Internal carbon pricing helps futureproof businesses

SINGAPORE’S state investor Temasek recently announced that it would raise its internal carbon price as it moves to cut the net carbon emissions of its investment portfolio. This internal price will rise to US$50 this year from the current US$42, and progressively onwards, with the expectation that it will reach US$100 by the end of the decade.

How does an internal carbon price work? This is a monetary value placed on each tonne of carbon emissions for a particular business. Attaching a price tag to carbon emissions makes the otherwise amorphous concept readily understandable throughout an organisation.

In 2020, more than 2,000 companies worldwide – including nearly half of the world’s 500 biggest companies by market cap – reported to global disclosure body CDP that they are using or planning to implement an internal carbon price within 2 years.