May 16, 2011 - 4:00pm
Today saw the launch of important new analysis from GE/ The Economist Intelligence Unit which lifts the lid on much greater readiness for low carbon economic opportunities in Australian industry than polluter scare campaigns, special pleading and current media coverage would have you believe. In today’s shabby public policy environment CEOs are almost obliged to be seeking better deals by whatever means, but this report shows many are ready to move on when and if a scheme to make large companies finally start to pay for their carbon pollution begins.
The Climate Institute commends GE for commissioning this illuminating research. Their release and contact details are below, and full report can also be found here.
With regards to scare campaigns, the Minerals Council of Australia (MCA) are once again providing misinformation on jobs impacts - headlined as "23 000 jobs at risk: miners" in The Australian today.
You can also find our latest jobs factsheet/mythbuster here – we are currently finalising a series of these factsheets which we will share in coming updates. As detailed in this factsheet our calculations show that under the CPRS-5 scenario modelled by Concept Economics for MCA, employment in the Minerals sector will grow by around 48,000 jobs by 2020, compared to 2009 levels – a 34% increase.
CFMEU released a report on these and other scare campaigns during the last debate.
Indeed, Minerals Council of Australia head Mitch Hooke, when pushed on this admitted:
“…we are not suggesting this is scorched earth. We know we are going to continue to grow.” (See p57 of Senate Economics Committee report)
There has also been commentary comparing the impact of the pollution price to that of the GST. Treasury documents released under FYI conclude that the impact of a $20/tonne pollution price would be 3.5 times LESS than the CPI impact of the introduction of the GST.
For further information:
John Connor | CEO, The Climate Institute |
GE MEDIA RELEASE
Australian businesses are preparing for the low carbon transition, but regulatory uncertainty is holding back progress: Economist Intelligence Unit report launch GE -commissioned report investigates business readiness for the low carbon future Sydney – Australia, 16 May 2011 – Australian business readiness to move to a low-carbon economy is higher than expected but an unclear regulatory environment is hampering progress. That’s the finding of a new Economist Intelligence Unit report, commissioned by GE , released today.
The survey of 131 senior executives in Australia across a broad mix of industries, found that more than half (54 percent) felt their organisation was ready for a low-carbon future, with the vast majority (70 percent) already implementing strategies to reduce their own carbon emissions. Notably, 29 percent of businesses are already modeling a carbon price into operations, with another 33 percent planning to do so.
64 percent of respondents cited an unclear regulatory environment as the biggest barrier to making further progress. This regulatory uncertainty is holding back investment, and some businesses even voiced concern that they were making poor investment decisions as a result.
When it comes to Australia’s transition towards a low carbon future, 54 percent of respondents feel that the opportunities outweigh the threats, while 24% are neutral. Some of the opportunities highlighted include improvement in customer relationships, and the development of new products and services.
Many companies are investing in resources today to create these opportunities – 38 percent have new dedicated roles and teams to identify products and services for a lower carbon economy.
Commenting on the report, Steve Sargent, President and CEO of GE Australia and New Zealand said: “Businesses are already on the move. The findings suggest a broad acceptance and preparedness for the transition to a low carbon economy. The survey found that a majority of businesses feel the opportunities outweigh threats but uncertainty is holding us back. A clearly defined carbon policy framework is a crucial element to encourage further change in business behavior.”
AGL calls for certainty
Tim Nelson, head of economic policy and sustainability, AGL said: “The longer we wait for certainty, the more bad investment decisions are being made. Energy firms will minimise their capital at risk by deploying the lowest-cost electricity generation equipment, which is generally the least efficient.”
Woolworths ahead of the curve
Woolworths is a company that is already factoring carbon price into its investments. Armineh Madirossian, Woolworths's group sustainability manager, said the company is well prepared for the new carbon-pricing scheme, having undertaken analysis of potential risks and opportunities that may arise from a low-carbon economy.
“We have to remain competitive...so we have put every possible scenario on the table and looked at what that might mean for us. It’s an opportunity to say what is right for the business, which investments make sense and which areas can bear an additional cost,” says Ms Madirossian. “We do factor in a shadow carbon price into future investments.”
Regulatory uncertainty has hampered decision making. Ms Madirossian says that more details about the proposed carbon price would definitely drive more investment into low-carbon technologies—investments that currently do not meet Woolworths’s return-on-investment hurdles.
GE’s Australian Low Carbon Readiness Index is the first of an annual series analysing business preparedness for a low carbon future in Australia. The key findings are:
- An unclear regulatory environment is holding back implementation of carbon-reduction strategies. 64% of respondents rate unclear regulatory environment as the main barrier to making further progress on carbon reduction in their company.
- Despite the uncertainty, most firms (70%) do have a strategy for reducing carbon emissions. More than two thirds are reporting against specific, measurable targets to reduce energy usage but only 29% have assessed the impact of different carbon prices on their business. 31% have no current plans to model a carbon price into their planning.
- More than half of the Australian businesses surveyed feel ready for the transition to a low-carbon future. 54% rate their company’s readiness as excellent or good, 34% say they are about average, with just 12% saying poor or very poor. This is markedly different from their view of the general economy’s readiness: only 15% think the Australian economy’s readiness is excellent or good, 54% think it’s poor or very poor.
- Australian businesses recognise that the opportunities outweigh the threats in a low-carbon economy. 54% feel the opportunities outweigh the threats, 24% feel they are balanced, and just 22% feel the threats outweigh the opportunities in the long run.
- Meanwhile, businesses are split equally on whether the opportunities created by introducing a carbon price will outweigh the risks. More than two-thirds of respondents do, however, feel that cutting Australia’s carbon emissions is principally a matter of changing corporate behaviour.
- The improvement of customer relationships and the development of products and services were identified as the biggest opportunities (47% each). 34% of respondents cited risk mitigation, with a quarter suggesting that access to new markets were opportunities.
- Increased cost identified as biggest risk of a low-carbon future. When analysing the threats, there were few surprises that 73% said cost, with lack of competitiveness the second biggest threat (49%) and the creation of an uneven investment environment third (42%) .
About the Report
The research involved surveying over 130 Australian-based senior executives who are familiar with their respective companies’ sustainability strategy. Many of the respondents are in senior management—57% are in the C-Suite or sit on the board. In terms of size, 47% work at companies whose global headcount exceeds 1000 people. Some 45% of respondents work at firms whose global annual revenues exceed US$1bn.
The respondents work in a broad mix of industries—23% work in the energy and natural resources sector; 18% work in construction and real estate; 11% are in the telecommunications industry; 11% work in transportation, travel and tourism; 10% are in the agriculture and agribusiness sector; and the remainder work in logistics and distribution; IT and technology; manufacturing; consumer goods; retailing; healthcare, pharmaceuticals and biotechnology; professional services; and education.
The survey took place before the Australian Government announced plans for a carbon tax in February 2011.
GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's web site at www.ge.com/au.
About the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 650 analysts and contributors, we continuously assess and forecast political, economic and business conditions in more than 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. For more information, please visit www.eiu.com or follow us on www.twitter.com/theeiu
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