C2ES’s Markets & Business Strategy (MBS) Program conducts research and analysis at the nexus of climate change and business. Market-based environmental policies are not unique to climate change, and their success in other contexts is why they have been embraced by both sides of the political spectrum. By employing the power of the market, market-based climate policies are designed to minimize compliance costs of reducing GHGs. The MBS program also seeks to help companies, policymakers and investors understand how to successfully manage carbon risks and capture new business opportunities as changes in public policy and customer preferences transform global markets.
The MBS Program works with the business community to develop policy solutions to achieve important climate goals that provide flexibility and incentives for innovation. Market-based environmental policies are those in which a price associated with pollution emerges, and each regulated business is able to choose independently how much pollution abatement is appropriate, and how to best achieve that based on its individual circumstances. Some companies can reduce pollution more cheaply than others (because of the age of their equipment or the technology they are using), so allowing them to reduce their pollution more, and compensate for others doing less, means that the environmental objective will be achieved as cheaply as possible.
Importantly, these policies allow a great deal of flexibility by encouraging firms to achieve environmental outcomes through pollution reduction in the least costly way they can find, and allows new or unexpected solutions to emerge. Because there is a constant financial incentive, companies will continually work to reduce emissions and do not just remain at a status quo level of emissions output. By creating a dynamic market for pollution reduction, market-based policies achieve environmental objectives at the lowest possible cost in the near term and lead to even greater environmental outcomes through innovation in the long-term.
In addition to our work on markets, the MBS program educates policymakers on how to shape policies that unleash private sector low-carbon innovation and investment. To this end, C2ES collaborates extensively with the business community, primarily through our 34-member Business Environmental Leadership Council (BELC). An invitation-only group, the BELC is now the largest U.S.-based association of corporations focused on advancing business and policy solutions to climate change. The program’s report “Getting Ahead of the Curve: Corporate Strategies That Address Climate Change” is illustrative of its approach to the climate issue. The report lays out a step-by-step process for companies to reshape their core business strategies in order to succeed in a future marketplace where greenhouse gases are regulated, carbon-efficiency is rewarded, and low-carbon products are in demand.