Carbon removal, a critical ESG challenge

By Ananya Chaturvedi

29th March 2022

The world is now experiencing global warming as a result of rising greenhouse gas (GHG) emissions.

The challenge is not really how to escape this tendency as it is how to slow it down and adapt as much as possible.


People have been burning a ton of stuff since the industrial revolution, with more every year. We release greenhouse gases in a variety of ways, from small fires in automobiles to large flames in power plants. We're dumping enough of these gases into the atmosphere that the thermal characteristics of the atmosphere are changing, trapping more heat. This is the greenhouse effect, which is the primary cause of global warming. Aside from power and transportation, there are less visible sources of emissions, such as cement, steel, agricultural emissions (nitrous oxide from soil, methane from animals), industrial and permafrost methane leaks, and so on. 


The climate catastrophe is existential, forcing every country, government, institution, and individual in the world to reconsider who we are and what we regard most. 

It also raises practical, strategic issues and a challenge for ESG stakeholders to decrease and remove carbon emissions, as well as to live and work within the planet's ability to sustain life.


Economic actors must consider carbon risk in order to be resilient in their activities. Carbon risk is a measure of an entity's vulnerability to the consequences of global warming, as well as the regulatory concerns associated with climate policy. Climate change is viewed as an externality that exposes businesses to a number of hazards.


We're currently witnessing increased market pressure, as investors become more aware of ESG (Environmental, Social, and Governance) problems and put a higher emphasis on assets' non-financial worth. Given this fact, including environmental, social, and governance (ESG) standards into your worldwide strategy has become critical - both to reduce environmental hazards and the resulting economic and health issues. 


Corporate carbon responsibility takes on new importance in the face of these issues. Companies have a key role to play in attaining carbon neutrality, guided by the principles of CSR (Corporate Social Responsibility).


Companies must now manage the carbon risk associated with their operations, as well as anticipate future environmental legislation. The moment has come to include ESG criteria into your worldwide strategy and minimize your GHG emissions with the effective solutions available today.


Without the right policy context and fund allocations, markets can only accomplish this much. Coordination on climate pricing through carbon markets or taxes is also critical to removing the incentive for firms to relocate operations from a jurisdiction where polluting business is more expensive to one where it is less expensive.


This demonstrates the critical need for governments to collaborate in order to properly share the costs of carbon-intensive industries, which too frequently fall on others while corporations benefit. A worldwide carbon price floor might aid in redressing this imbalance.


Businesses are still at danger as a result of the potential effects of climate change. Investors are becoming more aware of this, and they are assessing businesses' pledges and performance on GHG emissions and climate risk, particularly in carbon-intensive industries, and they are requiring reporting on ESG issues. CO2 levels now are greater than they have been in at least 800,000 years. It is on to businesses to redirect efforts to ensure that decarbonization is debated from boardrooms to copy rooms.
Putting industries on net-zero routes necessitates not just investing in new green technology, but also proactively phasing out carbon-intensive assets and addressing the consequences of that shift on employees and communities.


We are all at danger when it comes to climate change. No matter how much countries vary in other areas, when it comes to our climate future, it's time to set aside other conflicts. This is a great opportunity for a world that is struggling with so many challenges and different viewpoints: it is a chance to unite.


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