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Climate change has a cost on the world economy. Internationally, businesses must come to terms with these costs and institutions implement regulations to reduce the impact of global warming.
To say that climate change and the world economy are linked is inescapable. A report by Christian Aid* attests that:
- 15 climate disasters that occurred in 2021, including hurricanes and floods, have an estimated cost of $170 billion;
- the European Union's Green Deal fund plans to invest 1 trillion euros over the next 10 years;
- 70 billion euros (or 30 percent of PNRR funds) have been allocated for the green transition of Italian companies.
Calculating a company's carbon footprint is the first step in understanding at the corporate level the link between climate change and the economy. Embarking on the path to carbon neutrality through emissions reduction and offsetting is the next.
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Carbon offsetting in Italy and beyond: a growing market
Morgan Stanley analysts predict that the offsetting market will grow to $35 billion by 2030**. It is clear, therefore, that the sector has ample room for growth in Italy as well, where it will increasingly involve small, medium and large companies in our economic fabric.
Also citing the Covid-19 pandemic as a triggering event for a global shift in the way business is conducted, Larry Fink, CEO of Blackrock said in an interview***, "All companies and all industries will be transformed by the transition to the Net Zero. The question is, will you be a dragger, or will you be dragged along 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, it will be companies that are aware of the link between climate change and the economy that will succeed. Returning in the experts' words is the importance for companies to move early to combat climate change, both for multinationals and SMEs, including in Italy.
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The regulations on environment and offsetting
Those who take action from the standpoint of environmental protection will not be unprepared when new policies are initiated to achieve the goals set by the Paris Agreement. Indeed, the role of environmental regulations will grow, and with it the consequent concessions and penalizing forms of taxation.
Regulations on the environment and offsetting could become legislative obligations, in front of which companies will, sooner or later, be held accountable. That is why it is important to act now. Showing willingness to embark on the climate journey gives a competitive advantage to small and medium-sized companies, which are already favored in trade agreements with multinationals.
The scalability of offsetting and carbon removal projects will allow more and more CO₂ emissions to be offset, making Italian companies virtuous in terms 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 deployed to counter environmental disasters; on the other hand, the benefits in the market for companies that take an interest in ESG goals), how does one enter the offsetting market? Carbon offsetting in Italy is linked to investments in large-scale certified projects, which take place mainly abroad and particularly in developing countries.
The spread of third-party certified projects, most notably Verra, and technological advances in the testing and application of new forms of CO₂ capture is increasing certified carbon credits worldwide. As an entity that promotes such projects, we offer to guide you on the climate journey. Download our guide on the benefits of carbon neutrality or contact us directly to learn about all the opportunities that await you and become asustainable business.
