NZETS mitigation “essential”

Media Release

14 October 2008

NZETS mitigation “essential”

New Zealand firms that fail to mitigate the pass-through costs imposed by the price of carbon will struggle to survive in the potentially hostile environment brought about by the New Zealand Emissions Trading Scheme (NZETS).

That’s according to leading energy lawyer, Bryan Gundersen, partner at Kensington Swan.

He says many chief executives still have not grasped the fact that climate change is a significant risk to their company’s corporate performance.

“Businesses need to address the risks posed by climate change via their supply chain - this is where the majority of their climate change liability or ‘carbon footprint’ resides.

“In short, CEOs need to start taking the risks and increased costs associated with climate change seriously or the valuations and performance of their companies will suffer.”

Mr Gundersen says the implications of climate change associated risk are immense.

“Due diligence in mergers and acquisitions needs to be reassessed in light of the likely changes in corporate value, insurance issues need to be reconsidered, and so do any tax obligations.

“Having a corporate strategy which actively accounts for the inherent climate change associated risks is the most effective way to counter the uncertainties in the valuations and costs of business.

“The McKinsey Institute recently stated the mitigation of climate change will become a significant corporate-investment theme, either creating fundamental shifts in demand or leading to new competitive dynamics and business models.”

“In New Zealand the risk to corporate value and the hike in the cost of doing business is even more pronounced due to the recently implemented NZETS,” says Mr Gundersen.

ENDS

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