Source: Carbon & Environment Daily (www.cedaily.com.au)
Almost three quarters of ASX100 companies responded to this year's Carbon Disclosure Project questionnaire, up 26% on last year's response rate, according to results for Australia and New Zealand to be launched today by Climate Change Minister Penny Wong.
The report also assesses the carbon risk facing participating companies, with 10 Australian businesses – including Alumina Ltd, BlueScope and OneSteel – having an "underlying carbon risk" above 5% of 2007 EBITDA (earnings before interest, taxes, depreciation and amortisation).
This year's response rate by ASX companies was 72%, compared to 58% in 2007, the report says (report available here this afternoon).
The response rate was even higher for ASX50 companies (82%) and for ASX100 companies identified as 'greenhouse intensive' (86%).
Investors can be 'relatively comfortable'
Investors should be "relatively comfortable" with the approach of most Australian and New Zealand respondents to climate change and greenhouse gas emissions issues, the report concludes.
"While there are still gaps in companies' responses and some inadequate data sets for investors to accurately model the impacts emissions trading will have on the companies in which they invest, there is sufficient information for them to start the dialogue process with listed companies," it says.
Companies acknowledged in the report for leadership in their disclosure via the Carbon Disclosure Project include AGL Energy, ANZ, BHP Billiton, Boral, Downer EDI, Lend Lease, NAB, News Corp, Mirvac Group, Rio Tinto, Telstra, Transurban, Westpac and Woolworths.
The CDP is an annual global survey conducted on behalf of 385 investors with assets of US$57 trillion under management and global results were released last month (see related article).
In Australia it is carried out in conjunction with the Investor Group on Climate Change (IGCC), which has members including AMP Capital Investors, BT Financial Group, Citi Investment Research, Goldman Sachs JBWere and VicSuper.
This is the third global survey to include Australia and the first in which the reach of the survey was expanded from the ASX100 to ASX200 companies. The participation rate by the additional 100 smaller companies that comprise the ASX200 was relatively low, at 23%.
Alumina Ltd faces largest carbon risk
The report for Australia and New Zealand assesses the "underlying carbon risk" facing 68 of the participating companies which provided sufficient information for such an assessment to be made.
This underlying risk, which does not take into consideration any ability companies might have to pass on carbon costs or any assistance they might receive from governments, is expressed in terms of potential cost of emissions (at $20 per tonne) as a percentage of 2007 earnings (EBITDA).
It concludes 10 ASX-listed companies of the 68 face an underlying carbon risk greater than 5% of 2007 earnings – Alumina Ltd (22.9%), BlueScope (22.2%), OneSteel (21.1%), Qantas (10.3%), Boral (9.8%), Orica (7.9%), Rio Tinto (7.8%), Paperlinx (6.8%) and Woodside Petroleum (5.9%).
Lack of data from three firms a concern
The CDP Australia and New Zealand report says top companies in the region exceed their global peers in greenhouse gas emissions transparency, with 79% of ASX 100 respondents providing some emissions data, compared to 71% globally. A total of 60% of ASX100 respondents provided all requested emissions data.
However, the report says the lack of data "from a handful of emissions-intensive companies in the ASX100 and NZX50" is a concern. The three emissions intensive companies that answered the questionnaire but did not provide emissions data were ASX-listed CSR and New Zealand companies Infratil and Vector.
CSR says in its publicly available CDP questionnaire response that it will begin reporting emissions in its 2008 sustainability report, due out in December.
The CDP report for Australia and New Zealand says 42% of ASX100 respondents that reported emissions data had it fully verified, with a further 32% undertaking partial verification or planning it.
About a quarter (26%) of responding companies that reported emissions data indicated they had not had the data verified and did not plan to have it verified.
Less than half ASX100 respondents have set reduction targets
A total of 60% of ASX100 respondents have an emissions reduction plan in place, but only 46% have established emissions reduction targets for their company, the report says.
"Companies continue to be cautious about publicly committing to quantitative and time-framed targets until they have a well established emissions inventory and until they have identified the emissions reduction activities that will be undertaken," it says.
Other findings include:
only 41% of ASX100 respondents indicated they forecast their company's future emissions and/or energy use, with ANZ the only company to provide forecasts of future emissions and energy use;
only about a quarter of ASX100 respondents indicated or provided some explanation of how the cost of future emissions has affected investment decisions; and
31% of ASX100 respondents indicated they had some strategy for or were participating in emissions trading or trading-related endeavours such as Clean Development Mechanism projects.
All participating ASX100 companies acknowledged exposure to climate change risks, with 91% considering their company is exposed to regulatory risks, compared to a 70% global average. Respondents also frequently nominated physical risks such as property damage, reduced access to water and infrastructure damage.