The Group of 100 represents the senior finance executives and CFOs of Australia’s largest business enterprises.
Mr Peter Meehan, Chief Executive Officer of The Group of 100, said “there are many commercial implications that CFOs will be required to deal with under the new legislation. They will need to quickly understand the many commercial consequences the Carbon Tax will have on almost all major local and multi-national enterprises.
“In many organisations, it will be ultimately the CFO who will carry final responsibility for the strategy to deal with the legislation and the collection and reporting of emissions data – presenting yet another challenge for them in what is already a volatile economic climate”, he added.
KPMG says that businesses which have not assessed the impacts of the price on carbon need to act quickly.
“While many businesses that are directly impacted and are required to purchase carbon emissions permits have been working on this for some time, others have taken a wait and see approach,” said Adrian King, Head of Climate Change & Sustainability at KPMG.
“In our experience, few businesses have a complete view of the impacts that a carbon price will have on them. Now is the time for businesses to understand and assess the financial and commercial impacts,” Mr King added.
In response to this new challenge, The Group of 100 and KPMG have released a guide: Managing the commercial implications of a price on carbon, to help CFOs navigate their way through the key issues, challenges and opportunities presented by the legislation.
The guide covers the legislation’s policy context and design, consequences for organisations, collecting carbon emissions data, managing its financial and commercial impacts and overseeing reporting and assurance.
In the immediate term, KPMG says that businesses need to look at asset impairment considerations for December year end and half years. They also need to ensure that the systems and processes in place to measure and report on carbon are robust.
“Many businesses have improved their systems and processes to capture energy emissions since the introduction of NGERS (the National Greenhouse & Energy Reporting System), but there is still work to be done given this will underpin commercial decisions and be subject to audit,” said Mr King.
“This is a particularly critical area for businesses required to purchase permits.”
The other imperative for businesses is to understand their direct and indirect exposure to carbon. This includes rising energy prices, the potential for costs passed through their supply chain and, in turn, the potential to pass these costs on.
Other measures include exploring and assessing energy efficiency opportunities and assessing eligibility for government assistance.