Life in the low carbon economy. Is your business ready?

Popular Articles

In order to maximise commercial value from the issues arising as a result of climate change, businesses need to act and they need to act now. Designed to help businesses respond to the challenges of the new operating environment in a way that enhances brand reputation, operating efficiency and financial performance, KPMG’s Carbon Advisory Group provides a deep understanding of the issues and challenges facing businesses today.

Climate change is forcing companies of all sizes to rethink the way they do business. The tide of legislation and regulation across the globe is moving in just one direction. Whether new initiatives come from international bodies, such as the UN or the EU, or from national governments, the aim is the same: to find ways to sustain growth in a low, rather than high, carbon economy.

BECOMING A LOW CARBON BUSINESS

Increasingly, companies are under pressure from their investors, employees and customers to become low carbon businesses by reducing their emissions and accounting for their actions in a transparent and trusted way. That pressure will only increase.

But making the transition to low carbon operations is far from straightforward. Evidence suggests that many companies do not always know where to start the process of creating such low carbon strategies. Businesses need better guidance, both from government and their business advisors, to plot their approach. They need help in devising carbon strategies and support to think through how best to deal with a range of diverse issues including reporting, measuring, offsetting, trading, investing in new technologies and dealing with the complex financial, tax and insurance implications of their actions.

Some organisations clearly see this as a threat. Others, further along the road of planning for life in a low carbon economy and willing to see carbon management as a fundamental part of their business planning processes, take a more positive view.

They are already beginning to see that taking the right action at the right time can bring real benefits, not just in terms of brand and company reputation, but also in terms of operating efficiency and cost control. They are trying to plan a route that will allow them to comply with any future changes in legislation and regulation while making sure they increase, rather than decrease, business performance.

HOW TO PROSPER IN A LOW CARBON ECONOMY

KPMG’s Carbon Advisory Group is providing insight and strategies to help companies understand and manage the many business implications of climate change.

It is helping businesses to make sense of the confusing and, at times, inconsistent approaches being taking to carbon measurement and accounting, strategy development and the important tax and insurance implications of their approach to dealing with climate change.

WHAT ARE THE KEY SUCCESS FACTORS?

There are four key areas where an organisation can focus in order to create an efficient low carbon business, see below.
In order to plan, measure, manage and report efficiently we have identified seven key areas where KPMG can support a business to meet its carbon reduction objectives while at the same time maintaining business performance and operating efficiency, see box overleaf.

KPMG: SUPPORTING BUSINESS IN MEETING CARBON REDUCTION OBJECTIVES

Carbon trading and offsetting – investigation and dispute

Organisations seeking to reduce their impact on the environment through carbon reduction face a major issue – lack of clear and widely-accepted regulatory regimes. Where allegations of fraud or misconduct, or disputes arise, KPMG can provide support around the following areas:

Integrity due diligence on potential or existing carbon reduction partners
Investigations into allegations of fraud or misconduct
Assessment of the fraud and misconduct risks associated with carbon reduction schemes
Dispute advisory services including acting as expert witnesses.

Carbon efficient logistics

Today’s businesses are under constant pressure from investors, customers and regulatory bodies to adapt their business models to demonstrate a carbon efficient strategy. The carbon efficient supply chain team provide support around the following areas:

Network mapping
Scenario building
Risk and change management
Benefit tracking and realisation.

Carbon management

Climate change is progressively affecting the business environment and organisations that understand the implications and develop clear strategies aligned with core business activities will benefit. KPMG can help businesses focus on the integration of climate change into the business strategy, develop and implement carbon-reduction activities and provide clarity around the measurement and reporting of carbon.

Environmental tax and incentives

Understanding the tax consequences which may arise following a carbon reduction strategy will be important in allowing the true costs and benefits of such actions to be assessed by businesses. Investors in projects that generate carbon credits and/or other incentives will want to maximise financial return by managing tax leakage and maximising tax relief. Emissions trading can also lead to tax mismatches if not structured carefully. KPMG’s Environmental Tax and incentives team can support clients in all of these emerging areas.

Accounting for carbon

The key to accounting for carbon is to establish appropriate policies and to ensure those policies are communicated effectively to key stakeholders. From the strategy and planning through to review, reporting and de-briefing we can help a business understand the impact that activities in the carbon arena will have on the financial results.

Mergers and acquisitions in the carbon market

As businesses look to expand their development pipelines, by acquisition rather than purely by development, we expect to see more consolidation in the carbon market place. Focusing on capital raising, mergers and acquisitions and valuations, KPMG can provide advice around various aspects of corporate finance and transaction services.

Carbon restructuring

Concern about climate change has sparked significant shifts in legislation, regulation and consumer habits.The full impact of these shifts can be hard to predict and often force businesses into rapid and complex programmes of change. This can put great strain on management teams and their employees and can undermine initial investment decisions. KPMG can help businesses, their lenders and investors to deal with such problems.

Organisation

KPMG is the global network of professional services firms who provide audit, tax and advisory services. KPMG LLP operates from 22 offices across the UK with over 10,000 partners and staff. KPMG’s Carbon Advisory Group, made up of over 200 professionals, is providing insight and strategies to help organisations understand and manage the many business implications of climate change. The Carbon Advisory Group provides its clients with a range of linked services in order to help create an efficient low carbon business.

Enquiries

Richard Sharman
Lead Partner, Carbon Advisory Group
Tel: +44 (0) 207 311 8228
E-mail:

Climate Action - Assisting business towards carbon neutrality