Cleaning up: Australia's readiness for a low-carbon future
 

Cleaning up: Australia's readiness for a low-carbon future

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Cleaning up: Australia’s readiness for a low-carbon future is an Economist Intelligence Unit report, commissioned by GE. The Economist Intelligence Unit (EIU) conducted the survey and interviews ...

Cleaning up: Australia’s readiness for a low-carbon future is an Economist Intelligence Unit report, commissioned by GE. The Economist Intelligence Unit (EIU) conducted the survey and interviews independently and wrote the report. The findings and views expressed here are those of the EIU alone.

Elizabeth Fry was the author of the report and Sudhir Vadaketh was the editor. Gaddi Tam was responsible for design. The cover image is by David Simonds.

We would like to thank the following interviewees for their time and insights (listed alphabetically by organisation):


Tim Nelson, head of economic policy and sustainability, AGL

Peter Burn, policy director, Australian Industry Group

Craig Roussac, general manager of sustainability, safety and environment, Investa

James Kell, CEO, Kell & Rigby

Peter Shields, economics and sustainability team, Macquarie Generation

Robert Poole, general manager, industry and government affairs, Murray Goulburn

Carl McCamish, executive general manager of policy and sustainability, Origin

Rob Kella, formerly chief risk officer, Qantas

David Plunkett, general counsel, Qenos

Susie Smith, manager for climate change and sustainability, Santos

Armineh Mardirossian, group manager, corporate responsibility, Woolworths

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    Cleaning up: Australia's readiness for a low-carbon future Cleaning up: Australia's readiness for a low-carbon future Document Transcript

    • Cleaning upAustralia’s readiness for a low-carbon futureA report from the Economist Intelligence UnitCommissioned by
    • Cleaning up Australia’s readiness for a low-carbon futureContentsPreface 2Executive summary 3Introduction 7The Australian Low-Carbon Readiness Barometer: Baseline expectations 10Corporate sentiment towards a low-carbon future 13 Pricing carbon: How to reduce carbon emissions 13 Threat or opportunity? 14 Risks from going clean 17 Impact on competitiveness 18 Impact on operating costs and profit 18Corporate preparedness for a low-carbon future 20 Modelling the impact of carbon prices 20 Reducing carbon footprints 21 Proactive planning 23 Targeting targets 24 Capitalising on opportunities in a low-carbon economy 25Conclusion: Getting ready 28Appendix: Survey results 31© The Economist Intelligence Unit Limited 2011 1
    • Cleaning up Australia’s readiness for a low-carbon future Preface C leaning up: Australia’s readiness for a low-carbon future is an Economist Intelligence Unit report, commissioned by GE. The Economist Intelligence Unit (EIU) conducted the survey and interviews independently and wrote the report. The findings and views expressed here are those of the EIU alone. Elizabeth Fry was the author of the report and Sudhir Vadaketh was the editor. Gaddi Tam was responsible for design. The cover image is by David Simonds. We would like to thank the following interviewees for their time and insights (listed alphabetically by organisation): • Tim Nelson, head of economic policy and sustainability, AGL • Peter Burn, policy director, Australian Industry Group • Craig Roussac, general manager of sustainability, safety and environment, Investa • James Kell, CEO, Kell & Rigby • Peter Shields, economics and sustainability team, Macquarie Generation • Robert Poole, general manager, industry and government affairs, Murray Goulburn • Carl McCamish, executive general manager of policy and sustainability, Origin • Rob Kella, formerly chief risk officer, Qantas • David Plunkett, general counsel, Qenos • Susie Smith, manager for climate change and sustainability, Santos • Armineh Mardirossian, group manager, corporate responsibility, Woolworths May 20112 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureExecutive summaryA lthough corporate and public opinion in Australia is, by and large, in favour of lowering carbon emissions, there is much debate about how to do it. Although it seems somewhat inevitable thatAustralia will eventually transform into a low-carbon economy—thereby reducing its dependency oncarbon for economic growth—the roadmap for this transition is not yet clear. The current governmenthas announced plans to implement a carbon-pricing scheme from July 2012, but politicians have yet toachieve consensus on the finer details. In this uncertain environment, Australian businesses must design and implement corporatestrategy. How prepared are Australian corporations for a low-carbon economy? What are the biggestthreats posed by Australia’s shift to a more sustainable model? What is industry’s preferred option forpricing carbon, and why? And, crucially, have Australian firms identified opportunities for growth oralternative markets that are emerging or may emerge from a low-carbon economy? This report, basedon a survey of over 130 senior executives in Australia, attempts to answer these questions. The key findings of the research include:• Corporate strategy on carbon reduction is being held back by a lack of policy clarity, andcompanies are unsure when a clear policy will be implemented. For the majority of firms, the currentuncertainty around Australia’s future environmental policies is hindering the development andimplementation of corporate carbon-reduction strategies. Almost two-thirds of respondents to thesurvey consider the unclear regulatory environment the primary barrier to making further progress onreducing carbon emissions. Carbon reduction has moved up and down the corporate agenda over the past few years, partly intandem with the perceived political commitment towards combating climate change. The years ofpolitical paralysis have also led to some corporate scepticism—just 16% of respondents believe thatthe Australian government has the political will to push through a carbon price.1 This uncertainty has already hampered corporate strategy and decision-making, particularly withregards to potential new investments in Australia. Some firms, for instance, believe they are making 1 The survey was conducted in January and February 2011,poor investment decisions—investing in emissions-heavy capital equipment and infrastructure— before the prime minister,because they still do not have the certainty of a carbon price, which will make low-carbon technology Julia Gillard, announced plans for a carbon taxmore attractive.© The Economist Intelligence Unit Limited 2011 3
    • Cleaning up Australia’s readiness for a low-carbon future This suggests that Australia must resolve the current impasse over carbon pricing in order for corporations to design more effective long-term strategies, ultimately improving the economy’s competitiveness. • The majority of Australian firms are doing something to address carbon emissions, but only a minority have detailed strategies for a low-carbon future. Some 70% of firms say that they have a strategy in place for reducing their carbon footprint. More than two-thirds of firms have specific, measureable targets for reducing their overall energy usage. However, some of these efforts may be quite basic. Only 21% of respondents, for instance, say their companies have a clearly defined carbon reduction programme for their entire supply chain. Less than one-third of firms have modelled the impact of different carbon prices on their business operations. Clearly, Australian firms are at many different stages of preparedness for a low-carbon future. Some have developed thorough, holistic strategies; many have not done much at all, perhaps waiting for concrete legislative changes before acting. • Australian firms see opportunities in a low-carbon future, and some have already started capitalising on them. More than one-half of respondents believe that the need to cut carbon emissions is a driver of process innovation, and is an opportunity to gain a competitive advantage by creating new or more marketable products. Meanwhile, more than one-half of the respondents believe that a corporate carbon tax will improve innovation and investment in clean technology. More than one-half also say their companies are ready to capitalise on growth opportunities in a low-carbon economy. More than one-third of respondent companies have created new dedicated roles or teams to identify green products or services. • The biggest perceived risk in a low-carbon future is increased costs. When asked to identify the biggest risks to their business posed by Australia’s shift to a more sustainable economy, almost three- quarters of respondents say a major risk is added costs arising from compliance with regulations. In addition, more than one-third of respondents believe that a carbon price will harm their international competitiveness unless their foreign counterparts are subject to the same requirements. These worries may be partly driven by uncertainty around carbon pricing—companies are still unsure of the exact cost to their business. They also do not know what, if any, compensation they will be entitled to. Ross Garnaut, the government’s chief climate-change advisor, believes that a carbon price will affect the international competitiveness of some companies, and recommends that trade-exposed industries receive compensation—varying depending on the industry—for three years from mid-2012. Still, the prevailing uncertainty suggests that the public and private sectors need to invest more in carbon research to deepen Australia’s collective understanding of the potential impact of a carbon price. • There is little corporate consensus about the impact of climate change. Surprisingly, there are many executives who still question the science of climate change—40% of respondents say that the impact of carbon emissions on global warming hasn’t been sufficiently established to warrant wholesale4 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futurechanges in corporate strategy or behaviour. This indicates that broader, deeper climate-changeeducation is necessary. Similarly, there is a broad variation in assessment of the business impact of Australia’s shift to alow-carbon economy, with some respondents viewing it more as a threat to their business, and othersmore as an opportunity. They are similarly split on whether the opportunities created by introducing acarbon price will outweigh the risks in the long run. More than two-thirds of respondents do, however,feel that cutting Australia’s carbon emissions is principally a matter of changing corporate behaviour. Put together, these findings portray the uncertainty, doubt and confusion in Australia’s privatesector towards climate change and carbon reduction. This suggests that the national discussion anddebate about sustainability is still in its infancy.• The majority of respondents favour some sort of carbon-pricing scheme, but they disagree aboutwhich one. One-quarter favour a carbon cap-and-trade scheme, while 20% prefer a simple tax on thecarbon footprint of their operations. A further 12% want a consumer tax on the carbon footprint ofgoods and services consumed. Many of the companies interviewed for this report approve of the government’s idea of introducinga carbon tax—which gives them price certainty—followed later by a market-based pricing mechanism.Nevertheless, they are doubtful about the perceived accelerated timeline. They would also like moredetail on the impact on trade-exposed and emissions-intensive industries; the provision of incentives,allowances and a transition period; the potential for unintended consequences; and a host of otheruncertainties surrounding any scheme. This suggests that the Australian government must carry out further research and analysis intocarbon pricing, as well as broad-based communication and dialogue, in order to secure buy-in fromAustralian corporations and society. By building a broader consensus behind its carbon-pricingpolicies, the government will encourage more firms to make low-carbon investments in the country,and spur clean-product innovation within local firms. This should help to position Australiancompanies for success in low-carbon economies around the world.• Large firms are more prepared for a low-carbon future. The survey results suggest that biggercompanies have invested more into preparing themselves for a low-carbon future. For instance, 41% offirms with more than 10,000 employees globally have assessed the impact of different carbon prices ontheir business operations. This compares with just 23% of firms with 10,000 or fewer employees globally. Meanwhile, amongst firms with more than 10,000 employees globally, 34% have a carbon-reductionstrategy in place that covers the whole business, including external partners and supply chain. Thiscompares with just 15% of firms with 10,000 or fewer employees globally. These findings indicate that larger firms feel a greater imperative to prepare for a low-carbonfuture. This could be because they worry more about the possible impact of a carbon price on theirprofitability. Large firms also have more resources to dedicate to a carbon-reduction strategy.© The Economist Intelligence Unit Limited 2011 5
    • Cleaning up Australia’s readiness for a low-carbon future About the survey The respondents work in a broad mix of industries—23% work in the energy and natural resources sector; 18% work in construction and real The research involved surveying 131 Australia- estate; 11% are in the telecommunications industry; based senior executives who are familiar with their 11% work in transportation, travel and tourism; 10% companies’ sustainability strategy. Many of the are in the agriculture and agribusiness sector; and respondents are in senior management—57% are in the remainder work in logistics and distribution; the C-suite or sit on the board. In terms of size, 47% IT and technology; manufacturing; consumer work at companies whose global headcount exceeds goods; retailing; healthcare, pharmaceuticals 1000 people. Some 45% of respondents work at firms and biotechnology; professional services; and whose global annual revenues exceed US$1bn. education.6 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureIntroductionA s the world’s hydrocarbon reserves continue to be depleted, all countries will have to reduce their carbon intensity—the amount of carbon required per unit of GDP. This shift is being acceleratedby concerns about climate change, which have led to global agreements, commitments and effortsto reduce carbon emissions. Some countries, including Denmark, India, and the Netherlands, havealready implemented a carbon tax, largely with the intention of reducing carbon emissions. This issue is particularly important for Australia, the world’s top coal exporter, which generatesmore than 80% of its electricity from coal and has per-capita CO2 emissions that are the highest in thedeveloped world.2 Most other developed countries now have falling or steady emissions but, partly as a 2 The Global Carbon Project, 2009result of its resources boom, Australia’s emissions continue to increase rapidly. Australia’s robust economic growth drove energy demand from 2007 to 2009. Yet emissionsgrew only two-thirds as much as energy demand during that period, and four-fifths as much as GDP,reflecting a drop in Australia’s carbon intensity. Nevertheless, in the absence of further policy action,Ross Garnaut, the government’s chief climate-change advisor, estimates that total emissions willincrease by 24% from 2000 levels by 2020.3 This represents an upward revision of four percentage 3 The Garnaut Climate Change Review Update 2011points from 2010 projections, largely owing to the emissions from opening new coal mines andliquefying natural and coal seam gas for export. These findings are fuelling a growing awareness inAustralia about the need to continue reducing its carbon intensity. Australians have also suffered from tragic weather-related disasters recently, from the suffocatingdroughts in the decade up to 2009, to the devastating floods in Queensland in 2010-2011. These haveheightened criticism of carbon emissions and the role they play in climate change. According to the Commonwealth Scientific and Industrial Research Organisation (CSIRO),Australia’s national science agency, there is a 90% chance that greenhouse gas emissions resultingfrom human activities caused most of the global warming since the mid-20th century. CSIRO believesthat future climate change in Australia will depend on the level of carbon emissions in the country. Ifemissions are low, CSIRO expects warming of 1-2.5 ºC by around 2070, with a best estimate of 1.8 ºC. Ifemissions are high, CSIRO expects warming of 2.2-5 ºC by around 2070, with a best estimate of 3.4 ºC.4 4 “Climate change in Australia: technical report Although public opinion in Australia is, by and large, in favour of lowering carbon emissions, there 2007”, Commonwealthis much debate about how to go about it. Australia’s politicians have been unable to achieve consensus Scientific and Industrial Research Organisationon the issue, largely because opinion is so divided.© The Economist Intelligence Unit Limited 2011 7
    • Cleaning up Australia’s readiness for a low-carbon future In 2007, the Labor Party, led by Kevin Rudd, swept into power partly because of his commitment to reducing carbon emissions. In 2008, Mr Rudd’s administration ratified the Kyoto protocol and outlined a proposed Carbon Pollution Reduction Scheme (CPRS), a cap-and-trade scheme intended to cut Australia’s greenhouse-gas emissions by 5% over ten years. However, the proposal was defeated three times in Australia’s Senate (the upper house of parliament). Each time, members of the Australian Greens party opposed it on the grounds that the scheme would be too ineffective in reducing carbon emissions, while the opposition Liberal-National coalition claimed that it would unfairly harm trade- exposed industries like the mining sector. The Copenhagen climate conference in 2009, meanwhile, indicated that international enthusiasm for combating climate change had waned, and that a binding global pact was less likely to be agreed. Mr Rudd hence delayed implementation of the CPRS until 2012. This policy retreat, amongst other things, lost him his party’s support, and hence his job as prime minister. In June 2010 Julia Gillard, his Labor Party colleague, took over as prime minister, and soon after called an election, which resulted in a hung parliament. With the support of four MPs—one Green and three independents—Ms Gillard was able to form a minority-led government. Soon after Ms Gillard’s ascension, a renewed global commitment towards combating climate change emerged. While the Copenhagen climate conference in 2009 had failed to deliver any international agreements, the subsequent Cancun conference in December 2010 produced some concrete policies (albeit with vague details). These included US$100bn a year for developing countries by 2020 as climate assistance; a climate fund, partly under the direction of the World Bank, through which much of the money might flow; and a deal on the conditions under which countries may be paid to decrease the damage being done to their forests. In February 2011 (after the survey for this paper was conducted), Ms Gillard announced plans to introduce a fixed price on carbon from mid 2012, ahead of a full emissions-trading scheme in 2015. Under the new carbon-pricing scheme, Australia’s biggest polluters will be required to purchase fixed-5 Throughout the paper, price permits for each tonne of pollution they produce.5 The permit price will be fixed for each year butwe will refer to the currentgovernment’s proposed will increase annually at a pre-set rate. In effect, the price of the permit will be the carbon price.plan—for a carbon tax Despite these plans, there is still uncertainty about Australia’s climate-change policies. Ms Gillard,in 2012 followed by anemissions-trading scheme in after all, does not have a widespread electoral mandate. Building a consensus is difficult owing to the2015—as a carbon-pricingscheme unstable nature of the ruling coalition. Ms Gillard’s Labor Party and the opposition are committed to reducing Australia’s emissions by 2020 to at least 5% below 2000 levels. The Greens, meanwhile, want cuts of 25-40% below 2000 levels. They are also against generous compensation to the coal industry and the heaviest-polluting power generators. As such, the federal government could fail to win support for its proposed carbon emissions tax. In addition, powerful stakeholders, including the mining industry, are lobbying for or against a carbon price. Export-dependent companies are worried about a loss of competitiveness internationally. Operating costs will probably rise—RepuTex, a Hong Kong-based consultant specialising in carbon risk analysis, estimates that if the government sets the carbon tax at A$256 “A 2012 Carbon Price for per tonne, although nearly one-half of the A$3.3bn cost would be passed on to consumers, the topAustralia?”, Reputex 200 companies by market capitalisation would be left with a net liability of A$1.75bn.6 Amongst8 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureconsumers, meanwhile, there is some opposition to the scheme as people are increasingly worriedabout rising gas, electricity, water and food prices. All this suggests that the Australian government must carry out extensive further research andanalysis into carbon pricing, as well as broad-based communication and dialogue, in order to securebuy-in from Australian corporations and society. Australian corporations ultimately need policy clarity. They are concerned that the differentpolitical parties will never be able to agree on emissions targets and carbon-reduction policies. Theyears of political inaction have also led to some corporate scepticism—just 16% of survey respondentsbelieve that the Australian government has the political will to push through a carbon price. Thisuncertainty around Australia’s future environmental policies is holding back corporate carbon-reduction strategies. Policy clarity will also allow Australian firms to capitalise on any opportunities that might emerge ina low-carbon economy. Though carbon reduction is often framed as an effort to control climate changeand reduce fossil fuel dependency, from a corporate point of view, it is as much about developinginnovative products and exploiting new growth markets. In this report we examine corporateAustralia’s readiness to face both the risks and opportunities of a low-carbon future.© The Economist Intelligence Unit Limited 2011 9
    • Cleaning up Australia’s readiness for a low-carbon future The Australian Low-Carbon Readiness Barometer: Baseline expectations B ased on the survey conducted for this report, we have devised the Australian Low-Carbon Readiness Barometer, an ongoing index of perceptions of “low-carbon readiness”. Importantly, in future iterations the barometer will measure improvement or decline over current conditions rather than the absolute readiness. This chapter summarises the findings of the initial survey, which forms the baseline index. The barometer seeks to measure the degree to which companies believe Australia is prepared for the transition to a low-carbon economy, both in terms of minimising carbon emissions and seizing growth opportunities that this transition may present in terms of new markets for cleaner products and services. The overall score is the average of three qualitative scores by senior executives on their perceptions of “low-carbon readiness” of their company, their industry, and Australia overall, on a scale of 1 to 5,6 For clarity, the scoring with 5 denoting excellent readiness.6system in the barometerhas been reversed from In turn, perceptions of “low-carbon readiness” at the company, industry and national level are measuredthat used in the original by averaging respondents’ scores for two questions—“Please rate the overall readiness of each of thesurvey questions (where1=excellent). The original following for minimising their carbon footprint” (see Chart A); and “Please rate the overall readiness of eachsurvey questions arereproduced in the appendix. of the following to capitalise on growth opportunities in a low-carbon economy” (see Chart B). Using this methodology Australia’s overall low-carbon readiness is 3.1. The following scores will form the baseline for the ongoing index: Overall score 3.1 Company score—low-carbon readiness of “your company” 3.6 Industry score—low-carbon readiness of “your industry” 3.0 Country score—low-carbon readiness of “the Australian economy” 2.6 It is notable that executives view prospects for their own company—the business about which they are best informed—with the greatest degree of optimism. That may be because they are privy to new carbon-reduction strategies or clean energy opportunities that reveal the potential for their own firm to succeed in a low-carbon future. Alternatively, they may be overestimating their own firm’s readiness in relation to their competitors and the overall economy. Whether executives are being too positive or too negative will become clear in due course.10 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureBarometer by industryWhen asked for their perceptions of low-carbon readiness in their own industry, executives in theagriculture and natural resources, and construction and manufacturing sectors seem slightly lessupbeat than those in the services sector. This could be because companies in those industries typically emit more emissions than service-sector firms, and hence are a bit more sceptical about their ability to prepare for a low-carbon future. 7 Includes agriculture and Agriculture and natural resources7 2.9 agribusiness; energy and Construction and manufacturing8 2.9 natural resources sectors Services9 3.1 8 Includes construction and real estate; manufacturing sectors 9 Includes healthcare,Barometer by company size pharmaceuticals and biotechnology; IT andPerceptions of low-carbon readiness also depend on the size of the company. Medium-sized firms are technology; logistics and distribution; professionalthe least upbeat. This could be because big companies have deep pockets and plenty of resources to services; retailing; telecommunications;commit to any carbon-reduction initiative. Small firms, meanwhile, may feel they are nimble enough to transportation, travel andquickly adjust to changes in market conditions. tourism; consumer goods; education sectors Small (<101 employees) 3.7 Medium (101-10,000 employees) 3.3 Large (over 10,000 employees) 3.7 It may well turn out that executives in this baseline report are too optimistic about their owncompanies’ prospects, in relation to those around them. With uncertainty still surrounding a carbon-pricing scheme, many firms may actually be caught unawares when the final legislation is passed. With the overall barometer score at 3.1 out of 5, there remains plenty of room for movement in bothdirections over the coming year. To register your disposition—be it positive or negative—please join usonline at http://digitalresearch.eiu.com/cleaningup/benchmarking-survey.Barometer questionsIt is encouraging that the majority of firms believe they are ready to minimise their carbon footprintif need be (Chart A). Still, that does mean that some 46% of companies are, at best, at “average”readiness. With a little more than a year to go before the proposed introduction of a carbon tax, in July2012, this raises some questions about the ability of some firms to manage the transition. Carbon reduction has moved up and down the corporate agenda over the past few years, partlyin tandem with the perceived political commitment towards combating climate change. If and whenAustralia finally does decide to price carbon, more than one-half of Australian firms believe they are© The Economist Intelligence Unit Limited 2011 11
    • Cleaning up Australia’s readiness for a low-carbon future Chart A Please rate the overall readiness of each of the following for minimising their carbon footprint. Rate on a scale of 1 to 5, where 5=Excellent, 3=Average and 1=Very poor. (% respondents) Excellent 5 2 Average 3 4 Very poor 1 Your company 19 35 34 10 2 Your industry 5 17 50 23 5 The Australian economy 3 12 31 40 14 Source: Economist Intelligence Unit Chart B Please rate the overall readiness of each of the following to capitalise on growth opportunities in a low-carbon economy. Rate on a scale of 1 to 5, where 5=Excellent, 3=Average and 1=Very poor. (% respondents) Excellent 5 2 Average 3 4 Very poor 1 Your company 20 34 31 12 3 Your industry 5 24 44 23 4 The Australian economy 4 17 35 31 13 Source: Economist Intelligence Unit ready to capitalise on any opportunities that arise (Chart B). For the other firms, they risk missing out on new growth opportunities, both in Australia, and in other countries that are transitioning to a low- carbon economy.12 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureCorporate sentiment towards a low-carbonfuturePricing carbon: How to reduce carbon emissionsT here is little consensus among Australian executives about how to go about cutting carbon emissions. Some 40% of respondents believe that the impact of carbon emissions on globalwarming hasn’t been sufficiently established to warrant wholesale changes in corporate strategy orbehaviour. More than one-third of respondents, meanwhile, do not think that carbon should be priced,believing instead that green technology or behaviours should be subsidised (see Chart 1). Themajority, however, favour some sort of carbon pricing. One-quarter favour a carbon cap-and-tradescheme, while 20% prefer a simple tax on the carbon footprint of their operations. A further 12% wanta consumer tax on the carbon footprint of goods and services consumed.Name a priceChart 1: What do you think is the best option for pricing carbon?(% respondents)Carbon doesn’t need to be priced; green technology or behaviours should be subsidised instead 36Carbon cap and trade scheme (eg, CPRS) 25Corporate tax on carbon footprint of operations 20Consumer/sales tax on carbon footprint of goods/services consumed 12I don’t know 7Source: Economist Intelligence Unit This preference for a cap-and-trade scheme over a carbon tax probably reflects the perceptionthat the former will have a greater environmental impact. “The most effective, low-cost and flexiblesolution for a global problem is a globally traded carbon unit and a trading scheme that links countriesand industries,” says Carl McCamish, executive general manager of policy and sustainability at Origin,an energy company. “A price on carbon might affect behaviour but you don’t know by how much. If youput a cap on the total emissions that are ever going to be emitted, however, you have more certaintywith the environmental outcome.”© The Economist Intelligence Unit Limited 2011 13
    • Cleaning up Australia’s readiness for a low-carbon future Several interviewees for this paper feel that the success of a trading scheme is dependent on it being internationalised. Companies are searching for the cheapest source of abatement and that involves being able to trade permits internationally. For some companies, however, a straight carbon tax provides much-needed certainty. When business leaders know what it will cost them to emit a unit of carbon, they can budget and plan accordingly. With a carbon trading scheme, the price fluctuates, creating some uncertainty. Qantas, Australia’s largest airline, prefers the simplicity of the tax for now since it makes for easier administration and implementation. Businesses can easily use the information they already provide as part of the requirements of the National Greenhouse Energy Reporting Act (NGER) according to Rob10 For several years, Kella, until recently chief risk officer at Qantas. Their carbon tax liability can be estimated from that.10energy-intensive industrieshave been forced to report Others believe that the current two-step proposal—a tax followed by a cap-and-trade scheme—isenergy use under the Energy the most sensible approach. Once Australia is used to the general idea of paying for carbon emissions,Efficiency OpportunityAssessment Act and the it can then move to a more market-based system.National Greenhouse EnergyReporting (NGER) Act. About Even Qantas would prefer a cap-and-trade scheme in the long run, but its appeal depends on howone-third of Australia’s top the rules are set. “As a trade-exposed, emission-intensive business we didn’t feel the Rudd-designedcompanies are assessed. Asa guide, businesses emitting CPRS reflected the inherent limitations of our business and what we were trying to do strategically tomore than 25,000 tonnes ofcarbon dioxide equivalent, or move things forward,” says Mr Kella.consuming more than 25,000 Murray Goulburn, a dairy co-operative and one of Australia’s largest exporters of processed foods,megawatts of electricity or2.5m litres of fuel in a year, has come to the same conclusion. As a moderately intensive emitter of greenhouse gases it was notcan expect to be required toreport. eligible for free permits under the CPRS. However, as a fully trade-exposed business it would have incurred high costs and would not have been able to recoup one cent of the tax. It is hopeful that any future cap-and-trade scheme will address these concerns. Tim Nelson, head of economic policy and sustainability at AGL, an energy firm, also supports a fixed price for now, but likes the idea of eventually moving to a cap-and-trade scheme. To him, a carbon price such as A$20-30 per tonne is manageable and would allow for a gradual transition to a low-carbon economy. “We’re not talking about revolutionising the economy overnight, but a reform that will take three or four decades,” he says. Mr Nelson recommends transitional assistance for energy-intensive, trade-exposed industries to mitigate the financial impact on those businesses until comparable carbon-pricing schemes are implemented in competitor countries. He also suggests financial assistance for significantly affected industries like high-emitting coal-fired generators. “It makes sense to promote investor confidence and ensure energy security as we move to cleaner technology and renewables,” he says. Threat or opportunity? When asked if Australia’s shift to a more environmentally sustainable economy is a threat or an opportunity to their business, respondents are divided. One-half believe that the opportunities created by imposing a carbon price will outweigh the risks in the long run. The biggest opportunities, according to almost one-half of the survey respondents, will be in developing new products and services and in improving their relationships with their customers (see Chart 2).14 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon future Companies such as AGL, Origin and Qantas—three of Australia’s largest emitters11—envision plenty 11 Compared with others as reported in Greenhouse andof opportunities to develop new products and services for a ”clean” economy. In fact, they are already Energy Information 2009-10,investing heavily in clean energy. Origin wants to justify building more gas plants that would cut National Greenhouse and Energy Reporting,average emissions when generating electricity. “We have just built Australia’s biggest base-load gas- Department of Climate Change and Energy Reportingfired plant so we are very proactive in that space,” says Mr McCamish.Opportunity awaitsChart 2: What do you think are the biggest opportunities to your business in taking steps to reduce its carbon footprint?Select up to three. (% respondents)Developing new products and services 47Improving relationships with customers 47Risk mitigation (eg, in supply chains) 34Improved employee engagement/commitment 26Access to new markets 25Cost reduction 22Improving relationships with suppliers 9Source: Economist Intelligence Unit In response to demand from environmentally conscious consumers, Origin has moved to build amarket for “green electricity”—where customer choose to pay extra for electricity generated fromrenewables rather than from coal. Qantas relentlessly looks for ways to become more energy efficient. The airline’s massive fuel costdwarfs any prospective carbon price, and hence its minimisation is a much bigger driver of innovation(see Case study: Qantas). More fuel-efficient aircraft will help—Qantas will soon introduce a fleet ofBoeing 787s, which are 20% more fuel efficient than their older planes. “The real transformation opportunities will take place in the next three to five years with a newfleet, and in five to ten years with an alternative fuel option which has a better footprint,” says MrKella. He sees many clean energy opportunities in the aviation and automobile sectors, particularlywith the use of alternative fuels, which would also allow countries to reduce their dependence on theMiddle East for crude oil. Reflecting a popular corporate view, James Kell, chief executive of Kell & Rigby, a construction firm,believes that any and all sustainability efforts are good for the planet and should be encouraged.While still hesitant to spend money on measuring his firm’s carbon footprint or modeling risks andopportunities, he feels any price on carbon will boost innovation and investment in clean technology. For instance, although solar PV and solar thermal technologies are not yet commercially ready,and the grid in Australia is not “smart” enough to handle them well, they will one day be feasible.“Making buildings more sustainable and having a lighter footprint is the right thing to do, so I’mheading in that direction whether the debate is purely about carbon or not,” says Mr Kell. He seesplenty of opportunities through new building practices such as new substations, renewable electricityinfrastructure and the like. Much of this will be demand-driven, according to Mr Kell, as “green”© The Economist Intelligence Unit Limited 2011 15
    • Cleaning up Australia’s readiness for a low-carbon future case study Qantas punitive impact of any proposed carbon tax. Qantas’s fuel costs for 2010 exceeded A$3bn, says Mr Kella. By comparison, given that Qantas emits around 4m tonnes of carbon per year, a tax of A$25 Qantas, Australia’s largest airline, has been implementing carbon- dollar per tonne would imply a total tax liability of A$100m. “We reduction strategies for about five years. Unlike many Australian started looking at fuel efficiency and aircraft design to do the right businesses, Qantas could not afford to wait for regulatory certainty thing for the environment but equally it’s to be smart from a business about a carbon tax. Spiralling fuel prices forced the carrier to examine perspective,” he says. its fuel efficiency. “Our cost of energy—which is one-third or more Aviation is one of the most energy-intensive sectors in the world. of our total cost profile—is a dominant aspect of our business,” says Some 95% of airline emissions relate to the burning of aviation fuel. Rob Kella, until recently the airline’s chief risk officer. “If you go back Imposing a carbon price on Qantas creates a competitive distortion seven years we were pursuing fuel-conservation strategies then and since the firm competes with airlines from Asia and the Middle East looking at new equipment primarily because fuel was a high cost. that have fewer emissions subject to tax or trading systems. Emissions became a bigger issue subsequently and in many respects Therefore Qantas is hoping that any new carbon-reduction just complemented the work we had already started on,” he says. regime builds in some transitional arrangements for the aviation There have also been opportunities for Qantas to make industry and some incentives in recognition of initiatives already in incremental improvements to its existing fleet. For example it place—especially given the work on cleaner aviation fuel. switched to lighter catering carts in order to lower the total onboard “Government is asking for a response on pricing principles but weight of the aircraft. The major transformations will occur in a few seems to be putting the cart before the horse,” says Mr Kella. “It is years time, however, with the introduction of more fuel-efficient creating opportunities for industry to participate but seems to have aircraft and alternative jet fuels that have a lower carbon footprint. taken a view of how to proceed before the consultative period has The financial imperative for fuel efficiency far exceeds the begun. People are worried about the time they have to prepare.” buildings, which require different methods of construction, are more easily designed and constructed if they are requested by clients. These anecdotes resonate with the survey results, where more than one-half of respondents believe that cutting carbon emissions is a driver of process innovation, and is an opportunity to gain a competitive advantage by creating new, or more marketable products (see Chart 3). Innovation opportunity Chart 3: Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree. (% respondents) Strongly agree 1 2 3 4 Strongly disagree 5 Cutting carbon emissions is a driver of process innovation 26 37 22 8 7 Cutting carbon emissions is an opportunity to gain a competitive advantage by creating new, or more marketable, products/services 15 43 24 11 8 Cutting carbon emissions is an opportunity to find new clients in Australia 13 29 33 17 8 Cutting carbon emissions is an opportunity to find new clients internationally 15 22 29 21 13 Cutting carbon emissions is an opportunity to gain a competitive advantage in terms of cost reduction 11 22 29 20 18 Cutting carbon emissions is a necessity driven by government regulation 17 33 27 17 6 Cutting carbon emissions is a necessity driven by customer and other stakeholder demands/need to maintain reputation 7 31 31 21 11 Source: Economist Intelligence Unit16 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon future Firms are a bit more phlegmatic, however, about whether cutting carbon emissions can help themfind new clients. On balance, they are also somewhat sceptical that cutting carbon emissions will givethem a competitive advantage in terms of cost reduction.Risks from going cleanAlmost three-quarters of respondents say compliance costs arising from new environmental legislationis the biggest risk posed to their business by Australia’s shift to a low-carbon economy (see Chart 4).This finding underlines the fear of a spike in operating costs due to higher energy prices and taxes oncarbon emissions. It also underscores the importance of policy clarity and regulatory transparency socompanies can start managing and mitigating these risks. At the moment, policy uncertainty appearsto be causing concern and hindering corporate strategy. Almost one-half of the respondents perceiveloss of competitiveness as a big risk. Peter Burn, policy head at the Australian Industry Group, a non-profit cross-industry association,does not believe that the additional ongoing compliance costs will be great. He points out thatone-third of Australia’s biggest emitters already measure and report carbon emissions under NGER.Although firms incur significant costs to comply with the NGER, he believes that a carbon price thatfeeds off that reporting regime should not be expensive to implement. There will be additional compliance costs, says Mr Burn, if businesses participate in the EmissionIntensive Trade Exposed (EITE) scheme or other programmes aimed at offsetting any loss ofcompetitiveness. Both small and large companies may be involved. The EITE system has high upfrontcosts but much lower ongoing costs. In terms of implementation, a cap-and-trade scheme would be costlier because instead of paying atax, companies will have to acquire permits, expertise and any other know-how related to the permitplatform. Additional compliance costs would also be involved if the company were to buy carbonoffsets, such as forestry investments. All things considered, however, Mr Burn believes that loss of competitiveness could potentially havea much bigger impact on businesses than ongoing compliance costs.Risky business?Chart 4: What do you think are the biggest risks to your business posed by Australia’s shift to a more sustainable economy?Select up to three. (% respondents)Imposition of large costs through compliance with regulations 73Loss of competitiveness 49Creation of an uncertain investment environment 42Risk of brand/reputational damage through non-compliance 27Loss of strategic focus on enhancing corporate value 16Enhanced supply-chain risk 15Source: Economist Intelligence Unit© The Economist Intelligence Unit Limited 2011 17
    • Cleaning up Australia’s readiness for a low-carbon future Impact on competitiveness Many Australian corporations worry that any national carbon pricing scheme could make them less competitive internationally. Some have complained that this will ultimately lead to job losses in Australia. Almost one-half of respondents feel that any carbon pricing must involve a global agreement; they say Australia has no obligation to act unilaterally. These critics say that any carbon tax will have a negative impact on all trade-exposed industries because those firms will be unable to pass on the cost of the tax overseas, and will be forced to absorb it. The end result, suggests Robert Poole, general manager, industry and government affairs at Murray Goulburn, is that more manufacturing will be shifted abroad, as global corporations practice environmental regulatory arbitrage. The net effect on carbon emissions worldwide will remain unchanged. In fact, global emissions could even increase, if the company moves to a country that uses a more emissions-intensive production process, risking so-called carbon leakage. “Fears about carbon leakage are overblown but remain a powerful obstacle to the introduction of effective mitigation policies the world over,” says Professor Garnaut. Mr Poole believes that an international solution is critical since at present trade is highly distorted by the fact that some countries price-in pollution and some do not. “If emissions reduction is the appropriate response to address man-made climate change, then by definition if we don’t get the major economies involved, we are not going to achieve the outcome we are seeking,” he says. As with many companies, the dairy co-operative operates in a highly global competitive market where it already faces restricted trade access and export subsidies. “We don’t want to see another distortion in the already tough global dairy sector,” Mr Poole says. The Australian government, led by Ms Gillard, says it is engaged in genuine consultation with trade- exposed, emissions-intensive industries. Nevertheless, the government has been forced to publicly defend the consultation process, amid industry worries that the carbon price and compensation package have already been decided. Similarly, the interviews conducted for this paper suggest that many executives feel their voices are not being heard. “More work needs to be done on securing investment certainty during the transition from a fixed carbon price to a cap-and-trade scheme,” says one executive. Impact on operating costs and profit A national carbon price will inevitably have an impact on many aspects of business. Respondents generally believe that a price on carbon will lead to higher operating costs, lower profits, and weaker international competitiveness (see Chart 5). This reflects the fact that a tax is immediate and unavoidable, whereas any future fillips to profitability or competitiveness are merely potential. Peter Shields, who works in the economics and sustainability team at Macquarie Generation, a state-owned power generator, believes that the firm will lose hundreds of millions of dollars with the introduction of a carbon tax. It can pass on a fair portion of the costs but the tax could potentially wipe out all its profits. 18 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureUps and downsChart 5: How do you think the introduction of a national corporate carbon tax will affect your company in the following areas?Pick the most likely impact for each of the following variables.(% respondents) Improve Stay the same Deteriorate Don’t knowOperating costs 4 33 62 2Efficiency 21 62 16 2Profits 9 34 56 1Competitiveness within Australia 13 69 17 1Competitiveness internationally 10 48 38 4Brand value/reputation 43 47 9 1Employee engagement 29 61 8 2Innovation/investment into clean technology 56 32 11 2Risk management 25 58 12 5Transparency 23 61 8 8Source: Economist Intelligence Unit It is a similar story for Qenos, a plastics manufacturer. “Our production process is intrinsicallyemissions intensive, as our operations require very high temperatures and large volumes of steam,”says David Plunkett, general counsel at Qenos. “We have already taken steps to improve our energyefficiency and therefore reduce our carbon emissions. Nevertheless, if a carbon price is introduced, andwe don’t get appropriate transitional assistance, our long-term viability will be threatened.” Furthermore, a carbon price will dramatically change the dynamics in the energy sector and has ledto fears that electricity security will be compromised. As evidence, the opposition Liberal-Nationalcoalition points to Professor Garnaut’s report, which it believes shows that the government’s carbonpolicy would lead to brownouts and insufficient electricity production. Balancing these detrimental effects, however, respondents to the EIU survey do believe that acarbon price will benefit their business in some ways. More than one-half believe that it will boostinnovation and investment into clean technology, while 43% say that their company’s brand value andreputation will be enhanced. Several interviewees are concerned that proceeds from any carbon pricing scheme will not be usedto develop clean technology. The government has recently said that one-half of the revenues from itsproposed carbon-pricing scheme will be transferred to low-income households—probably throughcredits and tax cuts—to compensate for higher electricity bills. This has fanned fears that there will beinsufficient funds to compensate polluters and for clean technology investments. “While you don’t want to disadvantage Australian households, the government must make sure thatany additional revenue is invested in the most effective carbon-reduction measures,” says Mr Kella ofQantas.© The Economist Intelligence Unit Limited 2011 19
    • Cleaning up Australia’s readiness for a low-carbon future Corporate preparedness for a low-carbon future Modelling the impact of carbon prices A bout one-third of Australia’s top companies are already assessed under NGER, helping explain the survey finding that around the same proportion of respondents have modeled the impact of different carbon prices on their business operations (see Chart 6). In essence, NGER provides the framework for how a carbon tax or an emissions scheme would work. Once companies know what their emissions are, they can assess liabilities and look for cost-effective carbon-reduction strategies. Assessing the future Chart 6: In your scenario planning, have you assessed or modelled the impact of different carbon prices on your business operations? (% respondents) Yes 29 No, but we are planning to do so 33 No, no plans to do so 31 Don’t know 8 Source: Economist Intelligence Unit For many interviewees, the cost of carbon is incorporated into all planning and all investment decisions. However, one-third of respondents say they have no plans to model the impact. According to AGL’s Mr Nelson, one-third of Australia’s companies measure energy efficiency rather than carbon emissions per se, since energy consumption is the critical issue for them. The sophistication of the modelling is really in proportion to how much energy they use. Smaller users should focus on how efficiently they use electricity and gas, he says. Bigger users are probably already efficient but they should explore abatement opportunities outside their sector, such as sourcing inputs with lower energy intensity and hence lower costs in an emissions-trading environment. Like many heavy emitters, AGL models the impact of different carbon prices on operating costs, profitability and net present value over the next ten years and discloses it to shareholders. The company decided several years ago to start investing in clean assets in order to become more competitive in an environment where carbon costs are factored into fossil-fuel power generation.20 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon future Similarly, for nearly ten years, all of Origin’s investments have been subject to a carbon-priceanalysis. “Every time we make a new investment, build a new plant, or develop a new product we lookat the carbon cost,” says Mr McCamish. “It is built into everything we do much the same as the cost offunding.” Woolworths, a supermarket chain, factors a carbon shadow price into all areas of its business andall potential investments (see Case study: Woolworths). It is important to understand how preparedthe business is for a low-carbon future, and to be ready to capitalise on potential opportunities, saysArmineh Mardirossian, the firm’s head of corporate responsibility. case study Woolworths 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 Woolworths, Australia’s biggest supermarket chain by revenue, is cost,” says Ms Mardirossian. “We do factor in a shadow carbon price targeting to cut its carbon emissions to 40% below “business as usual” into future investments.” levels by 2015. In a bid to increase its energy efficiency as well as Regulatory uncertainty has hampered decision making. Ms reduce its carbon footprint, the firm continues to invest in low-carbon Mardirossian says that an appropriate carbon price should drive technology for stores (mainly refrigeration) and transportation. more investment into low-carbon technologies—investments that Relatively speaking, Woolworths is a moderate emitter. It has currently do not meet Woolworths’s return-on-investment hurdles. a large electricity bill, however, and managing that is essential The imminent carbon tax has, however, already led to some in a low-margin, fiercely competitive business. According to process improvements at Woolworths. In the course of setting Armineh Mardirossian, Woolworths’s group manager of corporate carbon-reduction targets, Woolworths realised that its various responsibility, the company is well prepared for the new carbon- business engineering divisions across the group had many different pricing scheme, having undertaken analysis of potential risks strengths. It subsequently centralised all the engineering divisions and opportunities that may arise from a low-carbon economy. in a single unit, which is now responsible for shadow pricing, Woolworths is driven by the need to pass on the carbon price and still investment evaluations, pilot projects, and other initiatives that remain competitive, which means understanding which parts of the require coordination across functions. This has improved decision supply chain can bear the cost increase. making in the group. “We have to remain competitive...so we have put every possibleReducing carbon footprintsAustralian corporations are at different stages of maturity in their efforts to reduce their carbonfootprint. More than two-thirds of firms surveyed have some carbon-reduction strategy in place (seeChart 7). Almost one-third, however, are concerned only with their own business. Almost 40% ofcompanies, meanwhile, have strategies that go beyond their direct operations. More than one-fifth offirms appear to be very well prepared, with a carbon-reduction strategy that covers external partnersand their supply chain. These findings indicate that Australian firms are at many different stages of readiness for a low-carbon future. Some have developed thorough, holistic strategies; many have not done much at all,perhaps waiting for concrete legislative changes before acting. Many firms may also be in the middle ofa multi-year, multi-staged process that begins with their own business.© The Economist Intelligence Unit Limited 2011 21
    • Cleaning up Australia’s readiness for a low-carbon future Smaller footprints Chart 7: Does your company have a strategy in place for reducing its carbon footprint? (% respondents) Yes, it covers the whole business, including external partners and supply chain 21 Yes, it covers the business, including our supply chain, but not our external partners 15 Yes, it covers the business, including our external partners, but not our supply chain 3 Yes, it covers only our own business 31 No, but we are currently developing one 17 No, and we have no plans to develop one 11 Don’t know 2 Source: Economist Intelligence Unit The survey results suggest that bigger companies have invested more into preparing themselves for a low-carbon future. For instance, amongst firms with more than 10,000 employees globally, 34% have a carbon-reduction strategy in place that covers the whole business, including external partners and supply chain. This compares with just 15% of firms with 10,000 or fewer employees globally. This finding indicates that larger firms feel a greater imperative to prepare for a low-carbon future. This could be because they worry more about the possible impact of a carbon price on their profitability. Large firms also have more resources to dedicate to a carbon-reduction strategy. Smaller firms, by contrast, may have less time and money to invest in planning for an uncertain low-carbon future. Susie Smith, manager for climate change and sustainability at oil and gas company Santos, says that the company has been proactive in trying to understand opportunities and risks in a low-carbon future: analysing the possible pricing impacts on their business, identifying costs of abatement and exploring projects that Santos can implement to reduce its carbon emissions. “Australia’s abundant reserves of natural gas provide a lower-carbon alternative to coal, and have the capacity to generate substantial employment and investment opportunities,” she says. Qantas has also introduced enterprise-wide initiatives to reduce emissions. Carbon reduction falls under the purview of the chief risk officer since emissions are classed as both a strategic and financial issue. “We are doing everything we can to understand the consequential aspect of the price on carbon from a financial perspective, as well as the economics of being able to pass some of that through,” says Mr Kella. Mr Burn of the Australia Industry Group says that while Australia’s bigger companies clearly have strategies in place, many manufacturers are not managing their footprint as well as they could. Some are still putting off costly investments until they really need to spend the money. Mr Burn believes that even larger firms could be doing more to assess the impact of a tax throughout the supply chain and to identify vulnerabilities. The reason they are moving slowly, says Mr Burn, is that they are assessing the likelihood and materiality of a carbon price against the cost of doing something about it. “They’re making very22 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futurerational bets and looking at different scenarios. If the carbon tax has little impact on them they won’tmake a big capital investment.” Many executives are reluctant to implement these strategies untillegislative changes will allow them to make a better judgement about the return on the investment. This also highlights the carbon-pricing dilemma facing the Australian government. Price carbon toohigh, and it risks undermining the viability of some businesses; price carbon too low, and it may nothave much impact on corporate behaviour.Proactive planningCraig Roussac, general manager of sustainability, safety and environment at Investa, a commercialproperty owner, believes that many Australian companies are focussed on short term energy-reductionstrategies—simple changes that save them money—rather than a long-term plan to set their businesson a clean trajectory. He views a close relationship between the sustainability manager and the otherexecutives as a sign that a firm has thought through its business strategy and started positioningitself for the long term. “There are no tensions between executives because financial strategy andsustainability strategies are aligned,” he says. Almost one-half of the survey respondents believe thereis a link between financial performance and carbon intensity reduction in their respective companies. Origin has plenty of small and medium-sized customers who are fairly proactive. Others,however, are not. “It’s not because they’re ignorant that they don’t make those preparations,”says Mr McCamish, “It’s because they are dealing with other more pressing issues that have greatershareholder value attached to them, such as wage rises.” Only 11% of firms do not have a carbon-reduction strategy in place and have no plans to developone. This is often because they are small, and do not consider it affordable, practical or necessary. Thissuggests that there may be a minority of firms who will never make significant efforts to reduce theircarbon footprint, even as Australia transitions to a low-carbon economy. Amongst firms that do have a carbon-reduction strategy in place, the majority say they were drivento develop it by the desire to do the right thing ethically (see Chart 8). This is seen as a more importantdriver than the need to comply with laws and regulations or the need for corporate risk management. However, this may not be an entirely accurate picture of the motives driving efforts to reduce carbonemissions. Our interviewees suggest that the desire to reduce energy costs—or, in other words, toimprove energy efficiency—is often important. “Energy is a massive expense and all forecasts pointtowards it becoming more expensive,” says Mr Poole of Murray Goulburn. “We think it is incumbent onlarge energy users to have a very clear strategy on how they source energy in the future.” Murray Goulburn has made reasonably good progress in improving the efficiency of its processes. Forexample, the dairy co-operative has pioneered the use of LNG in heavy transport, reducing transportcosts and associated emissions. Many large energy users are keen to implement large energy-efficiency projects. AGL and Qenos,for instance, have entered into an agreement to build a co-generation facility at Qenos’s Altona plant,replacing a steam boiler with one that uses a gas turbine to produce electricity and then captures the“waste heat”, a by-product of power generators, to produce steam. The plastics manufacturer expectsto cut carbon dioxide emissions associated with the production of polyethylene by 100,000 tonnes per© The Economist Intelligence Unit Limited 2011 23
    • Cleaning up Australia’s readiness for a low-carbon future Ethical behaviour Chart 8: What have been the primary drivers for developing this strategy? Select the top three. (% respondents) Desire to do the right thing ethically 54 Need to comply with laws and regulations 46 It is a part of ongoing corporate risk management 46 Need to meet demands of customers 26 Desire to discover new markets 20 Need to upgrade the company’s image 19 Need to improve the bottom line 14 Need to support recruitment and retention of employees 9 Response to pressure from NGOs and citizen lobby groups 7 Response to criticism in the media 2 Other, please specify 3 Source: Economist Intelligence Unit annum. “Not enough though,” says Mr Plunkett of Qenos. “The carbon price will still bite.” The desire to boost profits has driven Investa’s four-pronged plan. Its corporate strategy was to reduce risks, reduce costs, focus on building short-term relationships so as to secure deals, and then progress to longer-term relationships—becoming a business partner of choice for larger institutional tenants keen to be associated with more sustainable property. By reducing the carbon footprint of its buildings—through reduced energy use—Investa has managed to lower costs and improve its financial performance. “The less money we have to pay, the higher our net operating income from the building, the greater the value of the building. And tied to that is the awareness from tenants who are attracted to clean energy properties. So you get revenue-side uplift and expenses fall, so the net position is stronger,” says Investa’s Mr Roussac. Targeting targets The majority of companies have specific, measurable targets for reducing their carbon footprint in terms of overall energy usage, staff practices, green building technology, core products and services, and new investments (see Chart 9). In some ways, these represent the low-hanging fruit of carbon reduction. Less than one-third of firms have targets for customers, partners or suppliers. This suggests that these are areas that come later in the corporate carbon-reduction lifecycle. This also resonates with the findings from Chart 7. After a period of aggressive target-setting, however, some of Australia’s companies have ditched24 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futureCutting carbonChart 9: Does your firm have specific, measurable targets for reducing its carbon footprint in the following areas?(% respondents) Yes No Not applicableOverall energy usage 68 28 4Green building technology (eg, lighting) 58 37 5IT Systems (eg, data centres) 38 54 8Staff practices (eg, commuting, recycling) 60 35 5Core products and services 50 44 6Suppliers 31 61 8Partners 25 65 9Customers 27 65 8New investments 48 42 10Source: Economist Intelligence Unitthem, suggesting that once a company embarks properly on a carbon-reduction programme, targetslose their effectiveness as a way to drive behavior. At Santos, Ms Smith says that there is an interest in emissions-intensity targets when they are new,but once companies become more sophisticated, the targets become redundant. Once a company hasreduced its carbon intensity to a point, it takes much effort simply to maintain the status quo. “Also,the focus should be on implementing projects rather than watching the numbers,” she says. Ms Smith has found there are better ways to change and drive behavior. For instance, she likes togive highly motivated people full ownership and responsibility for key sustainability indicators. Thesepeople can then move at their own pace and quietly develop support. She has found that in this way,Santos still delivers on its targets because it has the right people in place.Capitalising on opportunities in a low-carbon economyMore than one-half of firms in the survey say they are ready to capitalise on growth opportunities ina low-carbon economy. Over one-third of respondents have created new dedicated roles or teams toidentify “green” products or services (see Chart 10). Some firms have taken the lead, however, and are already reaping the returns. Investa has managedto get a head start on its competitors by being proactive about sustainability. Commercial propertiesare now forced to disclose their greenhouse benchmark rating at the point of sale and point of lease.Before this was mandatory, early adopters promoted only their relatively higher-rated buildings.Investa took advantage of this gap by disclosing information about even its relatively lower-ratedbuildings. “We took a corporate position that mandatory disclosure was bound to become compulsoryat some point. When it did and all the buildings were rated, even our lower-rated buildings lookedbetter than our competitors’,” says Mr Roussac.© The Economist Intelligence Unit Limited 2011 25
    • Cleaning up Australia’s readiness for a low-carbon future Capitalising on carbon Chart 10: What steps has your company taken to make the most of these opportunities? Select all that apply. (% respondents) New dedicated roles/teams to identify “green” products or services 38 Customer/client focus groups to identify level of demand for “green” products/services 37 New dedicated roles/teams to identify “green” markets 22 Hired external consultants to help identify opportunities 21 Government lobbyist/liaison to maximise available support or subsidies 18 Other, please specify 17 Source: Economist Intelligence Unit AGL, meanwhile, decided several years ago to invest in zero-emissions electricity plants—assets which don’t have a carbon cost, so they will become competitive when there is a cost on thermal coal generation. It forecasts that the net present value of this investment over ten years is A$200m. AGL has also dedicated significant resources towards helping its customers with their own carbon management and energy use. “We have an eco markets team—most energy companies or energy intensive companies are looking to become greener,” says Mr Nelson (see Case study: AGL).26 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon future case study AGL Australia’s emissions indirectly through the energy it purchases on behalf of its customers. Once AGL had assessed its emissions, therefore, it was able to make more strategic investments in low- Tim Nelson, head of economic policy and sustainability at AGL, an carbon infrastructure. In 2005, AGL purchased 645MW of hydro- Australian energy firm, believes that the global economy is moving renewable energy. “It was our first significant step towards de- towards a low-carbon future, and hence Australia “cannot isolate carbonising our energy supply,” says Mr Nelson. itself from the rest of the world”. However, he says that a carbon price AGL has also improved its energy efficiency within some of its will have a much bigger impact on Australia than it will on most other power stations, and it supplies energy-efficiency advice to some countries because Australia’s carbon intensity—emissions per unit of of its industrial as well as residential customers. “We view this as a GDP—is generally higher. Therefore, in Mr Nelson’s view, the risk to partnership with our customers to help them not only reduce their Australia lies in not managing the transition well. “That’s why an early emissions but also reduce their bills,” he says. shift, but a gradual shift, is so important,” he says. Aside from two government-owned utilities, AGL is already Mr Nelson argues that Australia already has numerous natural Australia’s largest renewable energy business. Mr Nelson cites resources for alternative energy, which will smooth its transition to Australia’s renewable energy target—41,000GW hours of new a low-carbon economy. “We have a number of wind sites that have renewable energy power to be supplied by large-scale projects by speeds in excess of 8 metres per second, whereas wind farms in 2020—as a primary driver of investment for AGL’s business. Achieving places like Europe are generally built with much lower speeds. So we the target will require 10,000MW of new wind capacity to be built, can get more energy out of the same capacity,” he points out. which is about A$30bn worth of new capital investment. AGL recently AGL began publicly reporting its Scope 1, 2 and 3 emissions— signed off on the 420MW Macarthur wind farm in Victoria—the which refer to emissions from direct activities, electricity consumed, Southern Hemisphere’s largest—and it has several others in various and other indirect activities respectively—in 2003-04. He regards stages of development. this as an important first step in carbon reduction, as it allows a In a low-carbon future, AGL will also offer to its customers more company to assess how carbon-intensive its business is, and what the energy-efficiency products—the lowest-cost means of reducing risks associated with reducing emissions might be. emissions, says Mr Nelson—including the use of smart grids and a According to Mr Nelson, AGL is responsible for about 8% of shift to time-of-use pricing.© The Economist Intelligence Unit Limited 2011 27
    • Cleaning up Australia’s readiness for a low-carbon future Conclusion: Getting ready F or the majority of firms, the current uncertainty around Australia’s future environmental policies is holding back implementation of corporate carbon-reduction strategies. Almost two-thirds of respondents consider the unclear regulatory environment the primary barrier to making further progress on carbon reduction in their respective companies (see Chart 11). Other hurdles include a lack of international standards (41%) and the availability of relevant technologies at an acceptable cost (37%). Carbon reduction has moved up and down the corporate agenda over the past few years, partly in tandem with the perceived political commitment towards combating climate change. What this means is that if Australia finally does decide to price carbon, only slightly more than one-half of Australian firms believe they are ready to capitalise on any opportunities that arise. For the other firms, they Foggy road Chart 11: What are the primary barriers to making further progress on carbon reduction in your company? Select up to three. (% respondents) Unclear regulatory environment 64 Lack of international standards (eg, an agreed method of calculating carbon emissions) 41 Availability at acceptable cost of relevant technologies 37 Risk that environmental practices will raise your costs in comparison to competitors 30 Difficulty in developing relevant targets and measures 16 Difficulty in funding environmental efforts 15 Lack of client engagement/ demand 14 Lack of systems and tools to monitor and enforce compliance with the company’s environmental policies 11 Lack of buy in and commitment from senior management 8 Lack of employee engagement 2 Other, please specify 4 There are no barriers to making further progress 7 Source: Economist Intelligence Unit28 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Australia’s readiness for a low-carbon futurerisk missing out on new growth opportunities, both in Australia and in other countries that aretransitioning to a low-carbon economy. The specific details of Australia’s proposed carbon tax have yet to be decided, including the level ofthe fixed price, the rules for the tax-to-trading transition, the cap for the trading phase, compensationfor emissions-intensive, trade-exposed firms and electricity generators, and generally how and towhom the tax will apply. Without complete clarity, it is not possible for firms to accurately assess the impact of an Australiancarbon price. The only guidance companies have is the proposed CPRS, including the treatment ofmajor export industries, the coal industry and power generators. Big emitters such as MacquarieGeneration fear they will not be compensated because they failed to qualify under the CPRS.Respondents are particularly concerned about potential unintended consequences of any carbon-pricing scheme. This suggests that the Australian government must carry out extensive further research and analysisinto carbon pricing, as well as broad-based communication and dialogue, in order to secure buy-infrom Australian corporations and society. By building a broader consensus behind its carbon-pricingpolicies, the government will be able to attract more low-carbon investment into the country, anddrive clean-product innovation within local firms. This will position Australian companies for success inlow-carbon economies around the world. ”Will there be phase-in arrangements, what kind of transitional arrangements will there be, whatwill the cost be, will there be assistance?” asks Mr Kella at Qantas. Qantas is hoping for credits aswell as incentives to accelerate existing initiatives to cut emissions through increased fuel efficiency.“We could use more time to transition. We are hoping the new regime builds in some transitionalarrangements not dissimilar to those made in the EU where the aviation industry was given anopportunity to transition into a 100% scheme within an eight-year period,” he says. According to Mr McCamish at Origin, the uncertainty has not only stalled investment in theelectricity sector but it has encouraged the wrong kind of investment. “Instead of laying out thebillions of dollars to build a new gas-fired or coal-fired power station, we build smaller power stationsthat are cheaper to build, more expensive to run and have higher carbon emissions. What we need isthe certainty to invest in power stations that are efficient and modern,” he says. AGL’s Mr Nelson agrees. “The longer we wait for certainty, the more bad investment decisions arebeing made. Energy firms will minimise their capital at risk by deploying the lowest-cost electricitygeneration equipment, which is generally the least efficient. It does, however, minimise the chancethat any capital outlay will be stranded through a subsequent decision on emissions trading,” he says.AGL’s research shows that the uncertainty has cost the economy as much as A$2bn a year in additionalelectricity costs. Moderate emitters like Murray Goulburn and Woolworths will face rising energy costs with or withouta carbon price, and so have an incentive to improve their energy efficiency regardless. Nevertheless, MsMardirossian says that a price on carbon would drive more investment in lower-emitting infrastructurethat currently does not meet the company’s current hurdle rate.© The Economist Intelligence Unit Limited 2011 29
    • Cleaning up Australia’s readiness for a low-carbon future Until there is policy clarity and action, much of the potential opportunity in a low-carbon future will remain unexplored. Compared with Australian companies, how ready is your firm for a low-carbon future? To find out, please visit http://digitalresearch.eiu.com/cleaningup/benchmarking- survey, where you can fill out a short, quick benchmark survey, which will reveal how your firm measures up to other firms in your sector.30 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Appendix Australia’s readiness for a low-carbon future Survey resultsAppendix: Survey results1. Are you familiar with your company’s strategy regarding sustainability? (% respondents)Yes 1002. Please rate the overall readiness of each of the following for minimising their carbon footprint. Rate on a scale of 1 to 5, where 1=Excellent, 3=Average and 5=Very poor. (% respondents) Excellent 1 2 Average 3 4 Very poor 5Your company 19 35 34 10 2Your industry 5 17 50 23 5The Australian economy 3 12 31 40 143. Please rate the overall readiness of each of the following to capitalise on growth opportunities in a low-carbon economy. Rate on a scale of 1 to 5, where 1=Excellent, 3=Average and 5=Very poor. (% respondents) Excellent 1 2 Average 3 4 Very poor 5Your company 20 34 31 12 3Your industry 5 24 44 23 4The Australian economy 4 17 35 31 134. Is there a link between financial performance and carbon intensity reduction? Rate on a scale of 1 to 5, where 1=Strong link, 3=Average and 5=Weak link. (% respondents) Excellent 1 2 Average 3 4 Very poor 5Your company 18 30 24 13 16Your industry 15 25 32 13 15The Australian economy 13 22 39 13 13© The Economist Intelligence Unit Limited 2011 31
    • Appendix Cleaning upSurvey results Australia’s readiness for a low-carbon future 5. What do you think is the best option for pricing carbon? (% respondents) Carbon doesn’t need to be priced; green technology or behaviours should be subsidised instead 36 Carbon cap and trade scheme (eg, CPRS) 25 Corporate tax on carbon footprint of operations 20 Consumer/sales tax on carbon footprint of goods/services consumed 12 I don’t know 7 6. Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree. (% respondents) Strongly agree 1 2 3 4 Strongly disagree 5 A carbon cap and trade scheme is unworkable because it unfairly penalises companies in certain sectors of the economy (there would be no level playing field) 25 27 15 22 10 A carbon cap and trade scheme is unworkable because companies cannot pass on the full cost of carbon permits to consumers 15 27 24 21 14 The government should impose a scheme to force businesses to reduce carbon emissions 19 34 19 15 12 Cutting carbon emissions is principally a matter of changing consumer behaviour 26 34 21 11 7 Cutting carbon emissions is principally a matter of changing corporate behaviour 23 44 24 7 2 A consumer/sales carbon tax is politically unworkable 22 21 29 21 7 A carbon cap and trade scheme would not sufficiently change consumer behaviour to make any difference to national carbon emissions 16 34 31 12 8 A corporate/consumer carbon tax would not sufficiently reduce carbon emissions 11 32 24 23 9 The Australian government has the political will to push through a carbon price 5 11 30 34 21 Any carbon pricing must involve a global agreement; Australia has no obligation to act unilaterally 27 22 18 15 1832 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Appendix Australia’s readiness for a low-carbon future Survey results7. How do you think the introduction of a national corporate carbon tax will affect your company in the following areas? Pick the most likely impact for each of the following variables. (% respondents) Improve Stay the same Deteriorate Don’t knowOperating costs 4 33 62 2Efficiency 21 62 16 2Profits 9 34 56 1Competitiveness within Australia 13 69 17 1Competitiveness internationally 10 48 38 4Brand value/reputation 43 47 9 1Employee engagement 29 61 8 2Innovation/investment into clean technology 56 32 11 2Risk management 25 58 12 5Transparency 23 61 8 88. Do you think that the opportunities created by imposing a carbon price will outweigh the risks in the long term? (% respondents)No 44Yes 44Don’t know 129. In your scenario planning, have you assessed or modelled the impact of different carbon prices on your business operations? (% respondents)Yes 29No, but we are planning to do so 33No, no plans to do so 31Don’t know 8© The Economist Intelligence Unit Limited 2011 33
    • Appendix Cleaning upSurvey results Australia’s readiness for a low-carbon future 10. Does your company have a strategy in place for reducing its carbon footprint? (% respondents) Yes, it covers the whole business, including external partners and supply chain 21 Yes, it covers the business, including our supply chain, but not our external partners 15 Yes, it covers the business, including our external partners, but not our supply chain 3 Yes, it covers only our own business 31 No, but we are currently developing one 17 No, and we have no plans to develop one 11 Don’t know 2 11. What have been the primary drivers for developing this strategy? Select the top three. (% respondents) Desire to do the right thing ethically 54 Need to comply with laws and regulations 46 It is a part of ongoing corporate risk management 46 Need to meet demands of customers 26 Desire to discover new markets 20 Need to upgrade the company’s image 19 Need to improve the bottom line 14 Need to support recruitment and retention of employees 9 Response to pressure from NGOs and citizen lobby groups 7 Response to criticism in the media 2 Other, please specify 3 12. Why not? (% respondents) My company is too small for it to be affordable or practical 36 My company does not consider it as necessary 14 The cost involved is too high 7 There has been insufficient support for such a strategy at senior management level 7 My company should focus on making money, not saving the environment 0 Our competitors have yet to, so we see no need 0 Other, please specify 3634 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Appendix Australia’s readiness for a low-carbon future Survey results13. Does your firm have specific, measurable targets for reducing its carbon footprint in the following areas? (% respondents) Yes No Not applicableOverall energy usage 68 28 4Green building technology (eg, lighting) 58 37 5IT Systems (eg, data centres) 38 54 8Staff practices (eg, commuting, recycling) 60 35 5Core products and services 50 44 6Suppliers 31 61 8Partners 25 65 9Customers 27 65 8New investments 48 42 1014. Do you agree with the following statements? (% respondents) Yes No Not applicableAll senior executives in my company are aware of our sustainability agenda 74 19 7The board should lead initiatives to cut carbon emissions 73 19 9Carbon reduction will become increasingly crucial to all aspects of corporate strategy 67 28 5Carbon reduction is a short-term concern 22 76 2The impact of carbon emissions on global warming hasn’t been sufficiently established to warrant wholesale changes in corporate strategy or behaviour 40 58 2 31 61 815. Has your organisation implemented the following measures? 25 65 9 (% respondents) Yes No Not applicableEmployee incentives to encourage “green” process innovation 27 65 8 37 58 5Employee education and training 48 42 10 62 34 5Means to track and analyse efficiency of resource usage 59 37 5Clearly defined carbon reduction programme (internal) 40 55 5Clearly defined carbon reduction programme (supply chain) 23 70 7Renewable energy use targets 31 63 6Transparency with regard to carbon cost of business operations (internal disclosure) 36 56 8Transparency with regard to publication of carbon footprint (eg, in annual report) 28 61 11Climate change risk management: Insurance against potential impacts 22 70 8© The Economist Intelligence Unit Limited 2011 35
    • Appendix Cleaning upSurvey results Australia’s readiness for a low-carbon future 16. What are the primary barriers to making further progress on carbon reduction in your company? Select up to three. (% respondents) Unclear regulatory environment 64 Lack of international standards (eg, an agreed method of calculating carbon emissions) 41 Availability at acceptable cost of relevant technologies 37 Risk that environmental practices will raise your costs in comparison to competitors 30 Difficulty in developing relevant targets and measures 16 Difficulty in funding environmental efforts 15 Lack of client engagement/ demand 14 Lack of systems and tools to monitor and enforce compliance with the company’s environmental policies 11 Lack of buy in and commitment from senior management 8 Lack of employee engagement 2 Other, please specify 4 There are no barriers to making further progress 7 17. What do you think are the biggest risks to your business posed by Australia’s shift to a more sustainable economy? Select up to three. (% respondents) Imposition of large costs through compliance with regulations 73 Loss of competitiveness 49 Creation of an uncertain investment environment 42 Risk of brand/reputational damage through non-compliance 27 Loss of strategic focus on enhancing corporate value 16 Enhanced supply-chain risk 1536 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Appendix Australia’s readiness for a low-carbon future Survey results18. What do you think are the most crucial policies the federal government should pursue to encourage the reduction of carbon emissions? Select up to three. (% respondents)Subsidies for clean technology investments by companies 44Imposition of a fair carbon pricing scheme 37Establishment of incentives for green corporate behaviour 35Establishment of national carbon emission reduction goals 34Subsidies for clean technology usage by consumers 27Establishment of environmental reporting standards 24Provision of education on green practices for consumers 18Establishment of penalties for lack of compliance by companies 11Provision of information on sustainable practices for companies 8Establishment of penalties for lack of compliance by consumers 4None of the above: government can help most by doing nothing and letting the market come up with solutions 919. Please indicate on this scale the extent to which you see Australia’s shift to a more environmentally sustainable economy as a threat or an opportunity to your business. (% respondents) 100:0 90:10 80:20 70:30 60:40 50:50 40:60 30:70 20:80 10:90 0:100Opportunity 5 8 13 17 11 24 8 6 5 2 220. Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree. (% respondents) Strongly agree 1 2 3 4 Strongly disagree 5Cutting carbon emissions is a driver of process innovation 26 37 22 8 7Cutting carbon emissions is an opportunity to gain a competitive advantage by creating new, or more marketable, products/services 15 43 24 11 8Cutting carbon emissions is an opportunity to find new clients in Australia 25 65 9 13 29 33 17 8Cutting carbon emissions is an opportunity to find new clients internationally 27 65 8 15 22 29 21 13Cutting carbon emissions is an opportunity to gain a competitive advantage in terms of cost reduction 48 42 10 11 22 29 20 18Cutting carbon emissions is a necessity driven by government regulation 17 33 27 17 6Cutting carbon emissions is a necessity driven by customer and other stakeholder demands/need to maintain reputation 7 31 31 21 11© The Economist Intelligence Unit Limited 2011 37
    • Appendix Cleaning upSurvey results Australia’s readiness for a low-carbon future 21. What do you think are the biggest opportunities to your business in taking steps to reduce its carbon footprint? Select up to three. (% respondents) Developing new products and services 47 Improving relationships with customers 47 Risk mitigation (eg, in supply chains) 34 Improved employee engagement/commitment 26 Access to new markets 25 Cost reduction 22 Improving relationships with suppliers 9 22. What steps has your company taken to make the most of these opportunities? Select all that apply. (% respondents) New dedicated roles/teams to identify “green” products or services 38 Customer/client focus groups to identify level of demand for “green” products/services 37 New dedicated roles/teams to identify “green” markets 22 Hired external consultants to help identify opportunities 21 Government lobbyist/liaison to maximise available support or subsidies 18 Other, please specify 17 23. Which of the following have been the primary drivers for the development of new “green” products/services in your business? (% respondents) Increased regulatory demands that are likely to come into place 20 A belief that relevant innovation in this area will be crucial to our ongoing business success 18 Increased customer demand (or belief that there is pent-up demand) for "green" products/services that use less carbon emissions in their creation 14 A desire to be first to market with a new product/service in our industry 8 A belief that “green” products/services can improve your company’s productivity 8 Increased regulatory demands already in place 6 Increased customer demand (or belief that there is pent-up demand) for new "green" products/services that help cut users’ carbon emissions 6 The need to keep up with our industry competitors 6 Other, please specify 1 Not applicable—we don’t currently provide "green" products/services 1538 © The Economist Intelligence Unit Limited 2011
    • Cleaning up Appendix Australia’s readiness for a low-carbon future Survey results24. In which regions does your company have operations? 26. How many people work at your organisation globally? Select all that apply. (% respondents) (% respondents) 1-10Asia-Pacific 8 98 11-50North America 15 37 51-100 13Western Europe 34 101-200 5Middle-East and Africa 201-500 27 4Latin America 501-1,000 24 8Eastern Europe 1,001-10,000 20 13 Over 10,000 3425. What is your primary industry? (% respondents) 27. What are your organisations global annual revenues inEnergy and natural resources US dollars? 23 (% respondents)Construction and real estate $500m or less 18 47Telecommunications $500m to $1bn 11 8Transportation, travel and tourism $1bn to $5bn 11 11Agriculture and agribusiness $5bn to $10bn 10 12Logistics and distribution $10bn or more 7 22IT and technology 6Manufacturing 6 28. Which of the following best describes your job title?Consumer goods (% respondents) 2 Board memberRetailing 2 5 CEO/President/Managing directorHealthcare, pharmaceuticals and biotechnology 2 28 CFO/Treasurer/ComptrollerProfessional services 6 2Education CIO/Technology director 1 7 Other C-level executive 11 SVP/VP/Director 4 Head of Business Unit 9 Head of Department 5 Manager 18 Head of Sustainability 2 Other 5© The Economist Intelligence Unit Limited 2011 39
    • Appendix Cleaning upSurvey results Australia’s readiness for a low-carbon future 29. What are your main functional roles? Choose up to three. (% respondents) General management 46 Strategy and business development 31 Operations and production 30 Finance 20 Customer service 15 Marketing and sales 14 IT 11 Risk 9 Supply-chain management 6 Information and research 5 R&D 5 Human resources 4 Procurement 4 Legal 3 Other 340 © The Economist Intelligence Unit Limited 2011
    • Whilst every effort has been taken to verify the accuracyof this information, neither The Economist IntelligenceUnit Ltd. nor the sponsor of this report can accept anyresponsibility or liability for reliance by any person on thisreport or any of the information, opinions or conclusionsset out herein.Cover image - David Simonds
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