In the wake of the AIG scandal, it’s refreshing to see that some companies are tying company bonuses to significant achievements for both the corporation and society. National Grid- a London – based utility company – has has become the latest and biggest UK firm to link the company’s success in reducing its carbon footprint to executive remuneration packages. The company will also implement carbon budgets across its entire operations starting next month, and incorporate the cost of compliance within those budgets.
If you can’t measure it, you can’t cut it, so National Grid has been conducting a detailed greenhouse gas emissions inventory over the last 12 months to provide senior management with the tools to track each division’s carbon footprint, and take the steps necessary to improve the overall environmental performance. Although the remuneration committee still hasn’t decided what weight to give carbon reductions in compensation packages, a National Grid spokeswoman expects that it will become an increasingly important metric.
And that’s because National Grid has decided to cut their GHG emissions by 45 percent by 2020. The company will also apply a $40 per metric ton shadow price to carbon – as recommended by the UK government – to future investment decisions, including electricity and gas network construction projects and fleet and facilities’ management. When you price carbon at a significant rate, improving energy efficiency, purchasing plug-in hybrids and electric trucks, and investing in renewable energy becomes as easy as kissing my hand.
This new policy won’t only reduce emissions across the pond. In the US, National Grid distributes electricity to nearly five million customers in Massachusetts, New Hampshire, New York and Rhode Island, and delivers gas to 3.4 million customers in New York, Massachusetts, New Hampshire and Rhode Island.
It will be interesting to see how many American companies take note. This could be the best British Invasion since The Beatles appeared on Ed Sullivan.