Carbon price decision trigger for business
Wednesday, 2 March 2011 — Businesses need to prepare today for a carbon priced future in just over 12 months says EY.
Following the announcement of the climate change framework by the Federal Government, it is critical that businesses respond, despite the continued uncertainty and focus on the development of climate change and emissions reporting strategies. Otherwise, they will not be ready to respond to a carbon price EY’s climate change and sustainability leader Mathew Nelson says.
Mr Nelson said: “Climate change strategies can make money, save money and mitigate risk as businesses transition to a low carbon economy. Businesses that act sooner and prepare their readiness will be better equipped to capture these opportunities.”
However, Mr Nelson said that whilst having the proposed framework provided businesses with some clarity, there is a long way to go and further details were needed in time for businesses to adequately prepare for the 1 July 2012 start date.
“Obviously, investors don't like uncertainty and while the introduction of a price on carbon is no surprise, the sooner the Government can be clear about the detail, the sooner investors can properly factor that into valuations and transactions, and businesses can appropriately price their products and services.”
Mr Nelson detailed three key areas of focus for business when preparing for 1 July 2012.
- Refresh climate change action plans and strategies: Businesses should re-focus their climate change strategies now, waiting for further certainty is not an option. Executing on a clear vision that addresses the financial and strategic implications as well as managing the risks to core business is imperative. Embedding climate change strategies into core business activities and establishing internal governance processes takes time, and starting now will ensure that businesses achieve both short term objectives and create long term shareholder value.
- Review monitoring and reporting procedures: Although businesses are increasingly monitoring and reporting their emissions under the National Greenhouse and Energy Reporting System, a carbon price takes these requirements to a new level. It is imperative for businesses to track and monitor greenhouse gas emissions more frequently and increase the focus on the robustness of data so they can make efficient decisions.
- Provide feedback during the consultation period: Certainty is needed on the detail of the scheme design, particularly for the level and form of assistance to industries, and the ability to access the international carbon markets. Specifically, whether international emissions units will be included in the climate change framework during the fixed price period. EY encourages businesses to provide feedback to the Government during the consultation period. The use of lowest cost abatement opportunities are important as they can minimise costs to businesses, and they will need to consider what trading capabilities will be required once the transition to flexible prices takes place.
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