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You are here: Home / Archives for Stakeholder engagement

12 March 2015 By David McEwen

An Intergenerational Moment

An Intergenerational Moment
The Australian Government’s latest Intergenerational Report was released last week but misses an opportunity to start a key conversation. Looking 40 years into the future – what used to be two generations but is now closer to one given that the average age of parents having their first child birth is now over 30 – it is updated every five years or so.

In this case the report predicts the Australian population will have grown to around 40 million (from just under 24) – not unlikely given the current net growth of 1 person every 90 seconds or so. The average person will be older, with relatively fewer of working age and many people living longer into retirement. We’ll need a lot more healthcare and pension costs will soar, which will need to be funded from a relatively smaller tax base due to the reduced overall labour participation rate.

Meanwhile, by 2055, atmospheric carbon dioxide concentrations are expected to be anywhere between 480 and 580 parts per million, up from around 400 today (a 20-45% increase) and from about 320 when formal records began around 60 years ago. Average global temperatures, in turn, are likely to rise by a further 1-1.5 degrees C over current levels. Mean sea level rise is likely to be between 5 and 30cm. In these projections, the lower level of each range assumes deep cuts are made urgently to global greenhouse gas emissions.* To borrow a cricketing term, the “required run rate” involves cuts of around 6% per year, versus actual performance last year of an estimated increase of about 2.5%**

While it does contain a brief section on climate change, the 2015 Intergenerational Report is largely silent on the effects of these impacts of climate change on Australia’s future population and economy. In terms of its use as a facilitator of hard conversations between governments and the people, it fails to ask critical questions such as:

How will we keep our elderly (and outdoor workers such as farmers and construction personnel) safe from searing heat waves, which are expected to increase in intensity and frequency and exacerbate our health spending crisis?

How will we ensure fresh water security for a population base nearly 70% greater than today’s, particularly with rainfall patterns becoming more erratic?

How will we maintain a productive agricultural sector to feed Australians (and our export partners) with alternately parched, drenched and warmer farmlands?

And how will we deal with exposed coastal property and critical infrastructure such as ports, key airports and roads from storm surges that will be significantly heightened by rising seas and cyclonic winds?

If our tax base is already weakened by changing demographics and private insurance may become unaffordable, how will we afford the level of investment necessary to adapt to climate change and the likelihood of more frequent and costly natural disasters?

Within these questions, however, lies significant opportunity for a range of industries to position both existing and new products and services to the next generation of government, consumer and private sector buyers.

Talk to Adaptive Capability today about safeguarding and enhancing your business’ future.

 

*Source: United Nations Intergovernmental Panel on Climate Change Assessment Report 5, released 2014; ranges are approximate and have been estimated from graphs appearing in the report.
**Source: CO2 Now

Filed Under: Australian Government Climate, Climate Change Adaptation, Federal Budget, Risk management, Stakeholder engagement

25 February 2015 By David McEwen

What’s your ESG Rating?

What's your ESG Rating?

A new breed of sustainability analysts is increasingly driving institutional investor decision-making. Find out more.

As a company director or senior executive you keep an eye on your company’s credit rating and – if you’re a listed entity – your investor relations team will track what market analysts are writing about your stock. But have you checked your ESG Rating lately?

Environmental Social Governance (ESG) is the umbrella under which a growing number of specialist analysts and index providers are tracking aspects of company performance other than its financial results.

In recent years buy side analysts such as Sustainalytics have emerged providing reports or rankings about companies’ ESG performance to fund managers and other major investors. New indices and tools have been developed by the likes of MSCI to help investors understand and manage the ESG risks inherent in their portfolios. And not for profits like the global Carbon Disclosure Project have been directly collecting environmental data from companies and cities to inform the investment community.

The growing influence of such data was highlighted late 2014 when the Australian National University’s endowment fund controversially announced it was dumping a number of fossil-fuel exposed stocks on the basis of analysis from Canberra-based CAER. It is not alone, with a global divestment movement spearheaded by environmental groups and aided by organisations such as the Asset Owners Disclosure Project convincing a growing number of institutional and individual investors to sell down their holdings in the fossil fuel industry and take business away from banks that continue to fund it.

Company directors and executives should ensure they understand what is being said about their organisations by the various ESG analysts and that the information being presented to investors is accurate, rather than simply scraped from public domain sources as is often the case. Otherwise they may unwittingly lose shareholder value if investors make divestment decisions on the basis of incomplete or misrepresentative data.

Talk to Adaptive Capability today about safeguarding your business’ future.

Filed Under: Risk management, Stakeholder engagement, Strategic Adaptation

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