1、GETTING A GRIP ON DECARBONIZATION WITH EFFECTIVE INTERNAL CARBON PRICING3 6PRISM:GETTING A GRIP ON DECARBONIZATION WITH EFFECTIVE INTERNAL CARBON PRICINGARTHUR D.LITTLE3 73 8Regulators and other stakeholders are increasing pressure on organizations to monitor,improve,and share information on their g

2、reenhouse gas(GHG)emissions.They want increased transparency around targets,timelines,and plans and are increasingly demanding actual results from decarbonization efforts.The number of emission trading schemes(ETS)and carbon taxes is rising worldwide.In 2024,75 carbon pricing initiatives were in pla

3、ce,covering 24%of global GHG emissions.Other countries are discussing implementing their own carbon pricing schemes.As the world moves toward pricing carbon,organizations must respond by better managing and steering their carbon footprint.They need to start pricing carbon internally,using techniques

4、 such as internal carbon pricing(ICP),which contributes to better trade-offs in decision-making and considers the likely future price of externalities(as costs will be gradually internalized in products).Without ICP,procurement and other departments will never be incentivized to purchase and create

5、more sustainable products.While many companies use ICP,most only deploy it in the margins of their operations.They are not leveraging its potential to become the core of their decarbonization approach,which could satisfy sustainability targets and deliver significant value to the organization.This i

6、s partially because providing effective programs in practice is not easy,thanks to the sheer complexity of organizations and their supply chains and an absence of reliable data(both from upstream and downstream emissions).Consequently,many organizations that have launched ICP programs have only appl