Trucost finds ASX 200 carbon emissions rise as Australian emissions trading package hangs in the balance

02 February 2010

Greenhouse gas emissions from companies listed in the ASX200 have risen by 13% over three years, according to analysis by global environmental data provider Trucost. Unless the Australian Parliament approves legislation to apply a price to carbon, the rising trend in emissions looks set to continue. The VicSuper Carbon Count 2009 report highlights the need for investors to understand the carbon performance of companies they invest in to manage exposure to carbon costs.

VicSuper, with the support of the Environment Protection Agency Victoria, commissioned Trucost to analyse the carbon disclosure and performance of the largest 200 companies listed in Australia. Trucost also examined potential profit risk under the planned Carbon Pollution Reduction Scheme (CPRS), which the Senate is considering for a third time this week.

Key findings include:

Annual GHG emissions from ASX200 companies rose 10% to 268.7 million tonnes (Mt) of CO2-e in 2008. Over half of these emissions were direct from operations.
The Metals & Mining sector contributed most to a 13% rise in direct emissions across the ASX200 since the first analysis in 2006.
Six companies directly emitted 65% of greenhouse gases in the Index - Rio Tinto, BHP Billiton, Bluescope Steel, Qantas Airways, AGL Energy and Wesfarmers.
ASX200 companies emitted 370 tonnes of CO2-e for every AUD million of revenue they generated during 2008. Average carbon efficiency across the Index has improved by 9% since 2006.
129 companies that are less carbon intensive than the Index average will be less exposed to carbon costs that sector peers with above-average emissions. Carbon intensity varies most among companies in the Construction Materials and Oil, Gas & Consumable Fuels sectors.
If companies had to pay the projected CPRS market price of AUD10 for every tonne of GHGs emitted globally, carbon costs would total AUD2,287 million. This equates to just 0.37% of combined turnover.
At AUD10/tonne, carbon costs would equate to less than 1% of earnings for 107 companies.
On average, earnings are most exposed to carbon costs in the Construction Materials, Multi-Utilities, Food Products, Independent Power Producers & Energy Traders and Airlines sectors.
Carbon exposure varies widely within sectors. Metals & Mining companies have the greatest range in profit exposure to carbon costs (0.5% to 27%). Companies with lower carbon exposure are more likely to be able to pass on carbon costs.
ASX200 companies have continued to improve reporting of GHG emissions. The number of companies that reported data from which emissions can be assessed by Trucost rose from 25% in 2006 to 40% in 2008 (73 companies).
95% of greenhouse gas emissions analysed are now based on actual corporate disclosures, up from 75% in 2006.

Lauren Smart, Trucost Associate Director, said: "The VicSuper report shows that variation in carbon performance is growing. Super Funds can measure their exposure to carbon costs relative to benchmarks and identify how stock selection decisions contribute to carbon risks. Trustees and fund managers can use an understanding of the main contributors to fund carbon risks to reduce exposure to carbon costs."

Download The VicSuper Carbon Count 2009 at: http://www.trucost.com/publishedresearch.html

About VicSuper

VicSuper Pty Ltd is the Trustee of VicSuper Fund; one of Australia's fastest-growing public offer superannuation funds with over 249,000 members and AUD6.1 billion in net assets as at 30 June 2009. Sustainability is VicSuper's central operating principle and guides every decision we make.

While the interdependency between climate change and superannuation may not be immediately obvious, both are long-term issues that will determine our future quality of life. Both require foresight and long-term planning; and both call for action in the short term to influence outcomes in the long term.

At VicSuper, sustainability investing is a long-term approach that, when applied to investments in company shares and other assets, considers the implications of economic, environmental and social challenges on long term profitability and shareholder value. There is growing consensus within the investment community that over the long term, companies and other investments that address all of their environmental, social and economic risks and opportunities will provide better investment returns and a better outcome for the environment and society through sustainable economic development, which is particularly relevant to VicSuper as a universal investor.

Each year VicSuper releases a sustainability report under the Global Reporting Initiative (GRI) guidelines which details how we are building a sustainable super fund. VicSuper's sustainability reports can be viewed online at http://www.sustainabilityreport.vicsuper.com.au/

More details on VicSuper's commitment to sustainability can be found at http://trucost.corporate.trunky.net/cms/www.vicsuper.com.au

About Trucost

Trucost, the global environmental data company, helps organisations to understand and reduce the carbon and wider environmental impacts of their operations, supply chains and investments. In this way Trucost helps its customers manage financial risk from climate change regulation and natural resource dependency, meet environmental reporting requirements, demonstrate robust environmental credentials and drive cost and efficiency improvements through their operations.

Trucost's researches and maintains the world's largest and most comprehensive database of corporate environmental impacts - from carbon and other greenhouse gases to water, waste, metals and chemicals, and was commissioned by UK Government to write environmental reporting guidelines for business.

Notes to editors

CO2-e: Greenhouse gas emissions measured as their carbon dioxide-equivalent.
Download The VicSuper Carbon Count 2007 and VicSuper Carbon Count 2008 for FREE