a larger consequence, your financial bottom line.
Assets, on the other hand, are the emission reductions and carbon removals resulting from activities you undertake to reduce your carbon footprint. These can be achieved by introducing sustainable practices in your operations. These assets can be monetized in numerous ways, including selling carbon credits in the market, and achieving price premiums for decarbonized products or commodities. Other monetization strategies include improved brand reputation, increased market share and other benefits associated with climate-risk mitigation and cost reductions, as well as potential incentives, tax credits and/or subsidies provided by regulations.
So, our mission is to help our clients identify their risks and opportunities and support the design of long-term decarbonization strategies that will allow them to turn liabilities into monetizable assets, either by accessing carbon markets or adding value to their products.
This may not look "simple," but StoneX is prepared to help our customers navigate the emerging carbon markets and transition to a low-carbon economy, while mitigating their climate risks and protecting their bottom-line.
To learn more about StoneX Carbon Solutions, contact Alfredo Nicastro at alfredo.nicastro@stonex.com.
Originally published as part of The Outlook Newsletter
Vol. 1, Issue 2C
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