CEOs hazy on emissions trading

by 08 Jul 2008

CEOs AND senior executives know alarmingly little about Australia’s emissions trading scheme (ETS), an initiative of the Federal Government to adjust for the challenges of global climate change.

According to a recent survey of 250 CEOs, 8 per cent of all respondents indicated that they had no knowledge of the emissions trading scheme and 80 per cent stated they had only some or little knowledge of the ETS. Furthermore, only 36 per cent of those surveyed were aware that the Australian Government’s emissions trading scheme is to commence in 2010.

The Australian emissions trading scheme (ETS), will allow parties to buy and sell permits for emissions or credits for reductions in emissions of certain pollutants. Essentially, organisations that reduce their emissions below the threshold collect credits they can then sell to those organisations that use a higher than legislated level of carbon emissions; hence creating a free-market trading environment.

The impact of the ETS will be felt across all Australian organisations because the introduction of carbon pricing will increase the cost of electricity, transport and fuel.

Surprisingly, however, the survey, which was conducted by the Australian Institute of Management, showed that despite the lack of knowledge among CEOs and executives about the emissions trading, 62 per cent still thought it was a good idea and justified.

“The survey shows an alarmingly low level of preparedness for the emission scheme’s introduction with obvious implications for ETS readiness in 2010,” said Susan Heron, CEO of the Australian Institute of Management.

“What is encouraging is that 62 per cent of survey respondents said they believe the introduction of the emissions trading scheme is justified,” she said.

“Australian organisations need to recognise that the government’s ETS decision means the scheme will be a business reality in 2010 and they need to ensure they are best positioned to take advantage of its introduction,” she said.

Although the Australian Emission Trading Scheme is expected to be targeted initially at major polluters, its impact will flow through to small and medium-sized companies. However the low awareness levels of the emissions trading scheme, according to the survey, were broadly similar across all organisations, regardless of size.

When asked about which source they received their information regarding the ETS from, the overwhelming majority of respondents indicated they obtained their knowledge from news reports (TV, print and radio), followed by information provided to them by industry associations.

Heron said organisations needed to ensure there was an executive within their ranks who had been given accountability for emissions compliance.

“The emissions trading scheme will put more pressure on the training, development and skill sets of Australian management than we have seen for many years,” she said.

“I think we will see a new executive role emerge in Australian organisations based on sustainable management and I believe the capabilities of such a person will be crucial in shaping their company’s reputation and financial performance.”

Awareness of Emissions Trading Scheme

Very aware – 12%

Somewhat aware – 52%

Know very little – 28%

Know nothing at all – 8%

Source of information on Emissions Trading Scheme

News Reports – 94%

Industry Associations – 27%

Government Publications – 21%

Is the Emissions Trading Scheme justified?

Yes – 62%

Unsure – 30%

No – 8%

Source: Australian Institute of Management

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