Carbon pricing 'creates supply chain risks'

13 Dec 2010

Source: Environmental Leader
Carbon-reduction policies and marketing regulations are just some of the risks facing executives trying to green their supply chain, according to a report by Ernst & Young. As carbon pricing becomes established in various jurisdictions, organizations will face risks from compliance obligations, according to the report.

This will impact cash management and liquidity, and carbon-intensive sectors may see an increase in the cost of capital.
The Federal Trade Commission’s proposals to crack down on greenwashing presents another regulatory and reputational risk for companies, Ernst & Young says.

In general, Ernst & Young says companies should consider five categories of supply chain risk: strategic, compliance, financial, reputational and operational. Supply chain sustainability is affecting shareholder value, company valuations and even due diligence during proposed mergers and acquisitions, the report said. It added that shareholder actions on sustainability performance and transparency were up 40% in 2009.

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