Carbon pricing not a high risk for ASX200: CDP

ASX200 companies are slowly but surely becoming comfortable with carbon pricing, according to a Carbon Disclosure Project report, with just three companies – David Jones, Origin Energy and OneSteel – saying the carbon price was a “high risk”.
Carbon pricing not a high risk for ASX200: CDP Carbon pricing not a high risk for ASX200: CDP Carbon pricing not a high risk for ASX200: CDP Carbon pricing not a high risk for ASX200: CDP Carbon pricing not a high risk for ASX200: CDP

 

Max Pichon

The CDP Australia and New Zealand climate change report analyses climate change disclosures made by ASX200 companies (including 71 ASX100 companies) and NZX50 companies to investors through CDP.

The companies represent 85% and 91% of total market capitalisations of the ASX200 and NZX50 respectively.

Of the ASX200 respondents, the number of companies identifying risks from carbon pricing fell to 69% compared to last year’s 81%.

The response rate to the seventh annual CDP survey was higher among the top 100 stocks (71%).

In New Zealand, where carbon pricing has been in place since 2008, less than half of companies surveyed identified risks from carbon pricing.

“We'd expect, as the impact of the carbon price and climate change become more material, the response rate will increase over time,'' CDP Australia and New Zealand director James Day said.

Sustainability lead partner Brad Pollock said: "With the commencement of Australia's carbon price behind us, most businesses are handling the transition with minimal upheaval.”

The report found a decrease in the number of companies identifying risks to their business when compared with responses to the survey from 2011.

But it noted there was continued uncertainty surrounding Australia's climate change policy, with the Opposition still pledging to wind up the carbon tax if it wins government in 2013.

Just over a third of companies said carbon pricing was a driver of businesses opportunities — largely development of new products and services or increased demand for existing ones.

It was down from the 2011 survey but the report noted this could be because companies were adopting a “business as usual” approach now the scheme was better understood.

The report also found while 80% of ASX200 companies were doing at least one thing to reduce their emissions, less than 50% had a formal emissions reduction target.

Companies in the highest emitting sectors were among the least active in disclosing such goals, with just 20% of utilities, a third of material stocks and 40% in the energy sector doing so.

Encouragingly, the industrial sector has demonstrated a change in the number of companies disclosing targets since 2011, with up to 67%.

Energy efficiency emerges as key driver

Energy-efficiency initiatives are emerging as the preferred approach to emissions reduction, with 60% (up from 50% in 2011) of reported initiatives relating to energy efficiency.

It’s a possible indication that rising electricity prices are increasing management focus and improving investment returns on energy efficiency initiatives.

This is supported by the quantum of monetary savings from energy-efficiency initiatives reported, increasing from $A75 million in 2011 to $166 million this year.

It represents 71% of all emission reduction monetary savings reported.

However, Pollock pointed out, “the focus on implementation of energy efficiency initiatives, at times in the absence of clear corporate emission reduction targets, indicates a less than strategic approach by many companies and may be contributing to delayed action and higher than necessary costs to businesses in the medium to longer term."

The movers and shakers and absentees

The report identified five ASX200 climate change leaders recognised on both the CDP 2012 ASX200 carbon disclosure leadership index and the CDP 2012 ASX200 carbon performance leadership index.

These are (company, sector, score):

  1. Commonwealth Property Office Fund, financials, 97 A
  2. CFS Retail Property Trust, financials, 95 A
  3. Mirvac Group, financials, 92 A
  4. National Australia Bank, financials, 91 A
  5. Insurance Australia Group, financials, 90 A

While ASX200 carbon disclosure leaders are continuing to improve the quality of disclosure, climate change disclosure standards remain higher among leaders of Global 500, S&P500 and FTSE350 companies.

Top 10 ASX200 CDLI leaders (company, sector, score)

  1. Commonwealth Property Office Fund, financials, 97
  2. Qantas, industrials, 97
  3. News Corporation, consumer discretionary, 95
  4. CFS Retail Property Trust, financials, 95
  5. Amcor, materials, 94
  6. Woolworths, consumer staples, 93
  7. Mirvac Group, financials, 92
  8. Transurban Group, industrials, 91
  9. National Australia Bank, financials, 91
  10. AGL Energy, utilities, 91

The 10 largest ASX200 non-responders to CDP’s request for climate change information are:

  1. Singapore Telecom
  2. QR National
  3. Westfield Retail Trust
  4. Iluka Resources
  5. ASX
  6. Sonic Healthcare
  7. Lend Lease Group
  8. Ramsay Health Care
  9. ResMed
  10. Cochlear

This article first appeared in ILN’s sister publication BEN Global.

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