The thesis gives an insight into carbon shadow pricing as a tool to internally price carbon and account for carbon externalities in investment decisions. The paper first establishes the need to mitigate greenhouse gas emissions. It continues to give an overview of the risks and opportunities of climate change, its effects on businesses, and how corporations are impacted primarily financially. The third chapter introduces carbon shadow pricing as one way of internal carbon pricing. It covers the economic background of carbon pricing, the two most common pricing instruments on a governmental level, cap-and-trade systems, and carbon taxes. Further, this chapter introduces the rationale of companies' internal carbon pricing and carbon shadow pricing. Lastly, chapter three presents the method of setting a price on carbon. The fourth chapter analyzes the business case of Siemens AG. At the site in Hebburn, the heating system had to be modernized; two options were feasible and considered: an air-source heat pump and a gas-fired boiler. The calculation develops how high the shadow price should have been to mitigate carbon through choosing an air-source heat pump. A carbon shadow price is estimated for the case of Hebburn, by determining the switching value, through a cost-effectiveness analysis. Lastly, this thesis discusses research findings, the specific business case calculation, and the theoretical background. Especially the limitations of the rising capital expenditures are considered.