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SUSTAINABILITY Stuck in second on carbon scheme Although many local organisations are starting to prepare for the inevitability of a carbon-constrained economy, it seems that for most it is still an uphill battle. While Australian businesses are beginning the journey of adapting to emerging carbon constraints, the downside is that there is a real lack of understanding about the proposed Carbon Pollution Reduction Scheme (CPRS) and a worrying surge in regulation associated with greenhouse gas emissions. These are the overriding findings in a national survey into business readiness for climate change conducted by the Australian Industry Group (Ai Group) and KPMG, titled Gearing Up: Business Readiness for Climate Change. Based on responses from 400 businesses in the manufacturing, construction and services sector, it examines what stage they are at in adapting to emerging carbon constraints, how well they are prepared for the introduction of a national emissions trading scheme and the extent of regulatory burdens in the area. “There are plenty of very encouraging signs that businesses have begun to take active steps to measure and manage their carbon footprints,” says Ai Group chief executive Heather Ridout. “Businesses also have strong plans to take these initial steps further over the coming few years.” However, the survey also points to some significant problem areas. “Businesses are not yet well informed about the Commonwealth Government’s proposed CPRS,” she acknowledges. “While some have a very good understanding of the key elements of the proposal, this is far from widespread. There is clearly a great deal more that needs to be done before we can assume business is adequately prepared for the scheme and its impacts.” According to KPMG national partner in charge of Sustainability, Climate Change and Water, Jennifer Westacott, the firm’s work with clients in this space has shown time and again that the complexity and practical challenges of being ready to respond to big regulatory and economic change cannot be underestimated. “One of the biggest concerns for business is the disturbing proliferation of regulatory measures in the climate change area in recent times – and the strong expectation of more to come” “It is essential for business to move beyond a simple compliance focus to a comprehensive business strategy that creates value and competitive advantage,” she maintains. “While some companies are leading the way and making good progress, there is much work to be done. It is critical that government and business factor in realistic lead times for all sectors of the Australian economy to be ready for this significant change.” One of the biggest concerns for business is the disturbing proliferation of regulatory measures in the climate change area in recent times – and the strong expectation of more to come. Notwithstanding some promising initial comments by the Commonwealth Government, as Ridout notes, there is yet to be any significant streamlining of regulation concerning greenhouse gas emissions. “These findings accord with a recent report by the Productivity Commission in which it counted no less than 244 regulatory measures related to greenhouse gas emissions administered by 56 different agencies,” she says. “This is emerging as a major failure of policy in Australia. The Government needs to put right at the top of the policy agenda a plan with clearly defined targets aimed at getting rid of unnecessary and productivitydamaging climate change regulations.” 26 RISK August 2009
MACQUARIE UNIVERSITY APPLIED FINANCE CENTRE EXECUTIVE TRAINING COURSES FOR FINANCE PROFESSIONALS “It is essential for business to move beyond a simple compliance focus to a comprehensive business strategy that creates value and competitive advantage” A low carbon economy is no longer an “if”, it’s a “when”, Westacott adds. “It’s concerning that only a quarter of the respondents to the survey have undertaken a formal assessment of the impacts of the CPRS, while a third have reviewed costs and opportunities to reduce cost impacts,” she says. “When business really understands the detail, it is clear this is not only a compliance and reporting issue – it is integral to business strategy. “Australian business needs to act now despite the uncertainty around the CPRS. Strong global momentum for change is building and business has to start getting ready for the low carbon economy of the future.” R GEARING UP – KEY FINDINGS • Almost three-quarters of businesses currently measure or plan over the next three years to measure their carbon footprint; • About 38 per cent have taken steps to reduce their direct emissions, reduce energy overheads, or to reduce energy inputs per unit of production; • More than 60 per cent have taken steps or plan over the next three years to invest in “cleaner” capital equipment as part of management of their carbon footprint; • Only 15 per cent were confident they had knowledge of all key elements of the CPRS; • More than 30 per cent say they have no knowledge of the key elements of the scheme; • More than 55 per cent are currently not taking steps to become better informed; • Almost one-third had no knowledge of the main elements of the proposed scheme; • Close to one-quarter have undertaken a formal assessment of the impacts of the CPRS; • About one-third have assessed cost impacts of the CPRS and ways to reduce these; • More than one-quarter have assessed opportunities arising from the CPRS; • Manufacturers are the most active in taking steps to assess the impact and costs of the CPRS; • Sixty per cent of businesses intend to boost the capacity of existing personnel to assist in managing their carbon footprint; • Almost four in 10 reported an increase in costs of complying with regulation in the area over the past three years; and • Across businesses of all sizes, almost 70 per cent expect to be allocating extra resources over the next three years to compliance with regulations in the areas of greenhouse gas emissions and energy use. MAFC is the home of the world’s largest Masters of Applied Finance Program. We specialise in courses specifically tailored for finance professionals. All our lecturers are highly qualified with extensive industry experience. STRATEGIC RISK MANAGEMENT – GOVERNANCE, ORGANISATION & FRAMEWORKS *New Course* Melbourne 14 & 15 September – 2 days Within the context of the current global financial crisis, this new course outlines the means to ensure that the risks to your firm’s strategies are considered and mitigated. Lessons learned from recent failures of risk management are examined through relevant case studies. MANAGING SYSTEMS RISK Sydney (CBD) 22 & 23 October – 2 days The re-engineering of firms’ ‘core systems’ in response to changing customer demands has increased interest in techniques for managing Systems Risk. Participants will gain a working knowledge of and an approach to managing new regulatory requirements as they relate to IT Strategy, E-commerce, Infrastructure and Business Continuity. MANAGING OPERATIONAL RISK Sydney (CBD) 10 November This practical course meets the growing need in industry for operational risk managers to focus on emerging models and tools for identifying, measuring, monitoring and mitigating operational risk. The course covers the impact of the latest regulations in this area by the ASX, APRA and Basel II. These courses are delivered by DR PATRICK McCONNELL who is a published author and an expert in process improvement. www.mafc.mq.edu.au for information, pricing and registration email shortcourses@mafc.mq.edu.au telephone +61 2 9223 6231 CRICOS Provider Code 00002J RISK August 2009 27
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