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How does climate change impact the economy?
Say that Are climate change and the world economy linked together is inevitable. A report by Christian Aid certifies that:
- 15 climate disasters that occurred in 2021, including hurricanes and floods, cost an estimated 170 billion dollars;
- the European Union's Green Deal fund foresees investments of 1,000 billion euros over the next 10 years;
- 70 billion euros (or 30% of the PNRR funds) have been allocated for the ecological transition of Italian companies.
Calculate the carbon footprint of the company is the first step in understanding at the corporate level the link between climate change and the economy. Embark on the path to carbon neutrality, thanks to the reduction of emissions And to CO compensation2, is the next one.
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Carbon offsetting in Italy and beyond: a growing market
The analysts of Morgan Stanley They predict that the carbon credit market It will grow until it reaches 35 billion dollars by 2030It is therefore clear that the sector has ample room for growth even in Italy, where it will involve more and more small, medium and large companies in our economic fabric.
Also citing the Covid-19 pandemic as an event that triggered a global change in the way in which business is conducted, Larry Fink, CEO of Blackrock, said in ainterview:
“All companies and all sectors will be transformed by the transition to Net Zero. The question is: will you be a driver, or will you be carried away by it?”
In his definition of a 'sustainable capitalism', in which the value of companies will be dictated by their ability to create valuable relationships with customers, employees and investors, Fink stresses the importance of ethical choices.
In the global business of tomorrow, Will companies aware of the link between climate change and the economy be successful.
The importance for companies to move in time by time returns in the words of the experts combat climate change, either for multinationals and for SMEs, even in Italy.
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The regulations on environment and offsetting
Those who take measures from the point of view of safeguarding the environment will not be unprepared when new policies are launched to achieve the objectives set by the Paris Agreement.
In fact, the role of environmental regulations, like the CSRD And the CSDDD, and with it the consequent penalizing benefits and forms of taxation.
Environmental and offsetting regulations could become legislative obligations, to which companies will, sooner or later, be called to respond. This is why it is important to act immediately.
Showing willingness to undertake the climate journey donates a competitive advantage to small and medium-sized enterprises, which are already favoured today in commercial agreements with multinationals.
The scalability of offsetting projects and Carbon removal will allow more and more CO₂ emissions to be offset, making Italian companies virtuous from the point of view of climate choices.
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Entering the offsetting market
If the link between climate change and the economy is twofold (on the one hand, the immense resources used to combat environmental disasters, on the other hand, the advantages on the market for companies interested in ESG objectives), how do you enter the offsetting market?
The global CO₂ market It is mainly divided into two types: compliance markets and the voluntary market.
The compliance market is regulated by regulations that impose limits on CO₂ emissions for some companies operating in specific sectors. Companies that exceed these limits must purchase carbon credits from other entities that, on the contrary, emit less than allowed. An example is theEU Emission Trading System (ETS), which operates through a “cap-and-trade” system: the maximum emission limit (cap) is gradually reduced to encourage the reduction of emissions over time.
The voluntary market, on the other hand, allows individuals, companies and organizations to compensate voluntarily their issues by purchasing credits generated by certified projects. This market offers greater flexibility and is based on the encounter between supply and demand, with prices determined by the quality and type of project.
As for the offsetting projects, these can be divided into two main categories: Nature-based and Technology-based.
- Nature-based projects:Some text
- Forests and regenerative agriculture: Conservation of existing forests or planting new ones, and agricultural practices that improve soil health and capture CO₂.
- Marine and coastal ecosystems: Projects that restore ecosystems such as mangroves and seaweed, known for their ability to absorb large amounts of CO₂.
- Technology-based projects:Some text
- Direct Air Capture (DAC): Technologies that suck CO₂ directly from the atmosphere and then store it safely.
- Renewable energy projects: Installation of solar, wind or hydroelectric plants to reduce dependence on fossil fuels.
The dissemination of projects certified by third parties, such as Verra or Gold Standard, is contributing to the growth of certified carbon credits available in the market. These bodies ensure that projects meet strict requirements, such as additionality, transparency and the permanence of the results obtained.
