Sustainability: In The Dark On Emission Risks

Go to your next shareholders’ meeting and ask if the firm you own part of has assessed its emissions – and has plan to deal with them and their cost.
It’s likely you’ll find only seven out of every 100 firms have even measured their emissions, most have no plan in place to cut them, and, disturbingly, managers, boards and shareholders are being kept in the dark about the risks they face.
The sectors facing the biggest carbon emission bills – and opportunities to cut or avoid them – are poorly prepared.
As the Emissions Trading Scheme (ETS) was voted into law at 9.37pm on September 10, thousands of New Zealanders were completing ShapeNZ survey asking them if the organisations they work for or own have measured emissions, have had them properly verified, have plan to manage them, and regularly report to their CEOs, boards and shareholders on their emissions liabilities.
The results should concern any shareholder. Emissions pricing is coming, regardless of which parties form the next government. Most affected will be manufacturing, the primary sector (agriculture, forestry and fishing) and transport.
But the ShapeNZ results, covering 2455 respondents nationwide (and weighted to represent the population and with margin of error of +/– two percent on the national sample) reveal:
• 38 percent of respondents in manufacturing, 43 percent in the primary sector and 22 percent in transport or storage know their organisations will be involved in the mandatory ETS.
• Emissions have been measured by only 21 percent in manufacturing, five percent in agriculture, forestry and fishing, and eight percent in transport.
• Only 15 percent in manufacturing have had their emission measurements certified by an independent expert third party, five percent in the primary sector and seven percent in transport.
• Only 37 percent in manufacturing are developing an emissions reduction plan, and it gets worse in the primary sector (nine percent) and transport (seven percent).
• Only 12 percent or fewer in the three sectors have already implemented an emissions reduction plan.
It’s probably not surprising they don’t want to confess their lack of preparedness to their managers and owners:
• Only two percent of CEOs in manufacturing are getting regular reports on their organisations’ emissions status and liabilities, six percent in the primary sectors and five percent in transport.
• All but 16 percent of directors in manufacturing, six percent in primary industry and two percent in transport are in the dark on their status and liabilities, and
• Reports are being prepared regularly for only 14 percent of shareholders in manufacturing, and seven percent in each of the primary and transport sectors.
In July an Australian Institute of Management survey of 288 executives found that 80 percent knew “very little” or were only “somewhat aware” of their country’s proposed emissions trading scheme. Most Australian businesses had done no planning for an emissions trading scheme and only third were aware.
A November 2007 PricewaterhouseCoopers survey of more than 300 Australian chief executives found that 75 percent of businesses had not formally assessed the risk of climate change, and only two percent had recorded emissions data they believed would stand up to scrutiny. As many as 36 percent had no data about their business’ emissions at all.
A closer analysis of the ShapeNZ survey’s 527 business decision-maker respondents shows 41 percent agree with emissions trading (21 percent are neutral and 32 percent disagree), but only 14 percent say they feel “well informed”, and only 11 percent say their organisation has measured emissions.
Emissions pricing gives New Zealand chance to measure and cut emissions and costs, redirect investment, introduce new low-carbon technology, innovate and protect our trading position as the world moves to low-carbon economy.
Already New Zealand firms are planning more than $2.3 billion in emission trading-related or triggered investments during the next 10 years. Some New Zealand firms have already enjoyed multimillion-dollar bottom-line benefits from reducing energy and emission costs.
So ask at the next shareholders’ meeting: What’s your investment’s exposure to carbon pricing and, more importantly, what’s the plan to profit from it?

Peter Neilson is chief executive of the New Zealand Business Council for Sustainable Development.
www.nzbcsd.org.nz www.shapenz.org.nz

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