03 9948 2100info@dewintern.com

Carbon cost disclosure

Home / Carbon cost disclosure
Back to News

The impending announcement of details of the Federal Government’s carbon pricing scheme on 10 July brings with it a continuous disclosure question. In particular, companies will need to consider whether the scheme will have a material effect on the price or value of its securities, within the meaning of ASX Listing Rule 3.1. If it will, a market announcement will need to be made unless one of the Listing Rule exceptions applies. As reported in The Australian Financial Review, the ASX has warned that it will be closely monitoring listed companies’ disclosure in relation to the carbon pricing scheme’s impact.

Since the Government announced its intention to introduce a carbon tax, a number of companies have lobbied against the proposal, with some making strong (and specific) statements about the likely impact it will have on their operations. Some companies have suggested that the tax could see the closure of some of their operations as a result of the scheme, amongst macro business impacts.

This offers a broader reputational lesson from the carbon tax debate – that listed companies must always be mindful of the future continuous disclosure implications of their lobbying efforts. Of particular interest will be the way in which companies that made strong statements against the carbon pricing scheme now deal with their disclosure obligations following the Government’s upcoming announcement. Any new statement that is inconsistent with earlier statements (without good reason) could expose those earlier claims simply as political posturing, damaging a company’s credibility going forward. Such inconsistencies are also likely to be met with ire from shareholders and regulators, if not more serious questions of misleading conduct (as mentioned in the AFR article).

Putting aside the technical legalities around disclosure obligations, the upcoming AGM season may well put the screws on companies likely to be affected by the carbon pricing scheme – both those who have previously made noise about the proposal, who will be pressured to quantify and specify expected impacts, as well as those who have stayed mum but from whom shareholders will now be seeking disclosure.