Get ready: Emissions trading a fact of life

By: Troy Bilsborough


Businesses must accept an emissions trading scheme is about to become a "fact of life" whether they participate or not,

Businesses must accept an emissions trading scheme is about to become a "fact of life" whether they participate or not, experts say.

With Prime Minister Kevin Rudd now "rushing" to take charge on the issue, businesses taking a wait and see approach are being told they will suffer the consequences.

Leading carbon lawyer with Baker & McKenzie Andrew Beatty sees the Government’s timetable as "very ambitious", however says unfortunately for business, there will not be the "luxury of a 10-to-15 year transition period".

CPA Australia President Alex Malley says both the business community and government must therefore be attuned to the serious repercussions facing day-to-day operations.

"Although the vast majority of businesses will not be directly involved in the [Australian Emissions Trading Scheme] they will be affected nevertheless, and they have to realise this and prepare for it," says Malley.

Accommodating the costs of emissions in strategies around planning, investment and pricing is set to be one of the biggest challenges for business, particularly when it comes to setting the starting date and price at which costs will be passed down the supply chain.

Businesses also need to be checking current contracts according to Beatty, who says he would not be surprised if cost breakdowns were already inclusive of emissions charges.

"What are you going to do when suppliers pass costs of emissions down the line?" he asks.

"Are you going to wear it, pass it further down the line or are you going to place requirements on that supplier to demonstrate they adhere to certain criteria’s before you accept that cost?

"You must have some form strategy in preparation for this situation, because odds on its already happening."

Malley says costing issues will only increase in complexity as more and more businesses begin dealing across international ETS schemes.

Corporations have also been warned taking a "business as usual" approach by paying others to take responsibility for their emissions will leave their business "struggling medium-to-long term".

"The business response will need to be much more comprehensive than one of narrow compliance," says Malley.

"These businesses are foregoing all the efficiency gains that could be made through the timely reform of their business practices and fleet management," adds Queensland Conservation Council Executive Director Toby Hutcheon.

"Business should be seeing climate change not as a cost or problem, but an investment opportunity."

One of the biggest flaws hampering businesses is said to be a failure to correctly integrate environmental management into their corporate structure.

"If your environmental manager sits below 2-3 reporting levels below the board, you have a problem," says Beatty.

"They need to be coordinated, not separated across different departments… and reporting directly to the CEO."

The final Garnaut report, which will provide much guidance as to what the Federal Government’s policies on an AEST will resemble, is expected to be released in August.

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