Climate regulation risk intensifies as CPRS stalls
While the vast majority of Australian companies no longer consider the Federal Government’s stalled Carbon Pollution Reduction Scheme (CPRS) to be a serious business issue, concern is building about what regulatory alternatives might take its place, recent research has found.
As a result of the government’s deferral of the CPRS to 2013 at the earliest, dependent on the actions of other major economies, the research found that 70 per cent of Australian companies now consider the CPRS to pose either minimal or no risk to their business, with 54 per cent maintaining that the scheme’s wholly uncertain fate now had no impact on future investment decisions.
In contrast, 49 per cent of companies believe that the introduction of some form of climate change regulation was considered to be either a medium or high risk issue for their business.
“This finding confirms that while business considers the CPRS to be all but dead, anxiety is still high about what will fill the void,” said Mark Hamill, managing director of Protiviti, which conducted the research.
“There’s a sense that regulation or a future price on carbon is inevitable. However with the Federal Opposition proposing a very different scheme, coupled with the recent change in Prime Minister and the Greens signaling support for a carbon price, it all adds up to a highly uncertain regulatory environment.”
At present, companies’ most significant climate change-related risk was the impact on supply chain costs (30 per cent) followed by the impact of domestic climate-related regulation as well as the potential effect on future market trends for products and services (24 per cent).
“Any climate-related regulatory change will affect the way business is done and with it, the cost of inputs and outputs,” said Hamill.
“At the moment, businesses are chanting the mantra of cost containment in an economy that remains subdued in many sectors. Naturally, companies are concerned about margins getting squeezed even further if their cost structure changes as a result of the impact of carbon regulation.”
On a more positive note, many companies found that the National Greenhouse & Energy Reporting Act (NGER Act), under which organisations are required to report their energy production, consumption and greenhouse gas emissions, has had a positive business impact, with 27 per cent stating it had helped them to identify energy efficiency opportunities for the business.
News