Environmental Engineering Reference
In-Depth Information
Chapter 13
Carbon as an Emerging Tool
for Risk Management
Tenke A. Zoltáni
Islan Asset Management, Switzerland
ABSTRACT
Since 2005, when the European Union Emissions Trading Scheme (EU ETS) launched, green adoption in
business and industry has been marred by fraudulent carbon credits, VAT swindlers and carbon cowboys,
inefficiencies of a nascent market, and not least of all by legislative uncertainty. The disrepute afforded
by these examples hindered low carbon growth and deterred emerging business models from adopting
more carbon friendly practices. But, as this chapter argues, the shift toward liberal environmentalism
has yielded a new generation of businesses seeking to incorporate carbon assets, emissions trading, and
sustainability strategies across the value chain. Central to this shift is the notion of carbon as a tool for
risk management in businesses, which occurred through the instrumentalisation of CO
2
into a tradable
asset. By utilising carbon as a financial instrument, businesses are able to manage project risk, market
risk, and reputational risk more effectively. This chapter demonstrates this argument through industry
examples and provides practical advice for businesses today.
INTRODUCTION
carbon cowboys, inefficiencies of a nascent mar-
ket, and not least by legislative uncertainty. The
disrepute afforded by these examples hindered
low carbon growth and deterred emerging busi-
ness models from adopting more carbon friendly
practices. But, as this chapter argues, the shift
toward liberal environmentalism has yielded a new
generation of businesses seeking to incorporate
Since 2005, when the European Union Emissions
Trading Scheme (EU ETS) launched, green adop-
tion in business and industry has been marred
by fraudulent carbon credits, VAT swindlers and
