Internal CO2 price. Advantages of decarbonization.

High emissions may represent an ever-increasing risk factor for companies in the future, as they will most likely come at a cost. Becoming more energy efficient, promoting sustainable investment strategies and being prepared for the increasing regulation of emissions helps preparing for a low-carbon world and managing your greenhouse gas emissions, can make decarbonization profitable. As a result, more and more companies are already adopting an internal CO₂ price.

Promotion of the carbon footprint. Advantages for risk management and sustainability management.

The introduction of an internal CO₂ price offers companies various advantages and incentives in connection with climate protection. Internalizing CO₂ costs enables a market-driven improvement of your carbon footprint and a reduction of your CO₂ footprint. In addition, by anticipating future policy regulations, your company can introduce CO₂ pricing in preparation for upcoming regulatory requirements and convince investors and shareholders that you recognize and effectively manage climate-related risks and opportunities.

An internal CO₂ price also creates incentives for investments, enables the development of new markets and can be used to finance climate protection measures by setting up a budget pool or a CO₂ price fund. It also enables companies to identify and avoid physical and political risks in global supply chains in order to strengthen their resilience. Introducing an internal carbon price demonstrates your corporate sustainability and strengthens engagement with customers, employees and other stakeholders. It can help your company manage risks related to climate change by reducing your dependence on fossil fuels and taking action to adapt to climate change. Ultimately, an internal CO₂ price can help to sensitize employees when making decisions and raise awareness of corporate climate protection.

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Three steps to implement the internal CO2 price.

Status Quo Analysis:

Analysis of the use case in the company and determination of the ICP type
Analysis of the controlling and investment planning process to determine the implementation approach
Analysis of the GHG balance sheet and reduction initiatives already implemented or reduction potentials identified in order to carry out a price sensitivity analysis
Stakeholder analysis to identify requirements for internal carbon pricing (ICP)
Benchmark analysis to identify best practices and strengthen positioning
Environmental analysis with price levels, current practices and recommendations from academia and institutions
Creation of a comprehensive picture of the internal and external requirements for an ICP

Development of CO2 price scenarios:

Define the system boundaries for ICP implementation
Conducting a sensitivity analysis to determine an ICP level, taking into account internal information and external practices
Develop effective ICP scenarios to assess economic and environmental impacts, e.g. assessing the impact of different price levels on existing CAPEX investment decisions
Develop a proposal to integrate the ICP process into CAPEX decisions
Top-down estimation of implementation resources and timeline

Implementation of the internal CO2 price:

Development of a roadmap for ICP implementation within the company
Support in communicating the CO2 price within the company
Development of adjustments to corporate processes
Execution of rollout planning
Preparation of a decision presentation for the board meeting
Creating awareness of the urgency of ICP implementation, setting the internal CO2 price level, defining greenhouse gas emission limits and integration into business processes

Analysis of CO2 price scenarios.

An important aspect is to derive different scenarios with regard to the price level, dynamics and regional differences of the CO₂ price. Both the economic and environmental impacts will be assessed, including the potential impact on existing investment decisions. In addition, a proposal will be developed to conduct a financial assessment of reduction initiatives and integrate them into existing decision-making and the budget approval process.

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Targets and key figures. Effective KPI management.

Key performance indicators (KPIs) and targets play a decisive role in the implementation of climate strategies in an organization, as they contribute to increased transparency, accountability and targeted target allocation. KPIs serve as instruments for measuring and controlling target achievement. We support you in the selection of suitable KPIs to ensure the implementation of the climate targets set and also accompany the corresponding translation to the organizational structure, for example through the development of segment-specific and functional target breakdowns that allow operational implementation.

By breaking down greenhouse gas emissions into organizational units based on emissions intensity, your company gains transparency about the causes of emissions. It will play an increasingly important role for companies to be able to use meaningful KPIs for internal and external management and communication in order to meet requirements and achieve targets accordingly.

The linking of financial performance indicators with environmental indicators can be particularly relevant for companies with expected growth and increasing reporting obligations to stakeholders.

KPI management for climate strategies.

We create a status quo analysis of internal processes and responsibilities for your company and develop KPIs based on the Ambition climate strategy. We develop target breakdowns that enable a needs-based distribution of target loads across all relevant scopes. This includes a detailed breakdown at functional and segment-specific level. In addition, emission profiles are created to analyze greenhouse gas emissions. By allocating emissions to organizational units based on their emissions intensity, we gain transparency about the causes of emissions. This breakdown enables us to assign targets based on either the polluter pays principle or the maturity principle. These target contributions ensure that each organizational unit contributes proportionally to the overall target and promote a sense of responsibility throughout the organization.

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Development of organizational structures. Prioritization, responsibilities and communication.

After developing KPIs, it is important to establish appropriate governance structures that are responsible for implementing and achieving the targets.
The integration of a climate strategy into the governance structure of a company is of great importance in order to give sufficient priority to climate management. Climate management should be anchored at the highest organizational level to ensure that it is seen as an integral part of the company. Companies are increasingly being asked to incorporate climate protection into their strategic direction, adapting the governance structure enables effective control of climate management and the clear definition of responsibilities.

The size and complexity of the company determine the number of people responsible and the organizational structure required.
The involvement of a sustainability department or a sustainability committee facilitates the introduction and coordination of climate management. A sustainability board at the highest management level makes key decisions on climate strategy and the allocation of resources. A sustainability committee enables the integration of climate measures into site planning and business processes. In addition, open communication and transparency within the company are crucial to overcoming resistance to the switch to climate management and promoting acceptance and motivation.

Successful climate management with Sustainable.

We support companies in developing and implementing an effective climate strategy. By analyzing and adapting the governance structure, involving various committees at operational and strategic level, developing a transparent communication concept and involving employees, we create a solid foundation for successful climate management. Our aim is to support companies in anchoring climate protection as an integral part of their corporate strategy and to enable sustainable success in a low-carbon future.

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Designing an effective governance structure for successful climate management.

As part of the analysis and assessment of the current governance structure, a thorough review is carried out to determine the extent to which your climate management is already integrated into the existing structures. Potential gaps and opportunities to adapt the structure are identified. Process adjustments and incentive structures are also developed to support climate management. We also develop decision templates to serve as a guide for management during implementation.

In order to formalize the knowledge surrounding climate management, a climate strategy handbook is being created that contains rules, processes and information worth knowing. In addition, detailed implementation plans will be drawn up to provide a concrete roadmap for implementing the new governance structure. Timetables, milestones and the necessary resources are defined. In order to create clear structures, processes, responsibilities, deadlines and key performance indicators (KPIs) are presented in detail.

We develop a comprehensive communication concept that includes a communication plan. This plan defines suitable communication channels and means to disseminate transparent and understandable information about climate management throughout the organization and actively involve employees. Employee involvement is encouraged by offering them opportunities to contribute their ideas, concerns and suggestions on climate management. Feedback mechanisms are also established to facilitate open dialog and increase employee engagement. Training courses and workshops are held to raise employees' awareness of climate change and the importance of climate management. They are made aware of the role they play in implementing the climate strategy.

In addition, transparent reporting is being established by developing suitable reporting mechanisms. These enable regular updates on the progress of climate management and provide employees with clear information on targets, measures and results.

To encourage employee engagement, an incentive structure is being developed to create incentives for their active participation in climate management.

Monitoring, verification & reporting. Compliance with legal requirements.

There are various reasons why companies have to comply with legal and regulatory requirements to disclose CO₂ data. On the one hand, there is an increasing demand from stakeholders such as investors, customers and suppliers for transparency and verifiability with regard to companies' environmental performance and climate strategy.

Another reason for measuring and monitoring CO₂ data lies in companies' internal targets. Many companies set their own climate targets and want to measure and monitor progress in reducing their emissions. This enables them to ensure that they achieve their sustainability targets and successfully implement their climate strategy. Risk management also plays an important role. Measuring and monitoring CO₂ data enables companies to identify potential risks related to climate change and climate policy at an early stage. Through this early detection, appropriate measures can be taken to strengthen the company's resilience and minimize potential negative impacts.

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This includes the development of appropriate reporting formats, dashboards and communication materials that enable your company to clearly and comprehensibly present your efforts in terms of CO₂ performance and progress on climate strategy. In addition, we advise your company on the selection of appropriate tools and software solutions that facilitate the measurement, monitoring and reporting of CO₂ data. This process includes assessing existing management structures and integrating the selected tools into existing processes to ensure seamless and efficient data collection and analysis.

Framework for monitoring the climate strategy. Targets, reporting and tool consulting by Sustainable.

We support you in setting up an appropriate framework to continuously measure and monitor your climate strategy and intervene if necessary. This process includes setting specific targets, indicators and metrics to track progress and performance. We also offer support in setting up a transparent and meaningful reporting system that effectively communicates CO₂ performance and progress on the climate strategy.