Survey: Asia-Pacific companies worried over carbon laws

Study suggests carbon-hungry companies may be leaning toward green to reassure investors concerned about the financial impact on the companies of future carbon laws.

MELBOURNE, Australia--Asia-Pacific firms are worried that tougher laws on greenhouse gas emissions will hit financial performance and uncertainties on the issue are already limiting their ability to raise capital, a just-published survey showed.

The survey, by Standard & Poor's and carbon analytics firm RepuTex, also found only a minority of firms demonstrated a high understanding of risks associated with tighter carbon laws.

"Respondents from all sectors across the entire Asia-Pacific region clearly stated that they anticipate climate change to progressively affect their financial statements," it said.

The study found 41 percent of the respondents reported that to a degree they were already feeling the impact of carbon regulations on their fund-raising activity.

It indicated some firms were actively exploring strategies to turn financial risks associated with greenhouse gas emission laws into opportunities to gain a competitive advantage, but only a minority showed a high understanding.

"Existing levels of awareness around factors such as carbon prices, expected climate change regulation, financial risks, and opportunities are relatively low, indicating that there is a substantial knowledge gap that may need to be addressed to achieve effective risk management," said the survey, released at the annual Carbon Expo Australasia conference.

The survey polled 300 companies but was based on responses from 28 companies, though the results also included data from 1,657 Asia-Pacific companies monitored by RepuTex.

About 90 percent of respondents expressed concern over the impact of physical climate change on their industry, with most concern shown by companies operating in Japan, Malaysia, and India.

By sector, real estate; metals and mining; consumer products; and transportation saw climate change as having the most physical impact on their operations.

According to data provided by RepuTex, the most carbon-intensive sectors in the Asia-Pacific region are utilities, responsible for 58 percent of the region's emissions, energy, accounting for 18 percent, and materials, 13 percent.

The data showed Japan produced the largest portion of carbon emissions in the region, accounting for 31 percent, followed by China, with 29 percent, and South Korea, 11 percent.

The survey found that 46 percent of respondents recognized carbon change commitments as a possible source of competitive advantage, leading them to analyze future carbon liabilities while building carbon-management strategies.

Investors wary of carbon risk
Firms in the survey also indicated they believed the evolving regulatory and physical environment in the region meant investors were increasingly identifying firms which posed the greatest risk to their investment portfolios over potential carbon liabilities.

Investors were increasingly seeking to buy stock in carbon-efficient leaders, the companies in the survey believed.

The participating firms also recognized that behavioral change and the use of new technology to reduce carbon footprints opened up opportunities to cut exposure to higher energy costs.

Nearly 80 percent of the respondents chose implementing energy efficiency measures as the most preferable and feasible option to mitigate carbon exposure.

Investing in clean technologies, innovation, and renewable energy, and retrofitting and optimizing existing processes, were chosen by 71 percent of the respondents.

"We believe that this indicates that respondents are taking advantage of low-hanging fruit such as energy-efficiency measures, which often result in cost savings," Standard & Poor's/RepuTex said.

They said the oil and gas; metals and mining; electric utilities; and integrated gas sectors anticipated significant carbon exposure under future emissions trading schemes, and were already performing direct-emissions forecasting to determine future carbon liabilities.

 

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