Australia won’t be waiting for the Government!

Whilst the Australian Government and its multi-party climate change committee continue to pontificate over the introduction of a price on carbon, it seems the private sector is making up its own mind.

In the last week several reports have made the news indicating that a clean energy model adds value to the corporate bottom line. WME this week reported that PriceWaterhouseCoopers stated that the number of sustainability reports has continued to increase despite the global financial crisis. It adds: “such reports have become critical to a company’s credibility, transparency and endurance, with most companies now posting CSR information on their websites.”

It has been over seven years since the initial 10 international banks signed the agreement that is now known as the Equator Principles and it’s interesting to note that Westpac, ANZ and NAB are now signatories. The Equator Principles (EPs) are a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing.

The Westpac Banking Corp has now demonstrated its commitment to these principles by becoming the first major Australian bank to publicly state that it will avoid emissions-intensive projects until some form of carbon pricing structure has been implemented. If I were a gambling man, I would bet that they will not be the last Australian financial institution to see the business sense in advertising their green credentials.

Westpac’s statement, contained in its sustainability report, came almost immediately after a call for national and international policies to spur private investment into low-carbon technologies was issued by 259 of the world’s largest global investors from North America, Europe, Asia, Latin America and Africa plus 33 Australian institutions which, collectively, have assets totaling over $15 trillion – more than one-quarter of global capitalisation.

The 33 Australian investors are members of the Investor Group on Climate Change and its chairman, Frank Pegan of Catholic Super, said: “Australia should implement a carbon price as soon as possible to attract investment and avoid being last in the low carbon race.”

An idea of just how close Australia is to being last came in a study published last month by Vivid Economics commissioned by the Climate Institute which stated that China had an effective carbon price eight times higher than Australia’s and that the price in the US was three times higher.

Clearly, there is significant momentum building up in the private sector for certainty in the area of carbon emissions. That, together with the review recently undertaken on behalf of the Clean Energy Council that stated the strong dollar is a greater threat to the economy than any carbon pricing mechanism, serves to show that the real question is: How much longer will the government take to get through due process to convince itself, and the electorate, that it is jeopardising the prospects of Australia participating in the enormous economic opportunities offered by the low carbon economy?

Congratulations Westpac and the Investor Group on Climate Change. As for the rest of Australia, we must decide whether we want to be leaders or also-rans in the clean energy race!