Business Opportunities & Efficiencies

The politicians are not getting anywhere, says John Durie in The Australian, but the attitude in corporate Australia has shifted dramatically from sheer panic and negativity to actually identifying business opportunities from the introduction of carbon regulation. And the Australian Stock Exchange plans to list new renewable energy futures and options contracts.

John Durie in The Australian (9 October 2009):

Coming clean on carbon

THIS week’s Carbon Disclosure Project release marked a striking change in the attitude of big companies, with more identifying benefits from increased regulation than those identifying risks.

The politicians are not getting anywhere, but the attitude in corporate Australia has shifted dramatically from sheer panic and negativity to actually identifying business opportunities from the introduction of carbon regulation: new products and business efficiencies.

The Liberal Party may debate the need for Australia to set its rules before the world makes its call, but the business community has to get a head start.

Ninety one per cent of ASX 100 companies identified regulatory opportunities against 87 per cent that saw risks and just 84 per cent in the Global 500 that saw opportunities.

Australian companies feel more exposed to climate change through reduced access to water, property damage from extreme weather and the like, with 90per cent of the top 100 identifying physical risks, compared with 78 in the global 500.

Goldman Sachs has helped sponsor the project for the past four years. Encouragingly, since its inception in 2006, its carbon disclosure leadership index has outperformed the market by 10.7 per cent.

Companies that take an interest in their carbon output tend to have better governance standards than their peers, and are better run companies.

The index covers a range of big to minimal polluters and includes the likes of AGL, Santos, BHP Billiton, Boral, IAG, Mirvac, CSL, Woolies, Telstra, Stockland, Lend Lease and Westfield among some 38 stocks.

There are seven Australian companies in the global index — BHP, ANZ Bank, Commonwealth, NAB, Rio, Westpac and Woolies. In an investment market competing for investor funds, every tick counts.

The Carbon Disclosure Project is aimed at encouraging companies to measure their carbon output. With an investor group with $US55 trillion in assets under management, the idea is they will back the best carbon managers.

Big Australian companies perform well in answering the questions, with 96 per cent of the top 50 submitting answers and 73 per cent of the top 100.

There was a 10 per cent fall in responses from the big polluters, which said it all, really.

The companies that respond are those that minimise investor risks.

Some 84 per cent of companies surveyed said climate change issues were considered at board level.

Source: www.theaustralian.news.com.au

In the Sydney Morning Herald:

ASX Ltd plans to list new renewable energy futures and options contracts on its exchanges to support the Federal Government’s renewable energy target (RET) scheme.

The contracts will be based on Renewable Energy Certificates (REC) and list on November 24.

The stock and futures exchange operator said the new contracts will support the RET scheme, which is designed to ensure that 20 per cent of Australia’s electricity comes from renewable sources by 2020.

The ASX also plans to list certified emission reduction (CER) futures and options contracts in the first quarter 2010.
 
These securities are designed to service the requirements of prospective compliance entities in Australia and New Zealand, as well as investors and developers involved in clean development projects.

Subject to the passage of the proposed carbon pollution reduction scheme legislation in Australia, ASX also intends to list futures and options on Australian Emission Units (AEU).

The introduction of the three types of contracts will enable market participants to manage market risk and make investment decisions about climate change and related government policies, ASX said on Wednesday.

”The listing of these products will help firms in Australia and New Zealand to facilitate carbon trading, finance and investment, as well as to provide related risk and legal advisory services,” it said in a statement.

”Given the penetration and liquidity of ASX’s existing electricity futures markets in Australia and New Zealand, organisations accounting for over 50 per cent of greenhouse gas emissions in both countries are already users of ASX market infrastructure.”

The new range of trading products complements existing ASX energy and environmental products.

There are currently more than 80 clean technology companies with a combined market capitalisation in excess of $10.5 billion listed its boards.

Source: www.smh.com.au