Australia: Preparing for carbon price disclosures

Clayton Utz Boardroom Radio

Geoff Hoffman and Brendan Bateman talk to Boardroom Radio about how the carbon tax will affect companies' continuous disclosure obligations.

Find the link to the boardroom radio here and the transcript below.

You might also be interested in...


David Bushby

We're speaking with Geoff Hoffman who's a partner in the Corporate Advisory and M&A Group at Clayton Utz in Sydney. Joining him is Brendan Bateman who's a partner in the Climate and Sustainability Group, also in Sydney. Gents thanks for joining us and welcome to BRR.

Brendan, Prime Minister Gillard looks set to top television ratings this Sunday as she announces the Government's long-awaited carbon pricing package, but we're seeing a lot of the detail emerge already. Can you give us a quick wrap of what's expected, including of course the all-important price.

Brendan Bateman

What is going to be announced appears to be some type of package which includes a carbon price. There are other elements that are likely to be announced including renewable elements as well. There will be a carbon price mechanism.

Now the object of the carbon price mechanism is to introduce a price relating to the emission of carbon into the economy. That can be done any number of ways and it's expected that the Government will announce it will be done through an emissions trading scheme. That emissions trading scheme however will have a transitional period of three years, and during that transitional period there will be fixed price permits.

As you said the price for the permits is all important, because that ultimately is what filters through to the economy and sends the price signal to try and drive investment and purchasing decisions away from energy intensive goods and services.

At the moment we're looking at a price somewhere between $20 and $26. Professor Ross Garnaut has suggested that a price to achieve our abatement target by 2020 needs to be about $26, at least in the initial stage. Recent press reports suggest it might be around $23 which is where Treasury modelling was a couple of years ago.

So certainly that's where we're looking in terms of price. Other aspects and detail associated with how the price will operate will obviously be revealed on Sunday and that will have implications obviously for liability, exposures and things of that nature.

David Bushby

And if we can just turn to some of the impacts disclosure obligations, Geoff, if I can bring you in here, how can this impact on company disclosure obligations?

Geoff Hoffman

Well I think for companies in a number of sectors it's going to have a potentially material shift in their cost of doing business. So for those companies that are listed on the ASX this could give rise to an obligation to make announcements to the market to ensure that their shares are trading on what we call a fully informed basis.

The basic test is whether the impact of the scheme on the company is information which a reasonable person would expect to have a material effect on the price or value of the company's securities.

When we're talking about something like this, this scheme which will have an impact on underlying cost structures, you then have consider what impact that will have on the overall earnings of the company. The rule of the thumb is anything between 10 and 15% or more could be material.

So what we're saying is that if there's a change in the entities or the company's previously released financial forecasts or any market consensus forecast in excess of 10 or 15%, that may be considered to be material and it should be announced. And it should be announced as soon as the company becomes aware of the information.

David Bushby

Well Brendan bringing you in here, given there's a lot of this stuff that's already being leaked, so would a lot of this be priced into the market already or will Sunday's announcement really trigger some disclosure on earnings?

Brendan Bateman

Look I expect that there has already been factored in quite a bit. There's been certainly a lot of analysis by some financial institutions such as Citibank regarding exposures of particular Australian companies to a carbon price, and what that price will be.

That having been said, specific details associated with things such as compensatory measures, whether or not there's going to be a free allocation of permits to emissions intensive and trade exposed sectors, and what the quantum of those permits will be and how they're going to be distributed, may well have material impacts on how those companies operate and their cost structures.

Also important to bear in mind is that it's not just the direct cost that a company might have to purchase permits in order to be able to meet its obligations under the scheme. It also has impacts on asset values in terms of the valuation of a particular asset, but it also has indirect implications. The objective of this scheme is to issue the carbon price into the economy, not just on direct emitters but also on all aspects of the economy, so that prices get passed through the scheme.

Consequently through supply chains, businesses, will be paying higher prices for those goods and services which are more carbon-intensive. So there will be exposures not just for the direct liable entities but also for other sectors of the economy.

David Bushby

And just finally Geoff there are a lot of moving parts to all of this. So how can a company properly inform the market?

Geoff Hoffman

Look I think this probably throws back to a comment you made earlier about there's been a lot of commentary in the market already and a lot of analysis done.

I think perhaps before Sunday a lot of that has been in the realm of merely supposition and really hasn't been sufficiently definite to warrant formal disclosure on the part of companies. But I think the question is whether after Sunday the scheme still falls within that realm of supposition and speculation.

In terms of that level of uncertainty everyone expects that Sunday will remove that level of uncertainty because whilst what's being announced on Sunday isn't actually law, it's the result of multi-party consultation which we all assume will become law within a fairly short period of time.

So that uncertainty's been removed but you're still left with uncertainty about the economic impact on the economy. There are a lot of moving parts, there's price, there's exemptions and what activities are going to be caught. There's what compensation is available.

Then you need to analyse the impact of that on both the cost of inputs into the business and then what the impact is going to be in terms of your ability to earn money in your output market.

So I suppose what companies need to do is to think, well, just because there's no precedent for a significant regulatory intervention of this kind which has such a broad impact on the earnings of a large numbers of companies doesn't mean that, at least for some companies where the earnings impact is going to be material, they don't have to do the analysis and make disclosure.

David Bushby

Well it's certainly going to be a busy time for many, many businesses and analysis and commentators on Sunday night and through next week. We'll leave it there for now, thanks again for your time, Geoff and Brendan.

That was Geoff Hoffman and Brendan Bateman, Partners at Clayton Utz in Sydney. Listeners if you have any questions for either of our speakers today please Geoff on or Brendan at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.