The Chief Financial Officer + Sustainability + Carbon

Aaron Magner

UNSW Sustainability

Sustainability + CarbonPeople + profit + planet

The role of the CFO

CFO Symposium University of New South Wales

Overview

Sustainability + Carbon

> Carbon price impacts

> Mandatory reporting: carbon + greenhouse emissions

> Voluntary reporting: carbon + sustainability

> Evolving role + responsibilities of CFO + corporate finance

> Trends in sustainability reporting

> Sustainability and carbon issues to address now.

What Sustainability means for you

Sustainability = the capacity to endure.

Environmental> Energy—fuel, oil, alternative> Water> Carbon emissions> Waste reduction> Recycling> Reprocessing/re-use> Green cleaning> Agriculture/organic foods> Packaging> Product content> Biodiversity

Economic> Accountability/transparency> Corporate governance> Stakeholder value> Economic performance> Financial objectives

Social> Public policy and advocacy> Community investments> Working conditions> Health/nutrition> Diversity> Human rights> Socially responsible investing> Anticorruption and bribery> Safety> Fair Trade

The carbon price

Carbon emissions data = financial data> Clean Energy Futures package:

> Clean Energy Bill 2011 > sets up the carbon price. > Clean Energy Regulator Bill 2011 > sets up regulator. > Climate Change Authority Bill > advise government

on carbon price mechanism.

> 1 July 2012: $23 tonne CO2-e.

> 1 July 2015: Emission Trading Scheme

> Directly applies to 500 facilities.

> Pass through to consumers: indirect liability.

Carbon = NGER Reporting

National Greenhouse and Energy Reporting Act (NGER)Must submit by 31 October for year end 30 June:

> Energy consumed + energy produced> Based on invoices for electricity, gas, fossil fuels.> Calculate emissions for each ‘facility’ and each type of greenhouse

gas for each facility expressed as CO2-e.> Department of Climate Change and Energy Efficiency audits + fines.

NGER methodology underpins:> Carbon tax and Emission Trading Scheme> Government National Greenhouse Inventory. > National Carbon Offset Standard.

Carbon = voluntary reporting

Carbon + emissions data = financial data

> Energy Auditing and Management> Carbon tax liability assessment> Emissions Management Plan> Life Cycle Assessment> Carbon Neutral Certification for Company

or Product/Service> The Carbon Disclosure Project> Data visualization, smart grid, energy

efficiency opportunities.

Role of the CFOSustainability + Carbon data has becomeembedded in CFO’s traditional areas of focus.

> Access to evidence> Data collection processes> Strong analytical skills> Reporting skills> Reporting culture> Consistency of approach> Internal audit function> External audit relationships.

Sustainability reporting not yet mandatory.

Why report if you don't have to?

> Develop administrative capacity.> To drive value creation> Quality of management insight> Demonstration of value creation to stakeholders> Risk management incl. supply chain risks> Investor + customer demand> Competitor pressure> Request from stakeholders > To prepare for future mandatory reporting.

Sustainability IndexesSustainability Equity indexes> FTSE4Good

> Dow Jones Sustainability Index

> RepuTex

Credit rating agencies + investment brokers > Moodies + Standard and Poor's

> Thomson Reuters + Mercers

> Socially Responsible Investment (SRI)

> Environment, Social and Governance (ESG).

Sustainability reporting frameworksInternational

> The Global Reporting Initiative – GRI 3.1

> The UN Global Compact

> AA1000 Series

> Social Accountability 8000. 

Australian> GRI followed by 90% of sustainability reporters> National Carbon Offset Standard> AUASB to issue ASAE 3410 Greenhouse Gas Statement.

Trends: Walmart + supply chain

> Suppliers must provide detailed sustainability data.

> Category of questions:> Energy & Climate> Material Efficiency> Nature and Resources > People & Community.

Trends: Product responsibility

Product reportingEthical shopper guide 0- Choice

What you can do

> Work with sustainability staff> Engage and connect sustainability data holders.> Develop sustainability performance metrics> Training staff in carbon accounting and sustainability reporting > Communicate a sustainability vision & mission> Establish a sustainability management committee for governance > Establish business rules and policies and procedures.> Consider carbon management and sustainability reporting software.> Consider third party audit and assurance.

Actions for CFO’s to take to enhance corporate value through sustainability

Thank you + Keep in touch

Aaron Magner Director UNSW Sustainability UNSW SYDNEY NSW 2052www.unsw.edu.au/sustainability

LinkedIn linkedin.com/in/aaronmagner Twitter @aaronmagnerSlideshare slideshare.net/aaronmagnerFacebook facebook.com/SustainUNSW