Australian CEOs Not Ready on Climate Change

While Australian business leaders are aware of climate change as an issue and keen to know more about how to respond, they are not ready for a carbon-constrained economy according to a new Pricewaterhouse Coopers (PWC) survey.

PWC commissioned a major survey called Carbon Countdown to assess how prepared Australian businesses are to operate in a carbon-constrained economy, particularly in relation to regulatory requirements, investor expectations and consumer demand.

The chief executive officers or chief financial officers of 303 Australian companies with annual turnovers of at least $A150 million were surveyed.

The survey reveals that 67 per cent say they have concerns or are unsure about their compliance obligations, yet only a handful of businesses (less than 3 per cent) have implemented a strategic response to climate change.

The Federal Government intends to bring in new carbon emission laws by 2010.

The majority of survey respondents were unsure whether climate change currently represents a risk to their business, and less than 20 per cent are certain that the climate represents no risk.

While only 8 per cent of business leaders see climate change as a current risk, 15 per cent believe it will be a risk in 12 months, and 29 per cent believe it will be a risk in 2012.

The PWC survey says that given the level of uncertainty around climate change risks, it is perhaps not surprising to find that the majority of respondents have only taken minimal action to respond to climate change risks – 78 per cent have not taken any action and 98 per cent are yet to implement a strategic response.

The survey found that legislation and compliance are significant issues for business leaders, with the majority expressing concern or lack of knowledge about their obligations.

It says with the election of the Rudd Government and subsequent ratification of the Kyoto Protocol, many businesses will face the accelerated deployment of new regulatory requirements. Within the next 12 months, compliance requirements around GHG emissions will increase.

The survey findings suggest that businesses are not currently prepared to meet escalating investor expectations for robust emissions data and a well articulated strategic response.

Seventy-one per cent of respondents do not understand their company’s climate change obligations, and 78 per cent of businesses have yet to formally assess the climate change risks that will impact their businesses.

Most organisations either consider that they do not have adequate and reliable emissions data, or are unsure about the accuracy of such data.

The survey says that without the baseline data, it is not surprising only 8 per cent feel that they fully understand emissions reduction opportunities and risks.

A quarter of businesses disclose that customers are currently looking for ‘green’ or ‘carbon-neutral’ versions of products and services, suggesting that there is some level of demand in the market place.

Heightened public awareness of climate change appears to be impacting consumer buying decisions and consumer demand. Domestic consumers are already converting to green products whilst some businesses are already using climate change as an opportunity to develop innovative new products and services, drive revenue growth and improve their brand reputation in the consumer marketplace.

PWC says these findings are consistent across all industries with the exception of the Resources sector, which has come a long way through exposure to international markets and stringent demands from customers, investors and wider stakeholders.

Although other industries are lagging behind the Resources sector, PWC says it is expected that over 2008 they will move towards similar levels of understanding and action, as the forces that have shaped the Resources response are brought to bear more broadly across the economy.

Many businesses will find responding to these new expectations demanding, given the timeframes the new government has committed to.

The survey concludes that regardless of the level of performance a company is striving for, successful business leaders will be those that secure their seat at the table with policy makers and help shape the climate change policy relevant to their sector.

The PWC survey can be downloaded at http://www.pwc.com/extweb/onlineforms.nsf/docid/0EDACFFBA83712AB852573DB000F55FF