As global legislation sets targets for climate change, Exec Digital takes a look at how stock markets are meeting those standards
By Rebecca Waters and Ellie Duncan
The adoption of the Kyoto Protocol back in 1997 created a framework for the international carbon market that required countries to act by reducing carbon emissions.
Canada ratified the treaty, which stipulates that it reduce emissions to 6 percent below its 1990 levels during the 2008-2012 commitment period, in December 2002.
However, the US is yet to ratify the protocol, despite being one of the largest per capita emitters of carbon dioxide from the direct combustion of fossil fuels. Nevertheless, US companies have taken a proactive approach to emissions reductions and President Obama is keen to fast-track the American Energy and Security Act (ACES).
Meanwhile, Kyoto prompted the UK to set up its own framework, the Climate Change Bill. The aim of the Bill is to achieve a 60 percent cut in the UK’s carbon emissions by 2050, with an intermediate target in 2020 of between 26 percent and 32 percent. The impending Carbon Reduction Commitment, set for April 2010, also looks set to shake-up the UK industry’s obligation to carbon management. It wants to see a reduction of 1.2 million tonnes of carbon per year by 2020 among large, non-energy intensive organisations.
Since the introduction of Kyoto, there has been increasing pressure on organisations and corporations listed on the stock markets to publicly reveal their carbon credentials. In 1999, the Dow Jones Sustainability Index was launched, setting benchmarks and tracking the financial performance of the leading sustainable companies worldwide.
Growing awareness of the environmental issues facing the world and businesses today has put sustainability top of the agenda. But is it regulation that is forcing companies to act, or has the impact on shareholder value created a new sense of urgency? And are there wider financial implications of a compliance market?
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