Pricing Carbon Risk in Business Models

"Pricing Carbon Risk in Business Models" refers to the integration of potential costs associated with carbon emissions and climate change into a company's financial and strategic planning. As governments implement stricter climate policies, such as carbon taxes and emissions trading systems, businesses face increasing financial risks related to their carbon footprint. Incorporating carbon risk pricing involves estimating the future cost of carbon emissions and embedding this cost into investment decisions, project evaluations, and product pricing. This approach helps businesses anticipate regulatory changes, avoid stranded assets, and align with investor expectations focused on sustainability. By internalizing carbon costs, companies can incentivize low-carbon innovation, improve resource efficiency, and enhance resilience against climate-related financial risks. Overall, pricing carbon risk promotes transparency, supports the transition to a low-carbon economy, and ensures business models remain viable under evolving environmental regulations.