Australian companies will pay $1+ billion in climate accounting fees, including reporting CO2 produced in other countries

One thousand million dollars a year, soon to be more, is being sucked out of the Australian economy to pointlessly track carbon emissions. And companies will pay even more than that to hire consultants to calculate the emissions in the first place so the accountants (the ones earning a billion dollars) can check them.

It creates a new vested interest who will lobby for more of this red tape.

ASIC chair Joe Longo said  it would be  ‘the biggest change to company reporting in a generation’ .

All over the country fully functional people with 15 years of education (at least) are busy researching and calculating numbers that serve no useful purpose. Even if we pretend carbon dioxide was worth limiting (bear with me), what point is there is tracking emissions produced in China, say, from burning our coal? So we can flagellate ourselves at UN cocktail parties? So we can tell off President Xi?

Australian companies are being required to account for emissions they don’t produce, from facilities they don’t own, in countries where Australian law has no jurisdiction. Penalties are in the order of $18 million or 10% of annual turnover. What are we thinking?

This a billion dollars that isn’t making better widgets, growing food, or curing cancer. Customers will have to pay more for the exact same product. Shareholders get nothing but a smaller dividend. Australia becomes just a bit less competitive. But some bureaucrat will have some great stats to share on a slideshow at the next UN convention.

The Labor Party has brought in laws saying all Australian companies with more than 100 employees* have to calculate their carbon emissions in detail, including not just the emissions they control (Scope 1) but the emissions produced by their suppliers of electricity, heating and cooling (Scope 2) and even by their customers (Scope 3).

ClimateZero has helpfully laid out the full bureaucratic nightmare that poor CEO’s must employ lawyers and accountants to wade through. This onerous task is being phased in, starting with largest companies last year, and bringing in the smaller $50 million operations* mid next year. “Scope 3” emissions get added to the burden a year after the Scope 1 and 2 emissions.

The awful truth is that big companies are doing all this work, and then paying around $85,000 just for accounting firms to check and approve their numbers.  Mid sized companies are slugged for about $61,000 for the same process. This is really going to hurt smaller businesses.

The Australian Financial Review ran an article discussing “the billion dollar bonanza” these onerous rules give to the Big Four accounting firms. They noted that the Labor Government is promising to reduce the burden by $210 million or so, and was tinkering around the edges considering whether to allow some smaller companies to escape.

Two years ago two Coalition Senators estimated that climate reporting will cost business $2.3 billion. They estimated 1,800 entities would be captured. It’s just a paper pushing farce, tracking a gas that feeds plants and trees. The Labor Party is creating jobs burying bottles of cash and paying people to dig them up again.

Surely this is soul destroying for the national psyche? Half the population already doesn’t think Net Zero is worth spending a cent on. How long before the people doing the accounting and auditing realize their career is a pointless inanity?

This is The Blob feeding The Blob

Big four’s climate fee bonanza

Edmund Tadros, The Australian Financial Review

Australia’s climate disclosure regime is being examined by a Treasury consultation seeking to pare back some rules and cut the costs of compliance.
The consultation follows a proposal in this year’s federal budget to raise the thresholds for large proprietary companies. This is a move that could free many small companies of the obligation, and the big accounting costs that come with it.
In related developments, the Coalition also announced last Wednesday that it would significantly curtail climate reporting for business, by carving out emissions from Australian gas and coal burned overseas and reducing the number of companies captured by the scheme.
“The European Union and New Zealand have scaled their climate reporting rules back significantly, while the US has stopped pursuing it at the federal level.”
But reducing this accounting burden will cut the income of the Big accounting firms, cry me a river….

Climate fee bonanza for big four

Separate research has projected Australia’s climate reporting market to be worth more than $1 billion a year in fees for consultancies and auditors, with companies paying a median $85,000 (!) for assurance – 70 per cent more than Treasury’s initial $50,000 estimate.
The big four accounting firms captured 90 per cent of climate assurance engagements – 504 out of 561 reports – according to research by data consultancy Purpose Bureau, supported by Monash Business School and advisory firm Foresight.
The research found that the median disclosed fee of the big four is $88,000, compared with a median figure of $61,000 for mid-tier firms.
Thankfully, two weeks ago the Coalition announced they will dump the Scope 3 requirement, and also drop the smaller companies out of it.

Coalition to scrap climate reporting red tape

Labor’s own Treasury estimated Scope 3 emissions modelling alone could cost around $245,000 per entity in the first year, and more than $160,000 annually thereafter.

Leader of the Opposition Angus Taylor it is absurd to force Australian businesses to report on emissions they cannot control, using data they often cannot access, at a cost running into hundreds of thousands of dollars.

Even better, One Nation promises to get rid of the Net Zero Legislation, the Paris Agreement, abolish the Safeguard Mechanism and close the Federal Department of Climate Change.

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*It applies to companies with 100 employees or $50 million in revenue, or $25 million in assets. It may change to a $100m cut off soon, with the Labor revamp.

This article originally appeared at JoNova