The Australian Industry Group (Ai Group) / KPMG paper Gearing Up: Business Readiness for Climate Change reports that while businesses are beginning the journey of adapting to emerging carbon constraints, there is a lack of understanding about the proposed Carbon Pollution Reduction Scheme (CPRS) and a worrying surge in regulation associated with greenhouse gas emissions.
Based on a survey of around 400 businesses in the manufacturing, construction, and services sectors, the report examines what stage businesses are at in adapting to emerging carbon constraints; how well businesses are prepared for the introduction of a national emissions trading scheme; and the extent of regulatory burdens in this area.
Ai Group Chief Executive Heather Ridout said the news from business on climate change preparedness is mixed.
“There are plenty of very encouraging signs that businesses have begun to take active steps to measure and manage their carbon footprints,” Ridout said. “Businesses also have strong plans to take these initial steps further over the coming few years.
The survey also points to some significant problem areas, she continued. “While some businesses have a very good understanding of the key elements of [the CPRS], 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."
KPMG’s National Partner in Charge of Sustainability, Climate Change & Water, Jennifer Westacott, said that KPMG's work with clients in this space has shown time again that the complexity and practical challenges of being ready to respond to major regulatory and economic change can't be underestimated.
“It's essential for business to move beyond a simple compliance focus to a comprehensive business strategy that creates value and competitive advantage.
"While some companies are leading the way and making good progress, there is much work to be done. It’s critical that government and business factor in realistic lead times for all sectors of the Australian economy to be ready for this significant change," Westacott said.
Another issue, said Ridout, 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, there is yet to be any streamlining of regulation over greenhouse gas emissions.
“Ai Group urges the Government to put right at the top of the policy agenda a plan with clearly defined targets aimed at getting rid of unnecessary and productivity damaging climate change regulations," Ridout said.
Westacott said that a low carbon economy is no longer an 'if': it’s a 'when'. She said she is concerned that only a quarter of the respondents to the survey have undertaken formally assessed the impacts of the CPRS while a third have reviewed costs and opportunities to reduce costs impacts.
“When business really understands the detail, it’s 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.”
Key findings from the survey include:
- Almost three-quarters of businesses currently measure or plan over the next three years to measure their carbon footprint;
- Around 38 per cent of businesses have already taken steps to reduce their direct emissions, reduce their energy overheads; or to reduce their energy inputs per unit of production;
- More than 60 per cent of businesses have taken steps or plan over the next three years to invest in “cleaner” capital equipment as part of their management of their carbon footprint;
- Only 15 per cent of businesses surveyed were confident they had knowledge of all key elements of the CPRS;
- Over 30 per cent of businesses say they have no knowledge of the key elements of the scheme;
- Over 55 per cent of all businesses are currently not taking steps to become better informed;
- Almost one-third of businesses had no knowledge of the main elements of the proposed scheme;
- Close to one-quarter of businesses surveyed have undertaken a formal assessment of the impacts of the CPRS;
- Around one-third of respondents have assessed cost impacts of the CPRS and ways to reduce these impacts;
- More than one-quarter of respondents have assessed opportunities arising from the CPRS;
- Manufacturers are the most active in taking steps to assess the impacts and costs of the CPRS;
- Sixty per cent of businesses intend to boost the capacity of their existing personnel to assist in managing their carbon footprint;
- Almost four in 10 businesses surveyed reported an increase in costs of complying with regulation in these areas over the past three years;
- Across businesses of all sizes, almost 70 per cent of respondents 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.
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