Risks and challenges

Arguably the sector most susceptible to the financial risks associated with climate change, the energy and natural resources industry – as one of the largest sources of CO2 emissions globally – will be particularly hard-hit by the threat of mandatory carbon legislation. Due to its carbon-emissions intensive products and long development process, the oil and gas segment will be threatened by the financial implications of carbon laws. The increase in ethanol and renewable fuels is also a real risk for the industry. Additionally, the mining sector is constantly challenged by questions of energy security and, while it is common practice to use diesel generators, they still require fuel to be transported to remote mining areas.

Electricity power producers are even more vulnerable to the financial risks of climate change. These coal-fired and other high-emission power plants are colossal polluters and, with carbon-emissions legislation tightening globally, they may have to bear substantial compliance costs.
Litigation concerning corporate contributions to global climate change is also another real threat to this industry, with the precedent already existing in lawsuits against large utilities for significant contributions to climate change.

Opportunities:

Since it benefits their corporate image and reduces the chances of future litigation, leading utilities are trying to diversify into renewable energy sources and are offering clean energy products, such as solar, wind and biofuels.

In the oil and gas segment, rather than seeing the move to clean energy as an impediment, companies are harnessing these opportunities and are positioning themselves in the biofuels industry. Leading players are undertaking energy efficiency, renewable energy and education programmes, safe in the knowledge that they are aiding both their reputation and their profitability by reducing their own emissions while searching for alternative fuels.

Through the implementation of carbon credit projects, waste streams, such as gas flaring and methane emissions, are also being viewed as possible sources of revenue. By communicating their progress to their customers, leading companies are improving their reputations, gaining positive brand exposure and reducing perceived investor risk.

What can GCX do for you?

• Efficiency:

Through determining your carbon footprint and a business-case energy efficiency audit, GXC will assess your company’s carbon emissions and help you to set targets and budgets that suit your business. From here, GCX will help you to implement reductions and achieve your cost-cutting goals, which include education campaigns in your organisation to engrain climate-change awareness in your company’s culture and to ensure that employees support internal initiatives. GCX will also undertake to monitor your emissions on a continuous basis. The journey towards becoming a low-carbon business also offers significant PR and marketing opportunities that can be harnessed to differentiate your company as a climate-change leader.

• Adaptation:

Adaptation involves the adjustment of systems in order to respond to actual or expected weather events or their physical manifestation. These adjustments mitigate the harm or exploit the beneficial opportunities that arise from these events. GCX will assess the effect that climate change will have on your supply chain and business as whole. Our specialists will highlight the risks inherent in your business model and identify solutions to this risk and help you to implement them.

• Legislation and reputation:

GCX will determine the effect that carbon laws will have on your business and identify the best ways to ensure your continued profitability, which also include establishing the reputation risks posed by being affiliated with a high carbon-emissions business.

• Converting waste into energy:

Companies need to realise that their waste offers energy-efficiency and revenue opportunities through carbon credits. GCX will work with you to ascertain waste streams that offer these opportunities, through projects such as fuel switches (coal or gas to biomass), waste-to-energy (gas flaring utilisation) and waste heat recovery processes.

• Investors:

Through helping your company to formulate an emissions-reduction communications strategy, GCX will help you to assure investors that your company is managing the physical, legislative and reputation risks associated with climate change.