Qualiexpert

In this newsletter we look at how greenhouse gases and carbon dioxide have become currency and why your company needs to pay attention to this new currency, also known as the “regulated carbon market”.

In Europe, with the development of EU ETS - the European Union Emissions Trading System.., greenhouse gas emissions have changed the strategic landscape for companies.

The subject may seem distant, technical or complex, but it is already knocking on the door of many companies, even those that never imagined dealing with carbon.

How does this currency work in practice in Europe?

EU ETS held a benchmarking based on the performance of companies that emit less greenhouse gas per ton produced, sector by sector (it's as if she's saying: “if the best can do it, so can you!”), and this benchmark is changed in cycles.

If the national environmental authority notifies the company, it is obliged to measure and report your greenhouse gas emissions every year to these authorities, under penalty of administrative or financial sanctions. The reports must be verified by independent certifiers and issued by April 30th of the following year.

According to technical guideline, if the company exceeds this emission quota per ton produced during the year and doesn't buy extra carbon credits on the market, it pays out of its own pocket and the fine is heavy: 100 euros per ton of CO₂ it has exceeded its quota.

On the other hand, those who emit less greenhouse gas can sell this surplus as an economic asset, carbon credits.

In Europe, emitting CO2 has come to have a financial cost; reducing emissions has come to generate value and often revenue, which is felt in the cash flow. This whole process is known as the “regulated carbon market”.

And in Brazil?

Here, the issue is moving forward. In practice, this means that Brazil is structuring its the regulated carbon market itself with rules, emission limits and the possibility of negotiating permits, as is already the case in Europe.

The movement is clear: those who anticipate will be better prepared when the rules become mandatory.

The Brazilian regulated market will also require a structure for monitoring, reporting and verifying greenhouse gases, just like the European market.

What kind of company are you?

At Qualiexpert, we have seen four very distinct profiles on the market and perhaps you identify with one of them:

The Surprised

Totally oblivious to the issue of greenhouse gas emissions, climate change and not putting carbon in the company's strategy. Has been surprised by customer demands, global chains or market pressures.

What you can do now: Start from scratch, with technical support. The first step is to measure your greenhouse gas emissions. This will provide clarity about risks and opportunities, and help avoid future losses in the market or due to non-environmental reputation.

The Awakened Beginner

It recognizes the importance of the issue, but is still taking its first steps. Perhaps it has carried out a pilot GHG emissions inventory with online calculators or started internal awareness-raising discussions on the subject with the Board of Directors.

What you can do now: Organize the information, structure the data and ensure that the inventory complies with the sector's reference standards, such as ISO 14064-1.

The Strategic Preparedness

It already measures emissions, has some climate governance and is aware of national and international regulations. For him, now is the time to consolidate the strategy and ensure compliance.

What you can do now: Improve the greenhouse gas information management system, carry out internal audits periodically, integrate the issue into the certified management system and implement improvements in emission reductions.

The Pioneer Navigator

It already has an emissions inventory, reduction targets, strategic carbon governance and participates in initiatives leading the sector. They are ready to position themselves in the regulated market, negotiate credits and influence policies. For this profile, the market is an opportunity to expand leadership.

What you can do now: Taking advantage of the momentum gained to influence policies, generate revenue from carbon credits and position itself as a leading reference in the sector

Staying alert is one way to protect yourself

Carbon is no longer just an environmental indicator and has come to influence strategic and business decisions.

That's why understanding what stage your organization is at is the first step to taking action. In the carbon game, those who anticipate turn risk into advantage.

Understanding your greenhouse gas emissions, even if it's a simple first step, can make all the difference in the future.

More than complying with rules, it's about keeping the company relevant, competitive and prepared for a world that is changing fast.