Carbon Investments

The Situation

Driven by increasing regulatory pressures, stakeholder expectations, and the transition toward a low-carbon economy, a large energy company recognized the importance of addressing climate change risks and opportunities in their financial decision-making. The key challenges the company faced included:

Inconsistent approach to incorporating carbon factors across different business units and investment opportunities.
Lack of a standardized methodology for quantifying and embedding greenhouse gas (GHG) compliance obligations into asset-level and project-level economics.
Limited adoption of carbon pricing and emissions trading considerations among investment teams.
Difficulty identifying and quantifying potential revenue streams from low-carbon ventures and carbon credit generating opportunities.
A need for a robust governance structure to ensure consistent application of the carbon-related investment framework.

How We Advised

J.S. Held leveraged its expertise in carbon markets, sustainability, and financial advisory to develop a tailored capital allocation framework for the client. Key components included:

Standardized GHG Quantification Methodology: J.S. Held worked closely with the client to develop a standardized methodology for quantifying GHG emissions at both the asset and project level. The methodology ensured consistent and accurate quantification of Scope 1 and Scope 2 emissions across the organization.
Carbon Pricing and Policy Scenarios: J.S. Held assisted the client in defining relevant carbon pricing and policy scenarios to be used in investment evaluations, including development of a "Current Case" scenario based on existing regulations and a "High Case" scenario aligned with more stringent climate policies. The carbon pricing assumptions considered jurisdictional differences and projected price escalations over time.
GHG Cost and Opportunity Assessment: The team developed a framework for assessing the financial impact of GHG emissions on investment opportunities. The framework considered potential revenue opportunities from carbon credit generation, such as offset credits and low-carbon fuel credits, based on project-specific eligibility and quantification methodologies.
Integration into Investment Metrics: J.S. Held collaborated with the client's investment committees to integrate carbon considerations into key investment metrics and decision-making processes. These metrics provided a comprehensive view of a project's financial performance while considering its carbon impact.
Governance and Decision-Making: J.S. Held assisted in establishing a governance structure and decision-making process that ensured consistent application of the carbon-related investment framework. Regular monitoring and reporting mechanisms were put in place to track the performance of low-carbon investments and ensure alignment with the company's sustainability goals.

The implementation of the carbon-related capital allocation framework delivered significant value to the client, including improved decision making, enhanced risk management, better identification of low-carbon opportunities, and overall alignment with the company’s sustainability goals

Key Contact

Andrea Korney
Vice President of Sustainability
ESG & EHS Digital Solutions
+1 725 567 0668
[email protected]

Related Practice Areas

> ESG & EHS Digital Solutions
We provide environmental, health, and safety (EHS); sustainability; and environmental, social, and governance (ESG) advisory and technology services globally. Our team draws on a vast array of experience in a diverse range of fields, including management consulting, regulatory compliance, information technology, and occupational health and safety.

> Sustainability & ESG Services
Our corporate sustainability and environmental, social, and governance (ESG) consulting services are focused on addressing the triple bottom line – people, profit, and planet. Throughout the sustainability / ESG journey, we help business stakeholders shape their goals and strategies, select and implement technologies, enhance operations, mitigate risks, strengthen governance, and become more reputable and sustainable to drive long-term business value.

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J.S. Held, its affiliates and subsidiaries are not certified public accounting firm(s) and do not provide audit, attest, or any other public accounting services. J.S. Held is not a law firm and does not provide legal advice. Securities offered through PM Securities, LLC, d/b/a Phoenix IB, a part of J.S. Held, member FINRA/ SIPC or Ocean Tomo Investment Group, LLC, a part of J.S. Held, member FINRA/ SIPC. All rights reserved.

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