Designing a Proxy Carbon Price Strategy for Smith College
This thesis to Design a Proxy Carbon Price Strategy for Smith College was written to internalize the social cost of carbon emissions into financial decision-making. A proxy carbon price is a virtual price - meaning it does not apply an actual fee - to acknowledge the social cost of carbon in financial decisions. In general, the proxy carbon price can be used to evaluate investment or purchase decisions. The institutional driver for this thesis derives primarily the Study Group on Climate Change (SGCC) request to “Develop an internalized cost of carbon emissions—such as a carbon-proxy price—to help guide major capital budget management and other decision- making processes” (SGCC, 2017). This thesis identified that many business and governments are using carbon price strategies, but only four academic institutions are doing so. As a consequence, there is a lack of peer-reviewed literature, which must be filled through experimentation and publication. In order to understand how a proxy carbon price might be implemented at Smith College this thesis identified and experimented with strategies to incorporate the proxy carbon price into financial decisions, using a mix of background research, stakeholder interviews, and pilot examples. This thesis provides 8 recommendations regarding a Proxy Carbon Price Strategy for Smith College which would be applicable to other insitutions.