How Can Manufacturers Manage the Global Carbon Tax?
The United Nations Intergovernmental Panel says that putting a price on carbon aids in limiting the mean temperature globally to two degrees Celsius above pre-industrial levels. The new carbon tax has presented opportunities and challenges for many manufacturers.
The extra costs and complexities to compliance have been a lot to deal with amongst the current supply chain issues. As a result, manufacturers have been making significant changes within their operations.
What are your options?
No matter the side you take (for or against carbon taxes), the 2021 World Economic Forum Global Risks Report pointed out that four of the top five global risks were related to the environment. This is the first time in history. The risks include extreme weather, climate action failure, human environmental damage and biodiversity loss.
Setting aside cash flow to minimize the cost of climate change is not so easy when contending with inflation and supply chain disruption. But according to Risky Business, not facilitating positive changes could become more costly later (an estimated $12 billion annually for residential and commercial ratepayers).
The climate crisis seems to be worsening, and the pressure manufacturers feel is getting worse too. As a result, measures like the carbon tax seem inevitable as countries come together to find a solution.
How to manage
Manufacturers can be proactive. By assessing the current state of your operations, you will understand how the tax can impact you and how you can be compliant. Therefore, manufacturers should be prepared to do the following to stay afloat:
- • Research what it takes to be compliant.
- • Map out projections, operating costs and future plans now.
- • Review your procurement process and any supporting data.
- • Track and record your impact and exposure to evaluate taxes.
- • Prepare for bold decision-making to make the necessary changes.
- • Update your business and operating models.
You can begin this process by vertically integrating your supply chain, so review your production, sales and logistics now. For more information on what’s happening in the industry, keep following our blog.