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IRRC & Trucost study compels investors to evaluate carbon exposure of S&P 500

Lisa Hagerman, Tuesday, June 2nd, 2009

A new study released today by the Investor Responsibility Research Center (IRRC) and Trucost, “Carbon Risks and Opportunities in the S&P 500” analyzes the potential financial implications of applying a carbon price to global emissions for companies listed on the S&P 500.  Some of the highlights of from the press release on the report include:

  • Carbon costs would total over $92.8 billion if a market price of $28.24 – Trucost’s estimate of the carbon market price in 2012 – were applied to each metric ton of emissions from companies in the S&P 500 and their direct suppliers such as electricity providers. This represents more than 1% of revenue from these companies, and some 5.5% of combined EBITDA.
  • On a company-by-company basis, financial risk varies widely. Earnings could fall between less than 1% and 117% by company, if carbon costs were incurred.

“The cost of carbon emissions has been passed to the public and not reflected in the financial statements of companies,” said Jon Lukomnik, program director of the IRRC Institute, which commissioned the study. “The analysis makes clear that a cap-and-trade system is a real game changer. A number of companies will have to reform how they think about carbon emissions and the associated costs, or their bottom line will suffer greatly,” Lukomnik said.

The press release can be downloaded here (PDF) and the full report is available at IRRC and Trucost websites. The report also is included in the Social Science Research Network Corporate Governance Network.

 

posted 3:13PM 06/02/2009 by Lisa Hagerman

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4:48am 08/20/2010

program director of the IRRC Institute, which commissioned the study. “The analysis makes clear that a cap-and-trade system is a real game changer. A number of companies will have to reform how they think about carbon emissions and the associated costs, or their bottom line will suffer greatly,” Lukomnik said.

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