Navigating Carbon Impacts: Evaluating Product and Service Use
The Carbon – Products and Services Material ESG Issue (MEI) evaluates how companies handle energy efficiency and GHG emissions during product and service use, excluding financial services, which are assessed separately.
A significant portion of global GHG emissions stems from energy production and usage, impacting sectors like transportation and manufacturing. Companies in these sectors face risks associated with consumer-use carbon emissions.
Legal and regulatory challenges contribute to the rise in incidents related to product and service carbon impacts. Companies with high carbon portfolios face reputational risks and regulatory scrutiny.
Regulatory Shifts and Corporate Responsibility
Governments respond with regulatory measures to curb carbon impacts, such as fuel economy requirements and the shift to electric vehicles. Oil and gas sectors address emissions through clean fuel standards.
Evaluating Unmanaged Carbon Risks
Morningstar Sustainalytics' ESG Risk Ratings integrate business model risks and management practices effectiveness related to carbon impact, aiding investors in identifying vulnerable companies and assessing risk management efficiency.