A company's carbon footprint manager will have some big shoes to fill

11 Jun 2008Archived News Energetics in the News

Published: The Age - by Leon Gettler - Cheryl Bowler,Principal Consultant; Carbon Markets, Energetics Pty Ltd comments on the next steps for carbon management within a company.


Companies face the challenge of finding skilled people for the roles emissions trading will create.
THE position has not been created but one of the hot jobs of the future will be chief carbon officer. Not surprisingly, there is already talk of a skills shortage. There's gold in those emissions.

The global carbon market grew to $US64 billion ($A66.9 billion) last year, according to the World Bank. That's just the beginning. Experts say it is nowhere near its potential as market participants grapple with the complexities and risks of carbon trading.

Australian companies are scrambling to report how much energy they produce and consume under the National Greenhouse and Energy Reporting Act, the first step to an emissions trading scheme here.

It has just dawned on businesses that they need to start tracking their emissions from July 1. If they produce more than 125,000 tonnes of greenhouse gas, or produce and consume more than 500 terajoules of energy, they will need to register by August 31 next year. They will then have to report on how much energy they use and produce by October 31. The information will be published on February 28, 2010. Some companies in sectors affected by carbon trading - resources, utilities, manufacturing, financial services, food and beverages, and construction - have carbon specialists in place. But their workload will increase with an emissions trading scheme. "At the moment, there are quite a lot of carbon steering committees, but the next step will be the appointment of a carbon manager of sorts," said Cheryl Bowler, from consultancy Energetics. When that happens, it could change the shape and management of organisations. Carbon emissions are no longer just about risk management. Emissions management affects the way organisations run.

That's because carbon is not just an environmental issue. It is also a financial and accounting event. Carbon trading, credits and offsets have the potential to create significant intangible assets and liabilities. The chief carbon officer will also have to brief the audit committee on the implications of the company's carbon footprint - the term describing the impact the company's activities have on the environment, as measured by the greenhouse gases produced - for the financial accounts.

It is a hedging issue. Companies will have to forecast and hedge their carbon risk as part of their plans for growth and these plans will have an impact on the footprint. Chief carbon officers might be hedging that risk for growth with credits.

The chief carbon officer will also be looking into the risk profile across the supply chain. If customers or suppliers pay for every tonne of extra emissions, and if they cannot pass it on, their business might be in trouble under the new regime. What happens when a supplier decides to whack on a premium because your disclosures reveal that you are a carbon-intense business? Or if a customer refuses to do business with you?

Potentially, it might be a tax issue. Will there be a tax on permits or credits? And what about insurance?

The chief carbon officer will also have to get their head around the legal issues. What impact will an emissions trading scheme have on contracts? Then there is litigation. In January, the NSW Land and Environment Court gave us a taste of things to come when it ruled invalid a concept plan for a residential subdivision and retirement complex on the coast near Wollongong. The court said the department should have considered the flooding risk from climate change.

Peter Briggs, a litigation partner at Clayton Utz, expects a wave of cases over green products and services. "At the moment, you can go out and buy credits in the market to offset your emissions," Briggs said. "But what happens if the promise of carbon neutrality of that product is wrong? I can see a rash of cases about misleading conduct."

So who will get the chief carbon officer job? Traditionally, the job of environmental manager has gone to the engineers but the CCO will have a broader role. Andrew Petersen, a partner in the climate change services group at PricewaterhouseCoopers, said that might require a rethink of the way businesses are structured. He said the person who managed carbon would need an understanding of financial markets, legal risk, processes and controls and also manage the operational aspects of keeping carbon data and reporting.

But there aren't many of them around. And management structures don't lend themselves easily to identifying how carbon affects the business.

This is the challenge for organisations that have traditionally put their managers into silos where they are best able to deal with individual issues. That will no longer be the case with carbon.

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