Carbon Winnes and Losers in the ASX 200

The Australian fund managers, especially the pension funds are investing $1 trillion dollars and they are interested in the effect of Environmental, Social and Governance (ESG) aspects on the financials and future of large organizations in Australia. They set up Regnan to work in this area.

Their latest study conducted with the help of Monash Sustainability Enterprises (MSE) has come with some interesting information.

From the ABC:

Research conducted for Regnan estimates that 43 of Australia’s biggest 200 companies would suffer a significant loss in earnings under a carbon trading scheme in which carbon was priced at $30 per tonne.

Erik Mather is Regnan’s managing director.

“For the analyst community we’re saying, ‘Now is the time to get on top of this issue,'” he said.

“There is no longer a question of whether we are going to be facing a carbon-constrained future.

“It is just a question of price, and now is the time to understand all the variables – and there are many – that are going to impact that future valuation.”

Regnan’s news release (PDF)has some more facts including that there could be some 50 winners due to Climate Change in the ASX 200.

Key results from the study include:
 Greenhouse Gas (GHG) intensity issues are more widespread than previously thought. Forty three
companies within the S&P/ASX200 index have GHG intensities above 1750 tonnes CO2-e per $M EBITDA,
over 5% of earnings at a carbon price of $30/tonne. 5% of earnings is a common accounting benchmark for material impact.
 Twenty-two of the most GHG-intensive companies in the S&P/ASX200 index do not disclose GHG emissions
to the market.
 Only 36% of S&P/ASX200 index companies that currently disclose historical GHG emissions show declining GHG intensity.
 25% of S&P/ASX200 companies were identified as having greater opportunity than risk from weather related or market changes.
 More than half of the S&P/ASX200 companies fail to provide any evidence of climate change risk
 Clear and comprehensive consideration of climate change risks and opportunities in company strategy is
evident in only ten S&P/ASX200 companies.
 Weather impacts on earnings are rising as drought and extreme weather cause production stoppages,
project delays, impacts to supply chains, rising input costs, reduced sales and increased underwriting costs.
In some cases the earnings impacts were greater than 30% in 2006/07.


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