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2 Getting Momentum on Sustainability Steve Lee United Group Limited

Getting Momentum with Sustainability Steve Lee Group Manager HSSE

4 Getting momentum…

5 Big city lights….

6 Influences…

7 Risk: Climate Change No Action Reasonable Action Substantial Effective Action Radical Action Consequence Likelihood

8 Sustainable Development Improving operating efficiencies To meet the needs of the present without compromising the ability of future generations to meet their own needs." United Nations World Commission On Environment & Development Reducing the company carbon (ecological) footprint i.e. reduce use of energy, materials, water, waste

9 Business imperative Why integrate sustainability into the business? Investment groups with increasing expectations Compliance to current and emerging legislative requirements Compliance to current and emerging company reporting requirements Large company demand & competitors adopting progressively Opportunities for product and service Opportunities to improve internal efficiency Potential for positive marketing influence

10 Business as usual…! In the context of the businesses we are involved with… Electricity use – eg lighting, fixed equipment, air conditioning, hot water Fuel use – eg petroleum, diesel Green house gas contribution - LPG gas, CO2, Consumption – paper, air travel, bulb replacement, petrol, etc Resource use – eg water, Waste output reduction, recycling Impact of ETS on prices of energy Financial impact/increase – rising power & fuel costs, Identify environmental impacts in current operational facilities.

11 Australian response so far… Energy Efficiency Opportunity (EEO) Act (2006) Federal Govt – Dept focussed to improve their energy efficiency on top ASX high energy consuming businesses & industries using over 0.5 Petajoules (PJ) of energy (electricity & gas sources) per year. Required to evaluate & publicly report on cost effective energy saving opportunities. National Greenhouse and Energy Reporting (NGER) Act (2007) Federal Govt – Dept of Climate Change focussed on establishing a single, national system for reporting greenhouse gas emissions, abatement actions, and energy consumption and production by Australian Corporations from 1 July Australian Emissions Trading Scheme Legislation in 2009 focused on implementing ETS. Reporting on Carbon Disclosure and Corporate Responsibility Increasing demand by investment organisations requiring more information to accurately evaluate company non-financial related performance with respect to sustainable development and corporate governance.

12 Australian response so far… Energy Efficiency Opportunity (EEO) Act (2006) National Greenhouse and Energy Reporting (NGER) Act (2007) PJ energy (=125,000 T CO 2 ) PJ energy PJ energy

13 Progress to ETS Reduce Australia’s GHG emissions by 60% by 2050 Key steps Commencement of Mandatory Reporting (NGER)July 2008 Public release of a Green Paper on ETS design (Garnaut Report) July 2008 Consultation on Green Paper (Garnaut Report)July to Sept 2008 Public release of exposure draft Emissions Trading (ETS) legislation December 2008 Provide firm indication of medium term trajectoryBy end of 2008 Bill for ETS considered by ParliamentMarch to Mid-2009 Consultation on ETS regulations2009 ETS Act enters into force, regulator established3rd Quarter 2009 Emissions Trading Scheme (ETS) to commence (using Cap &Trade) 2010

14 Sustainable Development

15 Direct & Indirect Effects Direct effects of a Price of Carbon Upstream Pressures Suppliers will pass on cost of carbon –Materials – particularly those with high energy inputs such as cement, aluminium, steel –Electricity – liability of electricity producers, power rates increase –Fuel suppliers – potential increased costs from upstream liability Certain materials may develop higher demand because of use in low emission activities –The development of the ethanol industry in Australia may push up the price of sugar –Potential increased competition for forest resources because of forest sink activities or biomass fuel source Increase price of timber –Switching to gas from coal as a higher energy source –Solar energy capturing materials,

16 Indirect effects of a Price of Carbon Downstream Demands Customers want products and services with lower costs. Carbon price impact on energy costs gives incentive to purchase low emissions products and services to avoid a carbon liability on your business. Environmental sustainability demands –Rise of carbon neutral and emissions reduction programs in the corporate world –Companies that have made carbon neutral pledges include HSBC, Swiss Re, IAG and NewsCorp –Companies will increasingly want products and services that help reduce their carbon footprint –Large companies exerted pressure on their supply chain eg WalMart working with manufacturers and freight service providers Direct & Indirect Effects

17 Some steps to take a reasonable response in assessing the risks and opportunities and developing a carbon management strategy: 1.Measure and monitor carbon footprint – your energy usage 2.Ensure carbon data is independently audited 3.Forecast carbon growth and set reduction targets 4.Assign costs to abatement opportunities 5.Report carbon data internally and externally 6.Create a senior carbon management position 7.Track competitor’s responses 8.Price carbon into investment decisions 9.Identify and leverage new carbon opportunities (avoid green-wash) 10.Review progress on carbon targets Carbon Management Strategy

18 Progress to Date Working Group established - June 2007 Energy assessment data for UGL operations – Nov 2007 UGL Sustainability Program Paper – Feb 2008 Intranet – internal communication on sustainability – March 2008 Sustainability Manager initiated – May 2008 Sustainability Program commenced – May 2008 Collating current UGL activity and initiate both short and long term actions

19 Key actions Key Actions 1 Corporate Sustainability Manager, Establish a UGL Sustainability Steering Committee 2 Formal reporting be established for energy consumption Data to be collected and collated for end of quarter reporting 3Detailed strategy and initiatives communicated 4 Initiate reporting for identified resource consumption ie photocopier materials, lighting replacement, air travel. 5UGL Sustainability integrated into business planning activities 6 Formal reporting processes on progress against sustainability actions to be established on a quarterly basis

20 Summary  Identify your exposure to Federal Govt progress with EEO and business impact from the ETS  Assess the impact of projected energy costs increases on your business (cost to operating/manufacturing and price increase products)  Carbon reduction is a business efficiency issue  Carbon Management Strategy a good process to use  Broaden the efficiency assessment to include other resources you use  Define participation with your business units with efficiency initiatives  Employees need communication and participation opportunities  Evaluate if there are new business opportunities and impacts  Public company communication - prepare to adopt a corporate reporting standard ie Global Reporting Index (GRI) or similar