Vic minister warns of dangers of carbon price that's too low; IAG chief warns of government underspending on adaptation; CDP5 finds many Australian companies have emissions strategy in place, but GHG disclosure poor
Victoria’s environment minister warns of dangers of carbon price that's too low
Victorian environment minister Gavin Jennings this morning encouraged a gathering of finance sector executives to play a role nationally and internationally in ensuring carbon is not priced too low.
Jennings told the UNEP FI roundtable “the value of setting carbon high rather than low, because in terms of actually sharing risk that’s a way of actually appropriately circling the level of risk …”.
Jennings told the international meeting that politicians might lack “sufficient courage” to implement the correct regulatory environment and welcomed the sector’s involvement “in actually trying to drive the price of carbon nationally, internationally [to] the appropriate level” to drive the necessary level of innovation.
The finance industry was “at the pivot point” of seeing environmental realities “and being the facilitator of wise investment”, Jennings said. The sector had a key role to play in “bringing together the environmental imperative and the commercial realities”, he said.
Jennings also announced the government would provide $250,000 to be distributed through EPA Victoria’s Carbon Innovators Network to help businesses measure their carbon emissions, identify abatement and offsetting measures and prepare for emissions trading.
IAG chief warns of government underspending on adaptation
Governments are not doing enough to prepare communities for the inevitable impacts of climate change, head of insurer IAG, Michael Hawker, told the UNEP FI roundtable today.
“There has not been enough commentary in our view in terms of what governments are doing in terms of adaptation. Over the next 20 years just to maintain the current risk levels for the community to expect today there is significant investment needed,” he said. Hawker cited as an example the need for massively increased flood levies in Victoria. In Victoria, “probably $3 billion needs to be spent on flood levies to maintain the current risk profile on floods in this community over the next five years”.
He said the “biggest problem” in driving changes in business practice to meet the challenge of climate change was that it was very difficult to evaluate the impact of future costs.
The “single biggest need” is to drive the monetisation of these risks today. “We need to be able to bring forward these future risks into today’s dollars,” Hawker said. “Only then will investors and business management change behaviour to get the critical outcomes we are looking for.”
CDP5 finds many Australian firms have emissions strategy in place, but GHG disclosure poor
Neither Australia and New Zealand yet have national emissions trading schemes but that hasn’t stopped a large number ofr companies in the two countries developing an emissions trading strategy.
The 2007 Carbon Disclosure Report for Australia and New Zealand, released today, says the number of Australian and NZ companies with such a strategy “was above that of other CDP5 geographical … listings”.
A total of 64% of ASX100 companies responded to the CDP5 survey, slightly above the global response rate of 59%. By market capitalisation, the respondent companies constituted 71% of the ASX.
Greenhouse gas emissions disclosure is “a key area that requires improvement” by Australian and New Zealand companies, the report says.
“The number of Australian and NZ companies that provided a level of emissions data so as to be valuable to investors was low on a global scale with only Asian, Indian and South African companies providing a lower level of data to investors,” the report says. Only 10% of Australian and NZ companies provided a comprehensive emissions profile that had been independently verified.
While respondents identified a range of regulatory risks “companies were less likely to articulate how physical risks might affect their business in anything more than a general way”, the report says. Larger companies were more likely to have a reasonable understanding of physical risks than smaller ones.
“Only a relatively small proportion of respondents (12%) provided evidence of a comprehensive strategy including objectives and quantitative targets and adaptation to physical risks,” the report says. “Such companies included AMP, BHP Billiton, Boral, Lion Nathan, National Australia Bank, Orica, Rio Tinto and Telstra Corporation.” The report says Rio Tinto provided “the leading response” on future emissions and how the cost of these is factored into planning.
Few companies provide managers with incentive mechanisms linked to their climate change strategy, the report says. “This is an area for improvement if companies want to demonstrate to investors they are serious in their efforts to improve their climate change position.”
Companies considered by the CDP project to be either greenhouse-intensive or climate change-exposed that did not respond to the information request included Lihir Gold and Toll Holdings.
Businesses identified as providing responses that most adequately demonstrated to investors that they have understood and assessed risks and opportunities included AMP, Coca-Cola Amatil, Foster’s Group, Lend Lease Corporation, Santos, Woodside Petroleum, AGL Energy, ANZ, BHP Billiton, Boral, Insurance Australia Group (IAG), Origin Energy, Rio Tinto and Westpac.
The report notes that in the first six months of 2007 there were 4,777 articles mentioning climate change in major Australian newspapers and business magazines, compared to 917 articles in the first six months of 2006.
Coordinator of the Carbon Disclosure Project, Paul Dickinson, said the CDP “is about dialogue backed by quality data”.
Solutions have to be found to the “huge, growing and effectively permanent disaster” of climate change, he said.
Dickinson said companies including Wal-Mart, Tesco, Nestlé, Cadbury and Proctor & Gamble had committed to sending the CDP information request to their supply chains.
The report was released at a meeting of the United Nations Environment Programme’s Financial Initiative (UNEP FI) under way in Melbourne. It will shortly be available online on the CDP website.
