CarbonSignal

Preparation of Annual Reports for the 2008/09 financial year has commenced. Climate change and carbon management reporting can no longer be considered an optional inclusion in Annual Reports, or sub-set of Sustainability Reporting, because the Corporations Act 2001 (s299) requires the inclusion in the annual directors’ report of information that shareholders would reasonably require to make an informed assessment of the financial position of the company and the company’s business strategies and prospects for future financial years. NGERS compliance will also need to be reported under s299(f).

Information that shareholders may reasonably require regarding climate change and carbon risk includes the anticipated or actual impact of:
- Regulatory compliance costs;
- Carbon cost imposts (through direct emissions trading liability or cost pass-through down the supply chain);
- Subsequent implications for asset value and revenue streams;
- Flow-on changes on access to debt and equity; and
- Consequences of climate change impacts for assets and operations.

Firms may also identify significant market opportunities arising from climate change and carbon management that they want to communicate to their shareholders and stakeholders.

While disclosure under the Corporations Act is mandatory, a surprising number of ASX200, excluding the ASX100 (ASX200 (ex100)) either declined to participate, or did not respond to requests to participate, in the high-profile voluntary Carbon Disclosure Project (CDP) in 2008. While 72% of ASX100 companies completed the annual survey in 2008 only 23% the ASX200 (ex100) did so. The Carbon Disclosure Project Report 2008: Australia & New Zealand (2008; p 35) speculates that this

may be partly due to the fact that it was the first year they had received the CDP information request and partly due to the companies that comprise the ASX200 (ex100) being of a significantly smaller market capitalisation than companies in the ASX100.

The results from CDP7 (2009) are due in September 2009; it will be interesting to see which ASX200 (ex 100) companies responded to a second request.

While the deadline for reporting to CDP7 was the 31 May 2009 firms may still submit questionnaires and have responses included on the CDP website. Gathering and submitting the required CDP data now will not only provide the basis of your Annual Report requirements, but will position your company more favourably with climate-change savvy institutional investor groups such as the Australia-New Zealand Investor Group on Climate Change, individual investors and shareholder activists.