1. The Business of Climate Change

3. WHAT A MESS!

7. Australian Business Business Leaders

8. US$ 3.1 trillion by 2020 The Carbon Economy is real?

9. Two Challenges

12. International Experience EU ETS began 2005 Now in 2 nd phase, tougher targets & pressures Indications of things to come Real outcomes It is working Environmental policy is highly valued Greener supply chains Consumer sentiment changing Mitigating future cost increases

13. Good carbon management can reduce costs, help create more efficient and resilient organisations whilst delivering a competitive advantage

14. Today’s focus Legislation Compelling analysis from McKinsey Reasons for you to act Case studies Next steps

15. Carbon Planet Carbon management solutions Expert scientific and strategic advice 1 million tonnes of GHG “assessed”

16. Legislation Federal Government and the Carbon Economy NGER - National Greenhouse and Energy Reporting Commenced July 2008 First Reports were due by 31 October 2009 CPRS - Carbon Pollution Reduction Scheme Draft exposure legislation released Due to start July 2011

17. NGER Compliance

18. Act RefAct RequirementPenalty Units (PU)Penalty $ PU/Day overdue $/day penalty 12.1Requirement to apply to register2000$220,000100$11,000 19.2Report to be submitted2000$220,000100$11,000 20.4Liability of other persons to provide information Individual400$44,000100$11,000 Organisation2000$220,000100$11,000 21.4Reports content relating to GHG projects1000$110,000 22.1Group members activity reports to be kept1000$110,000 22.2Reports to be kept of a persons activities Individual200$22,000 Organisation1000$110,000 61.3Response to questions of Authorised officer10$1,100 69.2Failure to provide facilities assistance10$1,100 71.3Power to request information - compliance50$5,500 71.4Power to request information - misleading information60$6,600 73.5External audit - compliance1000$110,000

19. Major Transport Company Leading carrier servicing Adelaide, Melbourne and Sydney. Completed 2008 GHG Assessment and developed Carbon Management Plan. Outcomes Exceeded NGER threshold and avoided $220,000 fine Opportunity to offset all emissions via embedded carbon pricing (less than 1.8% increase) Source: Carbon Planet Case Study: Knowledge

20. CPRS snapshot Action on climate change crucial to economic prosperity Encourage polluters to a cleaner future Prices will rise Covers 75% of Australian emissions Broader offset strategies allowed Permits treated as financial products EITE industry given greater support Households given support

24. Key findings Significant GHG reductions to 30% below 1990 levels by 2020 and 60% by 2030 are achievable without major lifestyle changes or technology breakthroughs Reducing emissions is affordable $A290 per household Achieving significant reductions requires prompt action Failure to do so will have real consequences in upcoming commitment periods McKinsey Report

25. Cost Impact Source: McKinsey Australia Climate Change Initiative

26. Cost Impact Source: McKinsey Australia Climate Change Initiative

27. Carbon Action Meet the challenge of the Carbon Economy Reasons to Act 1 – Compliance 2 - Reduce energy use, emissions and costs 3 - Build credibility and increase market share 4 - Recognise and account for new carbon costs

28. Carbon Action - ROI 2. Reduce energy use, emissions and costs. Pathways Behavioural change - minimal cost, immediate return Minor infrastructure - low cost, quick return Major infrastructure - higher cost, long-term sustainability

29. Case Study: Quick Return Quality assured company that delivers highly effective document and drawing management solutions. Completed a GHG assessment in 2008 and commenced a range of environmental programs. Outcomes Reduced emissions by 55% Reduced energy use by 18% Implemented new lighting and water saving systems Substantial staff engagement Scan Conversion Services Source: Carbon Planet

30. Carbon Action - Opportunity 3 - Build credibility and increase market share Action Identify clients that are greening their supply chains Build credibility with carbon business planning Communicate and promote carbon credentials

31. ASX Govt M/L SME Supply Chain

33. Actual tender questions What is your environmental policy? What are you doing to reduce your carbon footprint? Has your company set targets for reducing emissions? 20% of tender weighting based on carbon neutrality

34. “We will only deal with organisations that have their own green policy in place and are aiming to reduce their own carbon footprint” Source: James Scott, CIO, Toyota Motor Corporation Australia

35. Case Study: Supply Chain Macquarie Telecom Recently awarded $1 million Information Communication Technology (ICT) contract to Sun Microsystems over long time incumbent Hewlett-Packard due to their; “solid environmental credentials” and their ability to “really deliver on their green promises” Source: World Environment Centre Source: Business Review Weekly

36. …and remember If you’re involved in a supply chain ensure you have included a “Carbon Variation Clause” in your supply contracts if they extend into 2011.

37. Carbon Action - Risk 4 - Recognise and account for new carbon costs Focus Identify increasing prices and measure the impact Explore alternatives, cleaner and cheaper options Implement changes

38. Embedded cost of carbon * Fuels prices to be offset via reductions in fuel taxes for first 3 years NB - Due to free permits final cost impacts may vary CPRS early estimates Source: Carbon Planet

39. Carbon Impact On Profits Case Study: Innovation As % of turnover Electricity4% Gas3% Steel 30% Aluminum10% Net Profit8% CPRS 11% 8% 4% 67% Cost Increase Runaway costs Electricity4.4% Gas3.2% Steel31.2% Aluminum16.7% Net Loss(0.5%) Manufacturing sector example

40. Case Study: Early Adopter Best International Technical service provider to leading Tier 1 vendors like Dell. Conducted a GHG assessment and designed an embedded carbon strategy. Outcome 20 cents was added to the cost of their service calls This generated enough revenue to offset all emissions Now recognised as a green service provider Source: Carbon Planet

41. Carbon Action Three clear steps 1 - Reduce energy use, emissions and costs - save money 2 - Build credibility and increase market share - win more customers 3 - Modify business to account for new carbon costs - make money

42. The Big Picture Investor Risk “Investors will consider a range of factors, such as a credible mitigation strategy, when assessing the impact of an emissions trading scheme on the value of a company.” Source: Carbon Disclosure Project Report 2008 Australia & New Zealand (On behalf of 385 investor groups with assets of $US57 trillion)

43. “Your company needs to beat competitors in 2 areas: Reducing exposure to climate related risks and find business opportunities within those risks.” Strategy for business Source: Harvard Business Review: Fred Wellington, Jonathon Lash

44. Benefits of Acting

45. Where to from here? Measure your carbon footprint & Do something about it

46. Carbon Management Planning

48. Grant Assistance Clean Business Australia Initiative $240 million fund Four year period Improve energy and water efficiency Increase sustainability Key elements Australian Carbon Trust Re-Tooling for Climate Change Green Car Innovation Fund Take advantage of Government funding