The Climate Institute
Annual Review
R EVIEW 2 0 1 0 - - - - 2 0 1 1 How Our World Looked In 2010-11
Cover Image: Ice Melt Photographer: Michael Hall Michael Hall is currently undertaking an extensive project to document the causes and effects of climate change to increase awareness and inspire action around the world. www.michaelhall.net www.michaelhallphotography. wordpress.com
The Climate Institute is an independent research organisation working to help build a resilient Australia prospering in a low-carbon global economy, participating fully and fairly in international climate solutions.
The Climate Institute
www.climateinstitute.org.au
Given The Climate Institute is moving forward with a renewed vision, we have taken the opportunity to imbue our Annual Review with a snapshot of our future focus. The activity and outcomes from the 2010-11 financial year have informed our strategic priorities for the immediate future which are reflected throughout this document.
Annual Review 2010-11
How Our World Looked In 2010-11
Contents
Foreword 02 Insights 04 Board + Staff 18 Supporters 22 Snapshot 24 Case Studies 26 Financials 52 Notes 63 Looking Ahead 76
Two Thousand + Ten Two Thousand + Eleven Foreword
When we reflect on the past year and recount everything that has evolved and been achieved, the image on the front of this Annual Review is a sobering marker. It is a compelling reminder that with every year that goes by, the realities of the climate change challenge become more and more difficult to ignore. Time is not on our side. The science keeps rolling in. Our world, its land and its oceans, is warming. This is driving observable changes across physical and biological sciences from glacier melt to species movements to changed rainfall patterns. At least 95 per cent of climate scientists agree that our energy, industry, transport and agricultural activities are influencing and accelerating this change. It is at least arguable to link to climate change many of the extraordinary extreme weather events, like floods and bushfires that are happening with greater frequency and intensity. It is beyond argument that all the predictions show more is to come. These events are already pushing our natural, social and economic infrastructure to their limits. On an overcrowded world, heading for 9 billion people, these impacts will only intensify as we struggle to manage limited resources, growing pollution and global economic uncertainties. Any chance we have of limiting global warming to less than two degrees above pre-industrial levels depends upon global levels of carbon pollution peaking this decade. That is the context within which The Climate Institute operates daily, and what motivates us to do what we do. We are racing against the clock in this critical decade of this carbon-challenged century. 02
There has never been a greater impetus to forge the partnerships and shape the solutions that will enable the scale of changes that are necessary, both here in Australia and abroad. In many ways it is both a chilling and a thrilling challenge as we push off from the fatal shores of a high carbon economy heading to low and zero carbon futures not yet fully imagined. The task is as challenging as the reality of the climate science. The tough political climate, merged with the current economic landscape, add to this challenge. Yet remarkable people and organisations are rising to that challenge: academics, engineers, entrepreneurs, investors, activists, communities and more. Innovative solutions, and the policies to drive them, are emerging. The combination of increasing urgency and potential opportunity provides a potent lure, but more needs to be done. Much more. It will require us all to better engage - governments, businesses and communities. Climate action can be a solutions multiplier. It can improve our connections with each other, with our natural communities and with healthier concepts of wealth and the good life. As we close off one year and look ahead to the next, our commitment to help build greater resilience, smarter prosperity and deeper Australian engagement with international climate change solutions has never been stronger. It is a very real challenge but also an opportunity for us all.
John Connor CEO
2010-2011
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Looking Ahead With 20/20 Vision Mark Wootton Chair
What was the original vision that led to The Climate Institute being established in 2005?
What would you like to see evolve in the future of The Climate Institute’s growth and consolidation?
The aim was to move the debate to a place which would see that Australia was acting decisively on climate change. In order to get Australia acting as a leader, not an international blocker, we needed to reframe the discussion. We needed an independent voice that could deliver innovative solutions in a creative and effective manner. We didn’t need more of the same type of organisations that were already playing in the climate change space.
This financial year marked an historic period of transition for The Climate Institute as we began to receive the last of the donations from the Poola Foundation (Tom Kantor) Fund and as we began to seek broader and more diverse revenue streams from a variety of sources.
Has the need for The Climate Institute diminished at all over time? Unfortunately, The Climate Institute is needed more now than when we started. The messaging about the urgent need for action has become fatigued. Partisan voices dominate the debate. The independent role played by The Climate Institute is even more critical. What has been The Climate Institute’s most significant contribution in its first five years, and what might it be after the next five? The last five years has seen The Climate Institute continually providing critical research and rigorous analysis to spotlight both the threats and opportunities associated with climate change, in order to move the debate forward to drive critical action: this has been the most significant role we have played and I suspect that this will continue in the future. Moving forward, how would you express a renewed vision and purpose? As we move beyond the carbon price debate it is even more important to keep playing our role as an independent thought-leader driving informed and innovative action on climate change. 04
This has meant a change from a spending organisation to an earning organisation which has not been without its challenges. I am delighted to say that the staff and Board have shown great commitment to ensuring our independence by supporting a dominant role for private philanthropy, but also engaging government and business in a manner that supports the evidence based, climate solutions focus of The Climate Institute. The coming financial year is a vital test for The Climate Institute’s ability to consolidate both that approach and of course our financial health. What is the unique differential that The Climate Institute brings to the mix, to move us forward to some meaningful solutions on climate change? To provide critical commentary and analysis not influenced by fear or favour and to forge the international linkages necessary for a low-carbon future. What motivates you personally to continue to work with The Climate Institute? The extreme urgency of climate change and the need for Australia to move to a place where it is a world leader in clean energy, low-carbon jobs and investment opportunities. Is it a hopeful future? I see so many good ideas in terms of climate change solutions and people who are acting positively on them, that it is hard not to be hopeful.
Future Thinking Tomorrow Today John Connor CEO
What are some of the key challenges that have characterised 2010-11 for The Climate Institute?
What has been a project that characterises the strengths of The Climate Institute?
2010-11 has been an extremely challenging year, particularly as it began shortly after the Government’s decision in early 2010 to postpone the Carbon Pollution Reduction Scheme.
How do you pick one!? Australia’s first climate change shareholder resolutions. The Pollute-O-Meter, measuring the emissions reduction potential of the election policies of the major parties. The world’s first comparative analysis of effective carbon prices in competitor countries. Our work with business Climate Partners. Analysis of the clean energy job opportunities for regional Australia. Policy work with the Southern Cross Climate Coalition of ACOSS, ACTU and ACF.
This decision took place against a back drop of aggressive questioning of the science, including the so-called Climategate, and misrepresentations of the extent of global action in the aftermath of the 2009 UN Copenhagen meeting. Through 2010-11 the gains that were made in Copenhagen were consolidated in the 2010 Cancun UN Agreements. Numerous scientific reviews confirmed the scientific foundations that our emissions are driving climate change – regrettably, these findings didn’t get the same sort of ‘shock and awe’ coverage as Climategate. In addition, this was the first year after the late 2009 shattering of the bi-partisan consensus that emissions trading is the most cost effective core policy for reducing greenhouse emissions. This set the scene for an increasingly bitter partisan and indeed ideological battle throughout 2010-11 pre and post the Federal election. The outcome of the election presented a remarkable opportunity to put a price and limits on carbon pollution. To put in place a vital cog in pollution reduction machinery. To help turn around climbing carbon pollution levels. To help Australia play its fair share internationally. An opportunity not to be missed!
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All these exemplify the evidence based approach and frank and fearless commentary that The Climate Institute excels at. They demonstrate the breadth of our activities but also our networks and relationships. The latter proved invaluable when we were the primary force in bringing Lord Nicholas Stern and Professor Ross Garnaut in front of the Independents, Tony Windsor and Rob Oakeshott during their deliberations in the aftermath of the inconclusive Federal Election. Both of these have since highlighted that this was a significant moment in their deliberations and have remained strong supporters of action ever since – despite considerable political heat. When the issue is so complex with so many stakeholders and agendas, how do you measure the effectiveness of activity in any given year? Measuring effectiveness is always challenging for an NGO. As an organisation, our focus is international accountability, economic transformation and societal leadership. Our effectiveness is reflected in the positive shifts that take place in these three areas, as they are key to realising our vision of a resilient Australia prospering in a low-carbon global economy, participating fully and fairly in international climate change solutions.
Future Thinking Tomorrow Today
We often hear about the need for collaboration between government, business and society to tackle the climate change issue. How is The Climate Institute a key part of that picture? It is never easy to blend working with those elements in business, government and community committed to solutions whilst highlighting the inadequacies and dangers of other sections of government, politics, business and community seeking to delay action or deny the need for it. I am proud of what The Climate Institute has done in its work with the community in the Southern Cross Climate Coalition and with the broad-based Say YES campaign. The latter demonstrated the wide spectrum of those supporting action across political, business and socio-economic divides. Work with community and business groups was critical this year as we faced the headwinds of scare campaigns, business advertising and antagonistic positions from segments of the media. This was vital to holding a strong base of business and community support from which to build in coming years. Our work with business Climate Partners was important in demonstrating the significant business support for carbon pricing and climate action. It was vital in ‘ground truthing’ and challenging our own ideas. It was also affirming to hear from those focused on the opportunities in taking action and the pragmatic steps needed to realise those opportunities. If we are to have a fast transition to a low-carbon economy then it must be a fair transition. It must be a transition that enhances prosperity and international participation. This ultimately requires collaborations across business, community and government. Can collaboration really happen on this issue or will self-interest continue to dominate? I have always believed that this climate challenge is one of harnessing the instincts both of self-interest and collaboration. My belief that we can blend the two is unabated despite considerable bruises and scars that come from the contest so dominated by those prepared to put short term objectives ahead of long term realities. We need laws, institutions and culture to better reflect long term perspectives in relation to the resources and pollution challenges that face this increasingly overcrowded world. 08
The reality is that we’ve now missed the opportunity for a smooth transition to low-carbon economies that would avoid all the impacts of climate change. This means re-doubling our urgency but also enabling greater collaboration in building more resilient communities and infrastructure. More resilient to the unavoidable impacts of climate change already in the pipeline. What could Australia do better in its approach to climate change? Australia can do much better if it can take the public debate out of the trenches of the culture wars and partisanship. Australia can do much better when we all realise taking action isn’t just a question of cost, it’s a question of opportunity, a question of risk management. Australia can then take its pragmatic and effective approach to diplomacy not just into the UN negotiations but regional, bi-lateral and other multi-lateral forums. Australia can then also seek to commercialise the solutions that are generated within a new understanding of prosperity that doesn’t have to cost the earth! Do you think that Australia can make the changes needed to address the climate change issue in a meaningful and sustainable way? Australia can make the necessary changes but people need to understand that the transition for a big polluting high carbon political economy won’t be easy. This means recognising we are shifting our political economy and building the durable partnerships with business and community groups that are necessary to finding solutions. That’s always been a focus for The Climate Institute. What do you think are the main barriers to the change that is needed? The main barriers remain the partisan and ideological divides in the way in which this issue is perceived and interpreted. It’s a mixture of ideology, psychology and economy that drive some to respond in a manner that denies or seeks to undermine the realities facing Australia and the world. These responses are sometimes understandable and at other times deliberate attempts to delay necessary action.
It can be an exciting future – a future in which humanity’s response to this challenge and other challenges can improve our lot.
How does that inform the work and focus of The Climate Institute moving forward?
What motivates you personally to continue the vision and work of The Climate Institute for the year ahead?
The barriers are front of mind and front of engagement for The Climate Institute and the work that we do in trying to articulate a response that is positive and pragmatic – a response that talks to a new competitiveness, a new prosperity and that seeks to put a human face and a human cost to the impacts in a way which places this as a question of risk management not just one of faith in the scientific process. All of these are central to our focus.
I have been extremely privileged to build a career as a public citizen and in particular to be here at The Climate Institute at this time of critical public debate.
What lies ahead for The Climate Institute in 2012? The immediate priority is ensuring the effective implementation of the Clean Energy Futures legislation and associated policy commitments. This will mean working with partnerships at community and business levels. We’ll also need to re-elevate our attention to Australia’s work in the region and in the UN and other international forums. We will also strengthen our focus on the way in which superannuation funds and The Future Fund are truly integrating long term and short term perspectives in their investment practices. In addition to the double dividend of competitiveness and cooperation, The Climate Institute will also need to put greater focus on the sober realities that the window has shut on a smooth and safe transition to a low-carbon economy. There will be climate impacts and extreme weather events that we now simply can’t avoid so there is a responsibility on organisations like The Climate Institute to speak to that reality but also to build the resilience in communities and infrastructure here at home and amongst, in particular, our poorer neighbouring countries.
I thrive on the vision and enthusiasm of others with whom I work at The Climate Institute but also in business and community circles and definitely feed off that enthusiasm. I am also motivated by the view that climate action can be a solutions multiplier for the challenges of sustainable prosperity, global poverty extremes and depletion of natural resources. And while it may appear trite, I am motivated every day as I look in the eyes of my children. Is it a hopeful future? I do believe it is a hopeful future. I have described myself as a professional optimist by nature and career but I am also sobered by the realisation that there is some considerable strife and a whole host of challenges ahead. We’ve lost sight of the fact that this is a human story and that people are the solution. I think that it can be an exciting future – a future in which humanity’s response to this challenge and other challenges can improve our lot; where we evolve to be better connected with our social and hopefully not too depleted natural communities; and where we’re better connected to new ideals of prosperity, wellbeing and the good life.
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Leading Action + Sustainable Change Erwin Jackson Deputy CEO
What are the core elements that drive the strategic focus of The Climate Institute?
What have been some of the challenges The Climate Institute has faced in the past year?
The Climate Institute’s research and evidence base is core to all we do. Evidence and a cross sectoral and international perspective underpins all our activities.
Post-truth climate politics. As the climate debate has become so mired in politics and misinformation it has been difficult at times to cut through with real facts and evidence.
Listening to and responding to businesses across the economy - whether they are a major investor or a farmer - is critical to the policy development as ultimately it is these economic factors that are going to make low-carbon Australia happen. Finally, Australia is not acting in isolation. There is a complex web of international politics and policy which is shaping the low-carbon world around us. We always look to ensure that the policies Australia puts in place will maximise the opportunities to build more ambitious global action. The actions countries are taking are significant but they are not sufficient and Australia has an important role to play in leveraging more effective global cooperation. What have been some important strategic aspects of The Climate Institute’s activity for the past year? Insight and leadership. Key elements of the pollution price package have been supported by our ability to identify core issues, focus analysis on them and generate support for change from a broad range of stakeholders. For example, helping to ensure the legislation had hooks to make sure the Government did not just consider the short-term but also the long-term implications of key decisions. Our work facilitating welfare and industry groups to reach a common position and advocacy strategy on energy efficiency measures enabled most key tests to be satisfied in the pollution price package.
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What has been a project in the past year that characterises the strengths of The Climate Institute? The ground-breaking work The Climate Institute undertook with Vivid Economics on direct and indirect carbon prices in major economies. This, to some degree, helped reshape how actions that countries are taking to limit pollution and drive clean energy development were quantified. For the first time, you could see (and had a common measure to compare) the implicit and explicit costs governments were imposing on their electricity generators as they worked to drive investment in clean energy. The research sparked considerable interest from academics, countries and governments as diverse as Denmark, Japan, South Africa and India. The Productivity Commission has since been given an ongoing role in assessing the level of industry assistance and linking that to more credible reviews of other countries’ actions. It has now also been picked up by the OECD who are building on the analysis further. This research attempted to calibrate our domestic policies to those of other nations, spotlighting one of the key problems facing Australian policy: a perception that other countries are not acting. To me this characterises The Climate Institute’s work: strategic, rigorous, innovative research that puts Australia in the international context, focuses people on key issues and communicates with them effectively to create step changes in the public debate.
Leading Action + Sustainable Change
How does The Climate Institute measure effectiveness of its activity in any given year? Have we positively impacted Australian policy development in a way that ensures we join other nations doing our fair bit in reducing carbon pollution while at the same time leveraging more global action. We can make some judgments on the policy design as to whether we have achieved this. For example, Australia has committed to achieving a range of targets to reduce pollution by 2020. The key test of the policy credibility both here and internationally is whether these targets can be achieved. The scheme has a number of mechanisms such as: default pollution limits that ensure minimum targets are met; independent target setting processes to help ensure limits are not set arbitrarily, and; independent reviews of industry assistance to ensure this does not become an unnecessary drag on ambition. Together these kinds of policies give me and others some confidence that the scheme can deliver on its overall objective. What do you think has characterised where the climate change debate is in the past year? Chaos and uncertainty. Australian policy was rocked by the ALP’s back sliding on carbon pricing, a cliff hanger election, the emergence of a minority government, the passage of the carbon legislation and a Coalition threat to repeal. It has been an extraordinary roller coaster which on one day you could think we will get there and on the next despair as to the prospects of effective climate policy emerging in Australia within the next 5 years. Internationally, it has been similar. The emergence of a fiercely partisan debate in the USA has meant that country has stepped away from policy development at a Federal level. Meanwhile, California and other US and Canadian states and provinces have got on with policies to reduce pollution. And while the disasters that have struck Japan have created uncertainty about the direction of their climate policy, the focus on the harards of nuclear energy has refocused investment on clean energy. The economic situation in Europe has depressed global carbon markets but the fundamentals of the EU’s policies remain strong.
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While advanced economies have grappled with impacts of other factors on their climate policy plans, the emerging economies like China are growing in confidence. China’s latest Five Year Plan has a very strong focus on low pollution innovation and an increasing focus on market approaches to curb energy use and pollution levels. China’s policies are striking but they are also self-interested. It is clear they are taking a long term view and positioning their economy to dominate the low-carbon race. What do you think will characterise the climate change challenge in the coming year? Unfortunately, political posturing will continue to cloud climate policy in Australia for some time yet. This is not just a political challenge, this uncertainty will impact on the confidence of investors to put money behind the low pollution and clean energy solutions. We also have some loose ends to tie up in policy terms like the development of a national framework for the delivery of energy efficiency at large scale. Ensuring bipartisan state and Federal cooperation on this front will be tough but needed if we are to maximise energy productivity improvements and pollution savings across households and businesses. With Australia and California joining the emissions trading club next year, eyes will be turning to the more detailed pollution price policy designs that will emerge from China, Japan, South Africa and South Korea. Increasing discussion will focus on how to link these markets in an effective and robust way. How can Australia show leadership globally? One of the most remarkable myths in the current debate is the belief that Australia is at risk of leading the world in the climate challenge. Remarkable that leadership is not only considered dangerous but also possible in the short term. We do have the chance to join with those showing true leadership. To join with those with prices and/ or limits on carbon pollution across Europe, in New Zealand and elsewhere. To join those supporting the development of low-carbon technologies and industries in the US and in emerging economies like China and South Korea.
We do have the chance to join with those showing true leadership.
With a smart policy mix, we can commercialise technologies here that build on our competitive advantage in terms of renewable resources such as sun, wind, wave and geothermal power as well as land-based solutions in carbon farming and forest protection. The successful passage of legislation putting a price and limits on carbon pollution also sends a very positive signal not only to the region but to the world. This is a positive signal that a country with a high carbon pollution profile and a high carbon political economy is prepared to engage with the challenges and opportunities. It is a very important part of communication to the rest of the world who expect such action to a large degree, both because we are a big polluter but also because all of the science shows Australia and its weather extremes is amongst the most exposed to climate change in the developed world. A key part of that picture for The Climate Institute has been trying to build the solutions and the partnerships that enable the scale of change, that is necessary both here in Australia but also abroad. What motivates you personally to continue the strategic work of The Climate Institute for 2012? My two little boys is the obvious answer. However, it runs longer back in history than this for me. I have been lucky enough to travel and listen to the people of the Pacific who are suffering from the impacts of climate change. I have also been to some of the world’s most magnificent and threatened natural systems – like Antarctica – and seen the impacts of climate change first hand.
I am also privileged to work with talented people in business, government, academia and the NGO sector on every continent who are trying to find solutions to the challenge that confronts us. At the end of the day, I also think The Climate Institute is one of the most effective NGOs in the climate change space in Australia. We are small but we are nimble and effective and the commitment of the team inspires me daily. Is it a hopeful future? Yes and no. I wrote my first paper on climate change in 1989 on a type writer. It was on the impacts of climate change on agriculture in Queensland. If I wrote it again today the basic conclusions would not change that much except for the fact that it would probably be more alarming. I say this because the science continues to point in one direction and the world as a whole is not responding fast enough. Climate change is going to have a very profound impact on all our lives over the coming decades and many will suffer as a result. However, if you had asked me five years ago when I joined The Climate Institute, if Australia would implement a carbon price on the scale we are, if global investments in renewables could outstrip investments in fossil fuels or if we could have a global agreement that included pollution targets for all major emitters then I would have said no. The foundations for stronger global action are being laid and the megatrends are positive. This gives me some hope that we will ultimately do what needs to be done. 13
Growing Momentum Working Together Sam Meers Board Member
What do you think is unique about the approach that The Climate Institute takes to tackle the climate change challenge? The Climate Institute’s strength lies in its independence, the commitment and diversity of its small team, and its ability to strategically engage the community, business and government in broad-ranging and un-biased discussion on critical issues. With its freedom from political pressures and corresponding ability to respond nimbly to emerging community concerns, The Climate Institute acts as a unique hub, facilitating relationships and identifying and accelerating innovative and productive research and policy approaches. The Climate Institute thereby plays a vital role in generating the societal shift required to achieve long-term change. Amidst the ‘fog of war’, the cacophony of voices that seek to divert our attention away from the real issues of climate change and distract us from proper discussion of our long-term interests, The Climate Institute represents a voice of truth. How do you think Australia can show leadership to the world in its response to this issue? Australia’s comparative economic resilience, its capacity for innovation, and the competitive advantages offered by a low-carbon economy future places us in a privileged position to define a future in which environmental and economic sustainability co-exist. As a community and as a nation, we need to assume a global leadership role by meaningfully reducing our emissions through a commitment to aspirational targets and by embracing a low-carbon economy in the progression towards integrated international action.
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Leadership requires courage, and our renowned Australian spirit equips us to rise to this challenge. Climate change is an issue that affects each and every one of us, both materially and spiritually. We each have a responsibility to help change misinformed views on climate change which over-state the costs and ignore the benefits, in order to give courage to our leaders to take responsibility for our future by closing the gap between intent and action. We must continue to urge business and government to realise the opportunities of climate change and drive investment in short and long term energy efficiency initiatives, renewable energy technologies and land management techniques which will enable Australia to secure a competitive advantage in the global marketplace. I sincerely believe that the collaborative research and policy work of The Climate Institute is one of the most effective tools to engender the momentum towards this new vision. Why is it important to support the work of organisations like The Climate Institute? The Climate Institute’s unique independence and intellectual agility flows from the fact that it is funded by private philanthropy. Without The Climate Institute’s thought leadership and its ability to bring diverse groups together to facilitate discussion of, and action upon, critical issues, the momentum towards collective action in Australia will be gravely endangered. We each have a personal obligation to abandon our addiction to short term-ism and utilise our every resource to work together as a community and as a nation to bring about the cultural and generational change that will ultimately benefit us all. I feel privileged to be a part of an organisation that is playing such a significant role in addressing this challenge, and I hope others will join us on the journey.
Growing Momentum Working Together
What motivates you personally to continue to work with The Climate Institute? My children; a strong belief in the development impact of climate change – that is, the interconnectedness of environmental and human welfare problems, both domestically and globally; and the inspirational staff of The Climate Institute and my fellow board members. Is it a hopeful future? Yes. Throughout civilisation, there are countless examples of human beings drawing on tremendous courage in the face of great adversity to effect fundamental social change – slavery; women’s rights; citizenship for Indigenous peoples; apartheid, to name but a few. These profound generational shifts occurred because communities worked together for a better world. I strongly believe that the climate crisis offers us what Al Gore referred to as “a generational mission”, the lessons from which will give us the capacity, vision and courage to take on other global challenges, such as poverty and famine. With its independent vision and commitment to a resilient Australia, The Climate Institute is the ideal organisation to guide us in working more effectively together to create a sustainable future in which we can all prosper.
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In 1990, the spacecraft Voyager 1 took a single photograph which showed the Earth as a ‘pale blue dot’ against the vastness of space. Discussing the photograph, the late Carl Sagan, the American astronomer and environmental scientist, offered a beautiful description of our relationship with planet Earth, which is pinned on the wall of my office and inspires me daily.
“ Consider again that dot. That’s here, that’s home, that’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines... – on a mote of dust suspended in a sunbeam. ... Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity, in all this vastness, there is no hint that help will come from elsewhere to save us from ourselves. ... There is perhaps no better demonstration of the folly of human conceits than this distant image. To me, it underscores our responsibility to deal more kindly with one another, and to preserve and cherish the pale blue dot, the only home we’ve ever known.” Carl Sagan Pale Blue Dot: A Vision of the Human Future in Space
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Board
Mark Wootton
John Connor
Andrew Demetriou Susan Jeanes
Adam Kilgour
Mark Wootton (chair) is the Principal and Manager of Jigsaw Farms, a family farm enterprise north of Hamilton covering 14,500 acres. Jigsaw Farms is a beef and sheep farming system with large tracts of biodiversity plantings, wetlands and agroforestry. Mark holds a Diploma of Agriculture, a Graduate Diploma of Education and a Geography Degree from Monash University. He is also a board member of the Glenelg Hopkins Catchment Management Authority.
John Connor, is a lawyer who has worked as a researcher for Dr Peter Macdonald the Independent member for Manly, as a leader in environment organisations like ACF, and as a co-convenor of Make Poverty History while working at World Vision. John has served on numerous government advisory panels, and is a member of the Board of the Environment Defenders Office, the Commonwealth Government’s NGO Climate Roundtable and the NSW Government’s Climate Council. John joined the Institute in March 2007.
Andrew Demetriou has been CEO of the Australian Football League since 2003. He is a former teacher in business, law and politics and AFL player. Andrew was appointed Managing Director of the Ruthinium Group in 1989 a position he held until his appointment as CEO of the AFL Players Association in 1998. Andrew remains a director of Ruthinium Group which is one of the world’s largest manufacturers and distributors of acrylic teeth, exporting to over 70 countries worldwide.
Adam Kilgour is Managing Director of Diplomacy Pty Limited. He is a former adviser to Victorian and Commonwealth Government Cabinet Ministers and founder of public affairs firm CPR. He has been a Managing Director of the ASX listed Photon Group Ltd, and is Chairman of Stirling Henry Global Migration. He is also an Independent Director of the NSW Racehorse Trainers Association.
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Susan Jeanes is the Chief Executive of the Australian Geothermal Energy Association (AGEA). Susan served in the Federal Parliament as the Liberal Member for Kingston and working as an Advisor to the former Environment and Heritage Minister on climate change and energy policy. Susan also held the position of Chief Executive of the Renewable Energy Generators of Australia (REGA) until 2007.
Board Our Board is a critical part of our effectiveness and is deliberately made up of independent individuals with a broad range of skills and expertise. The breadth of experience ranges from climate science experts to business leaders; from community leaders to former politicians. This unique mix aligns closely to our ongoing role working with all parts of society to try and find solutions to the growing threats of climate change.
Strategic Council Our 56 member Strategic Council forms another important part of The Climate Institute. Made up of scientific, business, community and NGO leaders, it provides ongoing strategic input to our research projects as well as playing an important governance and guidance role.
Clare Martin
Tony McMichael
Sam Meers
Graeme Pearman
Hugh Saddler
Clare Martin brings a wealth of experience through her work in journalism, and public life. Clare was elected to the Northern Territory Legislative Assembly in 1995 and appointed Opposition Leader in 1999. She was elected the NT’s first Labor Chief Minister in 2001 and served in that capacity until 2007, retiring from Parliament in 2008 to become CEO of the Australian Council of Social Service. In August 2010 she took up appointment as a Professorial Fellow at Charles Darwin University’s Northern Institute.
Professor Tony McMichael is an Environmental Epidemiologist, at the Australian National University (ANU) and a Member of US National Academy of Sciences. During 2001-2007 he was Director of the National Centre for Epidemiology and Population Health at ANU. He has, over several decades, advised the World Health Organization (WHO), the UN Environment Program and the World Bank on matters of environmental risks to health. He is currently assisting the WHO develop its international program of research and risk management in relation to climate change and human health.
Sam Meers is Executive Director and a trustee of the Nelson Meers Foundation. She is also a trustee of the Art Gallery of NSW, deputy president of Philanthropy Australia, a director of the State Library of NSW Foundation and the Documentary Australia Foundation, and a member of the Advisory Councils of the Centre for Social Impact and of the Sydney Women’s Fund. Previously Sam practised as a commercial lawyer, subsequently holding senior management positions within the media sector.
Dr Graeme Pearman was formerly head of the CSIRO Atmospheric Research and now runs a consultancy. He has provided over 450 briefings to companies, governments, industry bodies and public fora on climate-change science and related human behavioural issues, and strategies for energy futures. He has an Adjunct position at Monash University.
Dr Hugh Saddler is currently a Principal Consultant with Pitt&Sherry and the Managing Director of Sustainability Advice Team Pty Ltd. He is also an Adjunct Professor at the Australian National University (ANU). He is the author of a book on Australian energy policy, Energy in Australia, and over 70 scientific papers, monographs and articles on energy technology and environmental policy, and is recognised as one of Australia’s leading experts in this field.
Awards include: CSIRO Medal; UNEP Global 500 Award; Order of Australia; Federation Medal. Boards/advisory panels served include: START Sam is a former board member of the Belvoir International (Washington); St Theatre, the Power National Research Institute for Art & Visual Foundation (Singapore), Culture (Sydney University) Greenfleet Australia, RMIT and former deputy chair of Global Cities Institute, the Australian Subscription Goyder Institute, South East Television & Radio Australian Climate Initiative, Association (ASTRA). National Climate Change Adaptation Research Fund.
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The Team
John Connor CEO
Erwin Jackson Deputy CEO
Garrett Stringer Communications Manager
Fiona Skewes Investment Analyst
Julian Poulter Business Director
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The Climate Institute Team The achievements detailed in this report would not have been possible without the dedication of all those who have worked at The Climate Institute in the past year. As a highly networked organisation, we have a small full-time team of 11 people, but we would also like to acknowledge all the other individuals who have made such valuable contributions to our work in the 2010-11 financial year.
Esther Green Office Manager
Jenny Recio Administrative Officer
Corey Watts Regional Projects Manager
Giulia Baggio Communications Director
Will McGoldrick Policy + Research Manager
Richard Plumpton Development Director
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Partners + Supporters
Supporters + Funders Poola Charitable Foundation (Tom Kantor Fund) Eve Kantor & Mark Wootton Digger & Shirley Martin Environment Fund Hamer Family Fund Michael & Silvia Kantor (Palombara) Milan & Anne Kantor (Darinka) The Oak Foundation (US) Kate Kantor Surrowee Simon Holmes Ă Court Martin Kantor (Stromovka) Commonwealth Government Department of Climate Change & Energy Efficiency (DCCEE) Gadens Lawyers Baker & McKenzie Lawyers Victorian Government Department of Sustainability & Environment Environment Victoria Energy Efficiency Council Clean Energy Council
Climate Partners Financial + In-Kind Support Westpac KPMG Ogilvy Earth Pacific Hydro AGL Australia Post Better Place GE Jemena
Lead Climate Partner
Major Climate Partners
Climate Partners
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Partners + Supporters As an independent organisation we are heavily dependent on our supporters and partners to enable us to deliver the ground-breaking research that we hope will continue to accelerate Australia’s transition to a low-carbon economy. Whilst the following is not an exhaustive list, we would like to thank all those listed for their support of The Climate Institute over the last year. We would also like to acknowledge the numerous scientists, economists and academics who have reviewed and/or advised our work, as well as all the anonymous supporters who have provided financial support.
Other Partners
Individual Donations
AECOM ANU’s Climate Change Institute Australian Conservation Foundation (ACF) Australian Council of Social Service (ACOSS) Australian Council of Trade Unions (ACTU) Australian Ethical Investment Australian Institute of Superannuation Trustees (AIST) Australian Religious Response to Climate Change Australian Youth Climate Coalition (AYCC) Circul8 Climate Action Network Australia (CANA) ClimateWorks CHOICE EcoPerspectives Ernst & Young GetUp! Glider Global Climate Network Green Building Council of Australia Greenpeace NetBalance Oxfam Property Council of Australia Southern Cross Climate Coalition SKM-MMA The Brotherhood of St Laurence The Republic of Everyone Vivid Economics World Resources Institute World Vision World Wildlife Fund (WWF)
James Allen David Beattie Jason Bram Nikki Brown Phil Davis Janice Dudley Nic Fairbank Paula Fairbank Scott Farrow Stuart Farrow John Farrow Nicole Faulkner Alfons Fiorindo Frances Ford Michael Gough Belinda Jones Andrew Judd Nikki Klopfer Norman Kupke Ray Manley Paul Minifie Brett Moseley Michael O’Brien Ewan Ogilvy Jason Reid Jeffrey Sandon Hillary Schwantzer Rochelle Serry Rob Sheehan JoanneThompson 23
Snapshot 2010-11
2010
Climate Advocacy Fund Jul 2010
Federal Election / Pollute-O-Meter Climate Of The Nation 2010 Aug 2010 Aug 2010
The Climate Institute launched the world’s first climate change advocacy fund in partnership with Australian Ethical Investment. It aims to promote constructive company engagement and enable shareholder resolutions to influence Australia’s biggest companies to better manage climate change risk.
After breaking new ground during the 2007 election, The Climate Institute once again used the ‘Pollute-O-Meter’ to provide an independent, non-partisan assessment of each party’s climate change election pledges.
Global Carbon Price Study Oct 2010
Task Group On Energy Efficiency SCCC Climate Policy Priorities Oct 2010 Nov 2010
The Climate Institute commissioned Vivid Economics to compare the effective carbon price of six of the world’s leading economies. This world first study was launched with KPMG at the Melbourne Business School. (See Case Study Two for further details)
The Prime Minister launches a blueprint for improving Australia’s energy efficiency. John Connor participated in a high level advisory panel to help craft this report.
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The Climate Institute released its annual study into community attitudes towards climate change – a key ‘signpost’ in directing our work for the year ahead. (See Case Study Seven for further details)
The influential Southern Cross Climate Coalition – an alliance between the ACTU, ACF, ACOSS and The Climate Institute – launched ‘Stronger, Fairer, Healthier – Foundations for a Low Pollution, Clean Energy Economy.
Clean Energy Jobs Project Feb 2011
MPCC Carbon Price Framework Feb 2011
2011
Tony Windsor launched The Climate Institute’s flagship study into the potential for new clean energy jobs across regional Australia. The report found the electricity sector grows 34,000 jobs with strong climate action.
After months of negotiations, the Multi-Party Climate Committee made up of the Government, Greens and Independents outlined the broad parameters for Australia’s carbon price reforms. The Climate Institute offered cautious support.
Asset Owners Disclosure Project Mar 2011
Electricity Prices Policy Brief Apr 2011
Climate Partners Program Year 2 May 2011
Now in its third year, the launch of the annual Funds Survey Report ensured the AODP remained the world’s most comprehensive, independent survey of superannuation funds’ readiness to manage the risks and opportunities of climate change.
The Climate Institute injected some facts into the carbon price debate, with a policy brief outlining the real factors affecting recent electricity price rises.
The Climate Institute’s strategic partnerships with leading businesses continued to grow – current partners include Westpac, KPMG, Ogilvy Earth, Pacific Hydro, AGL, Australia Post, Better Place, GE, Jemena. (See Case Study Five for further details)
CFI Evaluation Paper May 2011
Say YES Campaign May 2011
Clean Energy Future Legislation June 2011
The Climate Institute released a realistic assessment of the mitigation potential of the Carbon Farming Initiative, with recommendations for how that potential could be augmented.
The Climate Institute, ACF, ACTU, WWF, GetUp!, Greenpeace, AYCC, Environment Victoria and CANA formed a broad and unprecedented partnership to demonstrate public support for a price on carbon. (See Case Study 8 for further detail)
With the MPCC in the final stages of their ultimately successful negotiations, The Climate Institute launched a discussion paper on how to ensure the governance structures around the carbon price deliver both on Australia’s international commitments and domestic transformation.
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International Accountability
Case Study One Global Negotiations Rio To Durban By Way Of Kyoto, Copenhagen + Cancun
Our work in the international accountability arena continued to be a critical area of focus in 2010-11 despite the sometimes overwhelming nature of the domestic policy challenges in Australia. One of the major battlegrounds of the recent carbon debate is whether or not other countries are taking action on climate change. Despite the claims and counter claims, the fact is many countries are implementing an unprecedented range of policies to encourage cleaner energy investments. These incentives, regulations and other policy measures address health issues, increase energy security, build low-carbon economic opportunities and help meet pollution reduction commitments made by countries that account for 80 per cent of the world’s emissions. Comparing the actions of different countries is a highly complex but important undertaking. This was highlighted by research commissioned by The Climate Institute from Vivid Economics in late 2010, which compared the direct and indirect carbon prices that exist in Australia and other major economies (see Case Study Two for more detail). Following the release of this research, the Government commissioned the Productivity Commission (PC) to undertake similar work. Both reports translated the policy actions of a selection of major economies into an equivalent carbon price. While Vivid Economics put Australia’s implicit pollution price behind our major trading partners, the PC suggested we were in the middle of the pack. In either case, it was clear there was no threat of Australia leading the world. The PC has since been given an ongoing role in reviewing industry assistance in the carbon price package based on this kind of analysis. 28
Looking at the international climate negotiations side of our work, part of The Climate Institute’s ongoing role is as a lead Australian analyst of global policy settings and their implications for Australia. As we write this review we are very much looking ahead to the UN climate meeting in Durban, South Africa which is the next critical juncture in a journey that extends a fair way back now. The current multilateral climate change regime was born on the back of successful international treaties such as the Montreal Protocol for the protection of the Ozone layer. When the UN Framework Convention on Climate Change was signed in 1992, it was seen as the heyday for global environmental treaty making. The 1997 Kyoto Protocol that followed was born from a similar mood – international treaties and top down approaches attempting to drive domestic action. The agreement and ratification of the Kyoto Protocol sparked a global investment boom in clean energy. Countries with obligations to meet targets have put in place domestic policies to meet them and now only Canada appears unlikely to meet its international commitments under the Protocol. Kyoto’s emission trading mechanisms also started to unlock multi-billion dollar investments in clean energy development in emerging and developing economies. This, combined with action to control local air pollution, increase energy security, build new local industries and foster lowcarbon competitive advantage, has resulted in an unprecedented level of global action on pollution and clean energy (see examples of existing carbon prices around the world on pg.31).
Global Negotiations
It was the Copenhagen meeting, with its overinflated expectations and subsequent perceptions of failure, that eroded public confidence in the UN process. This is despite the fact that a critical assessment of Copenhagen shows that it was an important moment; domestic policy implementation had reached unprecedented levels. The outcomes from Copenhagen, and the subsequent Cancun Agreements, did lay a potential foundation for an effective global climate change regime. However, in the policy realm, there is a broad recognition that a new treaty is unlikely to emerge before 2015. The world in advance of Durban can be seen as being in transition. Unlike during the first phase of Kyoto, the actions taking place now are occurring in the absence of a global, legally binding treaty that covers all major emitters. Countries have continued implementing new policies to limit pollution and drive clean energy investment. Over the last few years global investment in renewable energy like wind and solar has outstripped investment in traditional power generation, and China has poised itself to overtake EU countries as the world’s clean energy superpower. In Copenhagen, for the first time, all major emitters made a political commitment to act and reduce their pollution. In Cancun, this commitment was cemented into the existing UNFCCC system and more detailed implementation agreements were signed. If Durban is successful in building on Cancun, further progress can be made and a clear path established to complement domestic action and solidify and strengthen global cooperation. Our ongoing involvement in the international negotiations is vital to working towards global climate solutions. The coming 12 months look likely to bring an increased focus to the international side of our work. 30
Right: Approximate Carbon Prices Around The World Cross country comparison of carbon prices is challenging as countries apply them to different fuels, industries and pollution sources in different ways. These estimated pollution taxes should therefore be seen as indicative only. Please note forward projections of prices under emissions trading schemes are highly uncertain. The information at right is not exhaustive and does not cover current equivalent carbon taxes in China, India, Japan, Latin America and South Africa. It also excludes carbon prices under development in Chile, China, Japan, South Korea and South Africa.
Approximate Carbon Prices Around The World Carbon Taxes _1990 Finland (Also in EU ETS) $27/tonne
Netherlands (Also in EU ETS) $19
_1991 Norway (Also in EU ETS) $35/tonne
Sweden (Also in EU ETS) $130/tonne (EITEI rate: $30/tonne)
_1992 Denmark (Also in EU ETS) $16/tonne
_2001 United Kingdom (Also in EU ETS) $24/tonne in 2013 _2007 Canada - Alberta $14/tonne
Canada - Quebec approx. $3/tonne
Switzerland $13-32/tonne
_2008 Canada - British Columbia $23/tonne in 2011 ($28/tonne in 2012) _2010 Ireland (Also in EU ETS) $20/tonne ($33-$40/tonne in 2012-14)
Emissions Trading Schemes _2005 European Union $13/tonne (Projected: $19-$24/tonne in 2012/13, >$30/tonne in 2014-2020) _2008 New Zealand $10/tonne (Projected: $12/tonne in 2015, $15/tonne in 2020) _2012 Australia $23/tonne in 2012 increasing at 2.5 per cent/year (real) to 2014 (>$15/tonne from 2015) _2013 California $18-35/tonne in 2013-15 ($66/tonne in 2020)
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Case Study Two International Action ‘Putting A Price Tag On Pollution’ Shining A Light On Australia’s Failure To Act
In October 2010 we launched a ground-breaking report that continues to have relevance to the ongoing policy debate in Australia. Driven by an unprecedented level of global policy action, clean energy investments now regularly outstrip investments in traditional power generation. Some assume incorrectly that because a country does not have an explicit pricing mechanism, such as an emissions trading scheme or carbon tax, that it is not making businesses responsible for the carbon pollution they cause or driving the transition to a lower pollution economy. Indirect pricing policies such as regulations, subsidies or financial incentives are also relevant. Converting these into a price tag on pollution gives a clearer picture of the extent to which governments are making businesses responsible for the pollution they cause and stimulating investments in clean energy. As a first step towards gaining a better understanding of this issue, The Climate Institute commissioned internationally recognised firm Vivid Economics to assess the direct and indirect price tags on carbon pollution that are currently in place in the electricity generation sector of six key G20 countries. The countries studied account for close to 50 per cent of global carbon pollution and the global economy. The full report, titled ‘Putting a Price Tag on Pollution; driving competitiveness in the clean energy economy’, can be found at www.climateinstitute.org.au, but the key findings can be summarised as follows:
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01 Countries are pricing carbon pollution to drive clean energy investment Direct and indirect carbon pricing policies are emerging and are in place in many of Australia’s major trading partners. At the time, the research showed Australia was lagging behind. 02 Indicatively, direct pollution price tags are the most economically efficient Analysis suggests that market-based and explicit price signals are the most cost-effective options for limiting pollution. The emissions trading scheme and taxes in countries such as Japan, South Korea, the UK and the USA are generally delivering the most pollution reduction per dollar cost imposed to make clean energy comparatively cheaper. 03 Direct pollution pricing in Australia is crucial Australia is currently not on track to meet its 2020 pollution reduction targets. Putting in place a direct and broad based price on carbon pollution is required if Australia is to meet its targets at lowest short and long-term cost and ensure that its international competitiveness is not lost to other countries. This report proved to be both highly relevant and timely and, in hindsight, was one of our more important pieces of analysis in 2010-11. While the report continues to be referenced, cited and, occasionally, challenged we maintain that this type of work is of critical importance as Australia tries to match up its international commitments with real action.
Above Innovative infographics compared various countries’ direct and indirect carbon prices by showing price tags proportional to the scale of the implicit carbon price. Symbols were used to represent the percentage of the price attributable to distinct policy measures.
Economic Transformation
Case Study Three Domestic Policy Building A Transformative Policy Framework For Australia
Whilst it has not felt like it at times over the last year, our work on domestic climate change policy is just one part of The Climate Institute’s strategic focus as we look to enable the economic transformations necessary for a prosperous future for Australia. We have always viewed involvement in domestic policy as important given it effectively sets the framework for Australia’s journey towards a low-carbon economy. If it was important in previous years, it became absolutely critical in 2010-11 as we made a carefully considered decision to increase our focus and resources in this area in an attempt to finally help facilitate a break in the deadlock that existed in climate change policy in Australia. The Clean Energy Future Legislation has now taken its final steps through Parliament. This is a long overdue step forward for Australia, and, although we are acutely aware that it is just one step, it is still a step worth celebrating and, in part, vindicates our Board’s decision to place such emphasis on domestic policy over the last 12 months. This ‘emphasis’ taken the form of Senate Submissions to discussion papers to electricity price research to consultative roundtables. We have engaged with industry, farming, welfare, consumer and trade union groups to help ensure the carbon price package included policies that took a broader view of low-carbon competitiveness and pollution reduction. It has involved a considerable number of staff members at The Climate Institute, but has also seen us make extensive use of our Board, Strategic Council and broad networks.
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As we look back over the 12 months it is a sobering reminder of how quickly time passes to reflect on the fact that our year started in the lead up to a Federal Election and all that entailed. Whilst the election itself cannot be said to have included any standout examples of leadership from either of the major parties on the domestic policy front, it did lead to the ALP, Greens and Independents agreeing to look to find a way to price carbon in Australia. This decision prefaced the divisive carbon price debate that has since taken up a large part of 2011. During this debate we have produced an unprecedented range of discussion papers, policy briefs, research reports and general research-based commentary. We have worked with a broad range of partners and have always sought to introduce rational, fact based analysis in an attempt to contribute to what should have been a healthy policy debate. All this work we undertook during the 2010-11 financial year brought us into the critical months of Jul-Sep 2011 and have ultimately led to the successful passage of the Clean Energy Future Legislation. As we look back on the year and reflect on our decision to focus on domestic policy more than other key areas of our work, we are as confident as we can be that our decision was the correct one. An Australian price on carbon is such a critical part of the machinery to help kick-start the de-carbonisation of our economy that it is difficult to see us having taken another path. Time will tell, but we are quietly confident that this decision will be proved right as history unfolds in the months ahead.
Policy Spotlight
Policy Spotlight
Policy Brief
Policy Uncertainty Threatens Cost to Economy and Consumers
Pollute-O-Meter
Putting a Price Tag on Pollution
For the second election running we measured the emissions reduction potential of the election policies of the major parties.
The Climate Institute and its Climate Partners released a paper and joint statement showing that delay has a cost; policy uncertainty would cost the economy and consumers $2B per year.
The Climate Institute commissioned Vivid Economics Report released in October.
2010
2010
2010
B
A
C
Policy Brief
Policy Spotlight
Research Report
Stronger, Fairer, Healthier – Foundations for a Low Pollution, Clean Energy Economy
FOI Request for Documents Regarding Australian Emission Reduction Targets
Clean Energy Jobs Research
In partnership with the Southern Cross Climate Coalition (SCCC), we released a paper on the key foundations and principles for an Australian low pollution, clean energy economy.
In November we obtained DCCEE documents that showed Australia’s pollution reduction policy should adopt a new minimum target of 10 to 15 per cent below 2000 levels by 2020, with the flexibility for at least 25 per cent reductions.
2010
D
2010
Ground-breaking research by The Climate Institute that demonstrated the potential regional clean energy resources and outlined pathways for key Australian regions to maximise employment and investment opportunities. 2010
E
F
Policy Spotlight
Research Report
Policy Brief
Submission to the House & Senate on the Carbon Farming Initiative
Australian Electricity Prices Report
Energy Efficiency and Affordability for Australian Households
In April we provided a submission that was broadly supportive of the proposed scheme, whilst also stating that a better balance was still possible, and that other policy measures are prerequisites to the scheme’s success.
We looked to set the record straight by highlighting and discussing the key factors behind rising electricity costs in Australia.
The Climate Institute joined the Brotherhood of St Laurence, ClimateWorks, the Property Council of Australia, the Australian Council of Trade Unions, the Clean Energy Council, the Energy Efficiency Council, the Australian Council of Social Services and Choice in releasing a joint policy position on energy efficiency and affordability for Australian households.
2011
2011
H
G
2011
Research Report
Discussion Paper
Policy Brief
Evaluating the Carbon Farming Initiative: A Good but not Final Step
Achieving Carbon Pollution Reductions and a Switch to Clean Energy
Shielding Big Polluters: Who Pays?
We undertook a number of initiatives related to regional Australia in 2010-11, including this evaluation of the Carbon Farming Inititative in May 2011. 2011
J
A discussion paper that focused on pollution pricing mechanisms and an approach to setting scheme caps and targets.
This policy brief assessed the impact of exempting big polluting companies from the full cost of the RET on electricity bills.
2011
2011
K
I
L 37
Case Study Four Business + Investment Climate Change + The Investment Chain
Business and investment is at the heart of the climate change story given a large proportion of greenhouse gas emissions are produced by the business sector. We engage with the business community at many levels in order to assist businesses to understand the risks associated with climate change and the opportunities in tackling it. Perhaps the most important angle is the response of the investment chain which defines the behaviour of investee businesses and that controls the movement of capital. It is the investment processes, cultures and decisions that determine whether money is invested in low- or high-emitting assets. The global financial crisis exposed some core failings in financial markets and the way in which institutional investors, such as superannuation funds, seemingly blindly follow the accepted practices of a flawed market. If super funds are to rise above such systemic flaws for the benefit of their members, then significant changes regarding risk management are required. The two key issues in the sub-prime crisis were a lack of long-termism built into risk and opportunity management by stakeholders in the investment chain and a lack of accountability that has left risk in areas which are not adequately rated or controlled. In addition, there is concern over a growing ‘carbon bubble’. In order to prevent global temperatures from rising more than 2°C, there is a finite amount of fossil fuels that can be burnt. This carbon budget is a mere 20% of known fossil fuel reserves. If only 20% of the earth’s known fossil fuel reserves have economic value, there will be a significant impact on the value of companies with large quantities of these reserves on their balance sheets. Our continued focus centres on three core areas. 38
01 Influencing Companies The Climate Advocacy Fund We continue to work with Australian Ethical in engaging with companies to encourage them to better disclose and manage the climate change risks they face. This culminated with Australia’s first climate change shareholder resolutions put to Woodside Petroleum, Aquila Resources, Oil Search and Paladin Energy. As a result Aquila, Paladin and Oil Search, have moved to report emissions/adopt a reduction target. The resolution put to Woodside received support from the Australian Council of Super Investors and a number of super funds but was defeated at its annual general meeting. 02 Encouraging Disclosure Asset Owners Disclosure Project The annual survey of Australia’s super funds marked its third anniversary in 2010-11 by going global. The AODP will expand its scope to include the world’s 1000 largest pension funds. The AODP will continue to invite super and pension funds to disclose how they are managing climate change risks and opportunities and will use social media campaigns and a ratings agency structure to ensure institutional investors are looking after their members’ interests. 03 Working with Super Funds Climate Change Best Practice Methodology The Climate Institute released the most comprehensive guide for institutional investors on climate change risk management – the Climate Change Best Practice Methodology. The Methodology is an action plan setting out strategies to enable super funds to better manage climate change risk and opportunities. It guides asset owners from start to finish and includes every aspect of climate change capability development. To date the Methodology has been downloaded by over 130 organisations.
Case Study Five Climate Partners Leadership + Innovation With Business
A key part of The Climate Institute’s work is building strategic partnerships to help catalyse and drive the change and innovation needed for a low pollution economy and culture. When we look ahead at the economic transformation that is required to help build a smarter, cleaner and more resilient Australia, it is clear we need to engage with businesses and investors critical to the change required. This central role of business is one of the primary reasons we launched the Climate Partner program in May of 2010 with a select group of leading businesses. These businesses represent key sectors of the economy and all share an understanding of both the risks and opportunities for Australia inherent in the climate change driven economic transformations that lie ahead. Our current Climate Partners are leaders in sectors that include finance, energy, infrastructure, transport and communications; they are Westpac/BT, KPMG, Ogilvy Earth, Pacific Hydro, AGL, Australia Post, Better Place, GE and Jemena. We deliberately partner with a small group of strategic leaders rather than a broad group of companies to ensure the overall effectiveness of the partnership. 2010-11 has seen some truly innovative and forward looking partnerships and programs evolve as we have built the Climate Partners program. July 2010 for example saw us release joint research with AGL that highlighted the potential significant cost impact on electricity prices of delaying the introduction of an emissions trading scheme. This was launched jointly with all our Climate Partners and, courtesy of a front page story in the Daily Telegraph, clearly established that there are costs that flow from further uncertainty and delay. 40
Other programs have included research into the potential for clean energy jobs in regional and rural Australia using key data from Pacific Hydro, Jemena and AGL; Westpac’s hosting of the New Zealand Environment Minister to discuss the key factors behind the implementation of New Zealand’s Emissions Trading Scheme; joint briefings with KPMG on the details of the Clean Energy Future policy package to start to prepare businesses for its implementation; and working to support GE, Pacific Hydro, AGL and Better Place and their Business for a Clean Economy initiative with over 300 businesses showing support for a carbon price. As well as the programs and initiatives we undertake with our Climate Partners, we also receive important support both financially and through pro-bono donation of time and relevant resources*. We are careful to be transparent about our relationship with all our partners and have clear agreements to guarantee the independence of all involved. We won’t (and don’t) agree on all things, all the time! The rigour of engagement helps ensure that our policy ideas are ambitious and achievable. Our partnership with key businesses who see opportunity in the switch to a cleaner low-carbon Australia will only continue to grow in importance. In the years ahead it is absolutely vital that we continue to find ways to accelerate the rate of transformation through ever more innovative and inclusive, but also well informed, partnerships with business. * We ensure the majority of our funding comes from independent, philanthropic sources and have strict governance policies at a board level. In 2010-11 the total financial support from our Climate Partners was less than 6% of overall income.
“ Our partnership with The Climate Institute is one part of our ongoing work to find practical solutions to the challenge of climate change. We believe that climate change is not just an environmental problem; it’s also a fundamental economic and social issue posing various risks to Australia’s future prosperity.” Emma Herd, Executive Director, Emissions & Environment, Westpac Institutional Bank
Lead Climate Partner
Climate Partners
Major Climate Partners
Case Study Six Rural + Regional Australia A Uniquely Australian Angle On Climate Change
Unique amongst Australian non-governmental organisations, The Climate Institute has devoted specialist expertise and resources to researching and communicating the climate change risks and opportunities for regional and rural Australia in the shift to a low-carbon world. Not only are agricultural and regional communities especially vulnerable to climate change, but the land sector also accounts for around 23 per cent of Australia’s carbon footprint. However, in the right policy environment, farmers, Indigenous communities and other landholders also have the potential to be a much greater part to the solution. It is clear that this often-neglected area deserves our ongoing attention. In 2010–11, there were four key pieces of work: 01 Clean Energy Jobs Research Launched in February 2011 by Independent MP Tony Windsor, this project assessed the potential for clean energy and low-carbon employment in various regions across Australia. The project included modelling by SKM-MMA that demonstrated not only the new regional growth potential from carbon pollution pricing and clean energy policies, but also outlined development pathways or roadmaps. The clean energy jobs regional roadmaps were produced in collaboration with an array of stakeholders and experts in New South Wales. The Climate Institute worked with SKM-MMA and Ernst and Young with funding from the NSW Department of Environment, Climate Change and Water.
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02 Carbon Farming Initiative (CFI) Policy Brief In 2010–11, The Climate Institute campaigned strongly to ensure the CFI was designed properly; to enable broad participation whilst maintaining environmental integrity. Key to this is making sure the CFI is linked to the domestic carbon price, so that there is sufficient demand to drive the development of projects that cut emissions on-farm and sequester carbon in the landscape. Underpinning our advocacy was a policy brief on the CFI released in March 2011. 03 Submission to the House & Senate on the Carbon Farming Initiative In April 2011, The Climate Institute welcomed the opportunity to present the relevant Committees with our views on the Bills that went before the Parliament, and, consequently, the proposed CFI. On the whole, we were reasonably confident that the Bills struck a balance between the scheme’s twin principles of environmental integrity and broad participation and we were therefore supportive of the proposed scheme. 04 Evaluating the Carbon Farming Initiative: A Good but not final step In response to community concerns about the level of abatement and land use under the CFI, The Climate Institute commissioned AECOM to review realistic estimates of uptake under the scheme. Overall, we found the CFI provides a good foundation for financial incentives to landholders to take part in the carbon market and deliver a range of credible emissions reductions activities on the land, while maintaining and even improving productivity. It represents a reasonable start to abatement in the land sector equivalent to up to 10 per cent of emissions from these sources.
Societal Leadership
Case Study Seven Climate Of The Nation Australian Attitudes Towards Climate Change + Its Solutions
The Climate Institute has commissioned both quantitative and qualitative market research on the attitudes of the Australian public on climate change and climate change solutions since 2007. This research aims to understand and track Australians’ attitudes to climate change and policy, as well as identify and track barriers to change. These ‘Climate of The Nation’ reports have proven critical in helping us understand the changes that need to be made in Australia from a societal perspective and are also an important input into our strategic decision making process each year. Looking back on the 2010 report it certainly feels like some of the attitudes we tracked at the end of last year will already have shifted fairly significantly – and not necessarily for the better. Whilst we might not like the way some of these attitudes have shifted, it does highlight the fact that increasing efforts will be needed in the years ahead to re-engage society at large and start to re-build some of the support for strong action on climate change in the aftermath of the divisive policy debate that characterised 2011. It also reinforces our belief that it is critical we invest resources in ensuring we continue to monitor Australian’s attitudes via an annual report such as this. We are already looking ahead to the next Climate of the Nation report which is likely to throw up a number of interesting findings given its timing during the initial implementation of the Clean Energy Future Legislation. The 2010 report was based on research undertaken by Auspoll as a four-phase research program, both qualitative and quantitative, between the months of April to June 2010. Exit poll research was also conducted on 21 August 2010. 46
Overall it found that climate change had evolved from an issue linked primarily to concerns of environment, drought and water shortages, to one viewed through a more complex prism of political leadership, pollution and sustainability. A key finding of the research was the link between climate change inaction and an erosion of belief in political leadership, trust and credibility – a link that certainly appears to have strengthened since we published the research. In April 2010 after the then Prime Minister Kevin Rudd announced the delay of the Government’s flagship climate policy – its Carbon Pollution Reduction Scheme – his trustworthiness, leadership and credibility was undermined. 56% of Australians said they had a worse or much worse opinion of him in the area of keeping promises; 49% had a worse opinion of his credibility and 48% a worse opinion of his ability to tackle the big issues. Australians were looking for leadership on the issue and were willing to back a political party that had a plan. 85% said they would support a party that had a “detailed plan to change Australia to using cleaner energy sources.” Not only was it clear that people wanted action, they also wanted substantial action. 82% believed that Australia should make “medium” to “very large” changes to address climate change. In addition, just over one third would have rewarded the Government if they had taken action; 37% of voters said they would be more likely to vote Labor in support of new pollution and climate change policy. In addition to an indelible link between climate change and leadership, a majority also consider climate change as interwoven with pollution. Disaggregating climate change from issues of leadership and pollution therefore leads to a fragmented picture.
Climate Of The Nation
People are extremely concerned about pollution and don’t believe that it is at acceptable levels for their children’s health. Eight in ten people directly link pollution and climate change, with 82% agreeing that pollution is making climate change worse. Australians were concerned that our economy is too dependent on polluting sources of energy, and support a shift to clean energy sources. 78% of people agreed that our economy is too dependent on burning coal rather than using clean energy sources. 72% supported a plan to reverse our rising pollution in the next three years. A strong theme from the research was a belief that business needs to take responsibility for the pollution it causes. 84% agreed that it is unacceptable that some businesses focus too narrowly on profits while ignoring the risks of pollution. In addition, 81% agreed that “polluting corporations are dumping their garbage in our air and they should start cleaning it up.” While support for action on pollution and climate change was solid, following the global financial crisis, there were sensitivities to cost of living pressures and this was the number one concern for people about taking action on climate change. We have certainly see this play out through 2011 with cost of living pressures clearly increasing as a concern. Willingness to pay higher electricity prices had softened since 2007, but in the face of economic pressures, remained significant. In fact, perhaps surprisingly, people under financial pressure were the keenest to see strong action on climate change.
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In terms of solutions, support for direct action and clean energy options remained very strong. 86% supported moving to clean energy sources such as solar, wind and geothermal, while current support for nuclear power generators for electricity had risen only slightly to 38% whereas in 2007, 33% supported this idea. In terms of large, structural economic changes, people showed support for reducing our dependence on coal-fired power generation for our electricity (62%) and putting a price tag on pollution so clean energy gets cheaper quicker (78%). Both major parties have missed opportunities to improve policy and brand credibility on pollution and climate change throughout 2010. Cost of living pressures were, and certainly still are, a concern for citizens but it appears a simplistic mistake to automatically respond by freezing any policy that may have an impact on electricity prices. It is also a mistake to see climate change as a stand alone issue, it is integrated with leadership, economic reform and health as well as the environment. Australians want policies that amount to a credible and detailed plan on pollution and climate change. The 2010 Climate Of The Nation Report was, as in previous years, a critical piece of research for both The Climate Institute and the broader climate change debate. Looking forward, we believe future reports will continue to provide pointers to the hurdles that need to be overcome for Australia to accelerate its move towards a resilient, clean energy driven society.
Eight In Ten Four In Five Over Half
85% would support a party that had a detailed plan to change Australia to using cleaner energy sources.
78% of people agreed that our economy is too dependent on burning coal rather than using clean energy sources.
82% believed that Australia should make “medium” to “very large” changes to address climate change.
Yes. Better Leadership Action On Pollution Clean Energy
No. Pollution + Health Impacts Dependence On Coal-Fired Power Generation Further Delay 49
Case Study Eight Say YES Building Broad Community Support For An Australian Carbon Price
This year saw a broad and unprecedented partnership of nine leading organisations representing over three million Australians demonstrate wide spread public support for a price and limit on carbon pollution. The Climate Institute is proud to have partnered with ACF, ACTU, WWF, GetUp!, Greenpeace, AYCC, Conservation Councils and Climate Action Network Australia in the Say YES effort. From the outset, the alliance advocated not for a political party or policy package, but rather for action on key solutions and support. We called for a meaningful step toward a fair and prosperous, low-carbon future. In the ferocious public debate it was important to demonstrate the broad base of support for action from unions to environment groups – not always the closest of partners! Importantly, all of the funding for Say YES activities came from the organisations, their supporters and philanthropists, with no government funds spent. Say YES provided the community with a channel for a positive and hopeful counter to the polluter lobby. Hundreds of thousands in the community were engaged throughout the course of 2011 as the initiative unfolded. While The Climate Institute played an important role in the establishment and facilitation of Say YES, it has been a truly cooperative effort. Given the level of misinformation and scare campaigns, Australians were unsurprisingly confused about how a price on carbon pollution would work, how it would impact their hip pocket and how it would cut pollution and grow clean energy.
50
Say YES emphasised how much Australia has to gain from taking action on climate change. We did this by making clear that it was industry that would begin to pay for every tonne of carbon they produced – and importantly that families were not the target of carbon pricing policies. We highlighted the fact that the revenue raised through pricing pollution would go directly towards investment in clean energy, supporting families and workers affected by the reform, and contributing to a global effort to tackle climate change. This initiative was not about policy detail. It was important to all participants that they were free to develop and advocate finer grained policy design detail. What the groups did agree on was the need to put a price and a limit on carbon pollution, to support investment in clean energy and to ensure workers and families affected by the changes were fairly supported. These solutions, supported by the vast bulk of economists and climate scientists, were ultimately achieved. While a broad base of Australians demonstrably do support these solutions, there is much to do to counter much of the misinformation about the costs of, or investments in, climate action. The challenge is also to ensure the potential of these changes are maximised and that we drive a fast but fair transition to sustainable low-carbon prosperity.
“ I say yes because this is the most important thing we can do for our nation this century.” John Hewson, former Leader of the Liberal Party
“ Climate change hits the poor in developing nations the hardest. We Aussies can show real leadership and act now. That’s why I say yes to a different future for the poorest of the poor.” David Pocock, Australian Wallabies and Western Force Rugby Union Player
Above A sea of Say YES messages from the community on the lawns of Parliament House.
Financial Statements 2010-11
+ =
Financial Statements 2010-2011 Director’s Report
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
Your directors present their report on the company for the financial year ended 30 June 2011. Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. The names of the directors in office at anytime during or since the end of the year are: Mark Wootton John Connor Andrew Demetriou Susan Jeanes Adam Kilgour Clare Martin Tony McMichael Samantha Meers (appointed Aug 2010) Graeme Pearman Hugh Saddler The net profit of the company for the financial year after providing for income tax amounted to $1,036,933. A review of the operations of the company during the financial year and the results of those operations are as follows: The review found the operations to be in line with the projected budget for the year ended 30 June 2011. No significant changes in the company’s state of affairs occurred during the financial year.
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. Likely developments in the operations of the company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the company. The company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. No dividends have been paid or declared since the start of the financial year. No options over issued shares or interests in the company were granted during or since the end of the financial year and there were no options outstanding at the date of this report. No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of the company.
Research into climate issues.
No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
No significant change in the nature of these activities occurred during the financial year.
The company was not a party to any such proceedings during the year.
The principal activities of the company during the financial year were:
54
Over All
Ingoings + Outgoings 2011 Surplus $1,036,933
Funding Sources 2011 Revenue + Other Income $3,635,822
Business Partnerships (Climate Partners) 6%
Miscellaneous (eg online donations, speaker fees + interest) 2.5 %
Government Grants + Funding 10.5%
35.7% 50%
50%
14.3% Outgoings + Expenditure $2,598,889
Philanthropic Grants + Donations 81%
2010 + 2011 Comparison
The Financial Statements for 2010-2011 represent an important stage in the transition of The Climate Institute from its dependence on the vital legacy of Tom Kantor to a more diversified range of support. The surplus reflects some closing contributions plus additional contributions as we set up for longer term sustainability. In addition, we successfully sought contributions to support the Say YES community engagement program which will be expended in 2011/12. Critically, the clear majority of our support comes from private and philanthropic support.
2010
Expenditure $2,531,303
Income $2,663,399
2010 2011
Expenditure $2,598,889
Income $3,635,822
Financial Statements 2010-2011 Auditor’s Independence Declaration
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is attached to this financial report.
Signed in accordance with a resolution of the board of directors:
Director: Mark Wootton
Director: John Connor
28 September 2011 Date
56
Financial Statements 2010-2011 Auditor’s Independence Declaration
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
To the directors of Climate Institute (Australia) limited I declare that, to the best of my knowledge and belief, during the year ended 30 June 2011 there have been: (i) No contraventions of the auditor independence requireraments as set out in the Corporations Act 2001 in relation to the audit; and (ii) No contraventions of any applicable code of professional conduct in relation to the audit.
Geoffrey Cuffe Principal: Wearne & Co Audit Pty Limited Chartered Accountant
28 September 2011 Date
57
Financial Statements 2010-2011 Income Statement
Note
2011
2010
Revenue
2
$3,230,795
$2,047,752
Other income
2
$405,027
$615,647
Employee benefits expense
($1,037,701)
($1,015,172)
Depreciation and amortisation expenses
($18,301)
($42,664)
Finance costs
-
($45,000)
Other expenses
($1,542,887)
($1,428,467)
Profit Before Income Tax Expense
$1,036,933
$132,096
Income tax expense
-
-
Profit for the Year
$1,036,933
$132,096
Profit attributable to member of the company
$1,036,933
$132,096
Financial Statements 2010-2011 Comprehensive Income
Note
2011
2010
Profit for the Year
$1,036,933
$132,096
Other Comprehensive Income:
-
-
Other Comprehensive Income for the Year, Net of Tax
-
-
Total Comprehensive Income for the Year
$1,036,933
$132,096
Total comprehensive income attributable to member of the company
$1,036,933
$132,096
The accompanying notes form part of these financial statements.
59
Financial Statements 2010-2011 Financial Position
Note
2011
2010
Cash and cash equivalents
5
$2,018,787
$965,337
Trade and other receivables
6
$246,270
$149,875
$2,265,057
$1,115,212
$56,365
$47,204
Total Non-Current Assets
$56,365
$47,204
Total Assets
$2,321,422
$1,162,416
Assets Current Assets
Total Current Assets Non-Current Assets Property, plant and equipment
7
Liabilities Current Liabilities Trade and other payables
8
$192,388
$81,080
Short-term provisions
9
$62,088
$51,323
Total Current Liabilities
$254,476
$132,403
Total Liabilities
$254,476
$132,403
Net Assets
$2,066,946
$1,030,013
Retained profits
$2,066,946
$1,030,013
Total Equity
$2,066,946
$1,030,013
Equity
60
Financial Statements 2010-2011 Changes in Equity
Balance at 1 July 2009
Share Capital
Retained Earnings
Total
-
$897,917
$897,917
$132,096
$132,096
Profit attributable to the member of the company Balance at 30 June 2010
-
$1,030,013
$1,030,013
Balance at 1 July 2010
-
$1,030,013
$1,030,013
Profit attributable to the member of the company
$1,036,933
$1,036,933
Balance at 30 June 2011
$2,066,946
$2,066,946
The accompanying notes form part of these financial statements.
61
Financial Statements 2010-2011 Cash Flows
Note
2011
2010
Grants received
$3,563,711
$2,664,144
Interest received
$72,110
$31,792
Payments to suppliers & employees
($2,554,910)
($2,594,299)
$1,080,912
$101,637
Payments for Plant and Equipment
($27,462)
($37,169)
Net Cash Provided by (used in) Investing Activities
($27,462)
($37,169)
Net increase in cash held
$1,053,450
$64,468
Cash and cash equivalents at beginning of financial year
$965,336
$900,868
$2,018,786
$965,336
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities
11
Cash Flows from Investing Activities
Cash and cash equivalents at end of financial year
62
11
Financial Statements 2010-2011 Notes
The financial statements cover Climate Institute (Australia) Limited as an individual entity. Climate Institute (Australia) Limited is a company limited by guarantee, incorporated and domiciled in Australia.
1. Summary of Significant Accounting Policies
Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present.
Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (IFRS). Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (a) Income Tax The Company’s income is exempt from income tax under Division 50-5 of the Income tax Assessment Act (1997) b) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate assets, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of property, plant and equipment (excluding freehold land) is depreciated on a straight-line basis. Depreciation commences from the time the asset is available for its intended use. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.
Financial Statements 2010-2011 Notes
(c) Financial Instruments
(i) Financial Assets at Fair Value Through Profit or Loss
Initial Recognition and Measurement
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the company commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transactions costs, where the instrument is classified ‘at fair value through profit or loss’ in which case transactions costs are expensed to profit or loss immediately. Classification and Subsequent Measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method or cost. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction cost and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. The company does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. 64
(ii) Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. (iii) Available-For-Sale Financial Assets They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. (iv) Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Impairment At the end of each reporting period, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in profit or loss. Also any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point.
Financial Statements 2010-2011 Notes
(d) Employee Benefits Provision is made for the company’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. (e) Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. (f) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (g) Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted as a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets is the rate inherent in the instrument.
Revenue recognition relating to the provision of a service is determined with reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable. All revenue is stated net of the amount of goods and services tax (GST). (h) Trade and Other Payables Trade and other payables represent the liabilities for goods and services received by the company that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. (i) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. (j) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current year. (k) Critical Accounting Estimates and Adjustments The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company. 65
Financial Statements 2010-2011 Notes
Note
2011
2010
2(a)
$72,110
$31,792
Climate partner fees
$208,636
$140,000
Grants received
-
$800,000
Government subsidies
-
$150
Gift fund
$2,950,048
$1,075,810
Total revenue
$3,230,795
$2,047,752
Other income
$23,059
$307,000
Special project grants
$381,969
$308,647
Total other Income
$405,027
$615,647
(a) Interest received from: other corporations
$72,110
$31,792
Short-term benefits
$190,986
$167,333
Total compensation
$190,986
$167,333
$7,220
$6,470
2. Revenue and Other Income Interest received
Other income
3. Key Management Personnel Compensation
4. Auditors’ Remuneration Auditors’ remuneration
Financial Statements 2010-2011 Notes
Note
2011
2010
Gift fund
$151,283
$15,638
Petty cash imprest
$400
$400
Bank guarantee
$34,179
$32,244
Cash at bank
$12,168
$176,847
*Express Saver Cheque Account
$1,819,478
$651,383
*Special project - TCI SP power saver account
$1,279
$88,824
$2,018,787
$965,337
Trade receivables (less provision for doubtdul debts nil)
$245,250
$149,875
Other debtors
$1,020
-
$246,270
$149,875
Office furniture and equipment - at cost
$143,380
$121,226
Less accumulated depreciation
($91,410)
($74,021)
$51,970
$47,204
Furniture and fittings - at cost
$2,181
-
Less accumulated depreciation
($480)
-
$1,701
-
Website development - at cost
$98,738
$95,613
Less accumulated amortisation
($96,045)
($95,613)
5. Cash and Cash Equivalents
6. Trade and Other Receivables Current
7. Investment Property
$2,694 Total Investment Property
$56,365
$47,204
67
Financial Statements 2010-2011 Notes
Note
2011
2010
Trade creditors
$118,782
$19,460
Other creditors
$73,606
$61,620
$192,388
$81,080
8. Trade and Other Payables Current
9. Provisions Provision for Holiday Pay: Opening balance at 1 July 2010
$51,323
Movement during the year
$10,765
Balance at 30 June 2011
$62,088
Analysis of Total Provisions Current
68
$62,088
$51,323
Financial Statements 2010-2011 Notes
10. Company Details The registered office of the company is: Climate Institute (Australia) Limited Level 10, 168 Walker Street North Sydney NSW 2060 The principal place of business is: Climate Institute (Australia) Limited Level 15, 179 Elizabeth Street Sydney NSW 2000
Notes
2011
2010
Cash
$400
$400
Cash at bank
$2,018,387
$964,936
$2,018,787
$965,336
$1,036,933
($132,096)
Provision for holiday pay
$10,765
$20,461
Depreciation
$18,301
$42,664
(Increase)/decrease in other debtors
($1,020)
$40,563
Increase/ (decrease) in trade & other payables
$111,308
$15,728
(Increase)/decrease in trade receivables
($95,375)
($149,875)
Net Cash Provided by (used in) Operating Activities
$1,080,912
($162,555)
11. Cash Flow Information (a) Reconciliation of Cash Cash at the end of financial year as shown in the Statement of Cash Flows is reconciled to the related items in the statement of financial position as follows:
(b) Reconciliation of Cash Flow from Operations with Profit/(Loss) Profit/ (loss) Non-cash flows in profit:
Changes in assets & liabilities:
69
Financial Statements 2010-2011 Notes
Office Furniture and Equipment at Cost
Furniture and Fittings - at Cost
Web Development - at Cost
Total
Balance at 1 July 2009
$28,508
-
$24,192
$52,700
Additions
$37,169
-
-
$37,169
Depreciation expense
($18,473)
-
$24,191
($42,664)
Carrying Amount at 30 June 2010
$47,204
-
-
$47,204
Additions
$22,155
$2,181
$3,126
$27,462
Depreciation expense
($17,389)
($480)
($432)
($18,301)
Carrying Amount at 30 June 2011
$51,970
$1,701
$2,694
$56,365
12. (a) Movement in Carrying Amounts Movements in carrying amounts for each class of property, plant and equipment.
70
Financial Statements 2010-2011 Directors’ Declaration
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
The directors of the company declare that: 1. the financial statements and notes, as set out on pages 5 to 20 are in accordance with the Corporations Act 2001: (a) comply with Accounting Standards and the Corporations Regulations 2001; and (b) give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the company 2. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors.
Director: Mark Wootton
Director: John Connor
28 September 2011 Date
71
Financial Statements 2010-2011 Independent Auditors Declaration
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
Independant audit report to the member of Climate Institute (Australia) Limited We have audited the accompanying financial report of Climate Institute (Australia) Limited (the company) which comprises the statement of financial position as at 30 June 2011 and the income statement, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the director’s declaration. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: ‘Presentation of Financial Statements’, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. 72
Financial Statements 2010-2011 Independent Auditors Declaration
Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the would be in the same terms if provided to the directors as at the date of this auditor’s report. Auditor’s Opinion a. The financial report of Climate Institute (Australia) Limited is in accordance with the Corporations Act 2001 including: (i) giving a true and fair view of the company’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001. b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Geoffrey Cuffe Principal: Wearne & Co Audit Pty Limited Chartered Accountant
28 September 2011 Date: 73
Financial Statements 2010-2011 Profit and Loss Statement
2011
2010
Interest received
$72,110
$31,792
Climate partner fees
$208,636
$140,000
Gift fund
$2,950,048
$1,075,810
Grants received
-
$800,000
Government subsidies
-
$150
Special project grants TCI
$381,969
$308,647
Other income
$23,059
$307,000
$3,635,822
$2,663,399
Accountancy fees
-
$3,480
Advertising
$5,590
-
Auditors’ remuneration
$7,220
$6,470
Bank charges
$1,695
$2,023
Borrowing expenses
-
$45,000
Business
$184,130
$169,329
CEO
$115,347
$135,808
Communications
$542,374
$474,398
Organisational development
$28,554
$18,037
Religion
-
$12,815
Research
$321,867
$303,623
Rural
$149,926
$199,261
Contingency
$843
-
Courier fees
$904
$1,450
Depreciation
$17,821
$42,664
Depreciation - furniture and fittings
$480
-
Directors’ expenses
$31,756
$22,364
Income
Less Expenditure
Project expenses:
Financial Statements 2010-2011 Profit and Loss Statement
2011
2010
Electricity
$1,981
$4,330
Emissions offset
$2,954
-
Employees entitlement
$10,765
$20,461
Food & beverage
$4,597
$14,728
Equipment
$180
$3,341
Filing fees
$108
$57
General expenses
$5,811
$1,944
Insurance
$11,092
$6,527
IT services
$40,463
$24,977
Payroll tax
-
($16,587)
Printing and stationery
$9,886
$12,932
Rent
$89,643
$70,115
Repairs and maintenance
$1,568
$1,850
Salaries and wages
$913,927
$894,285
Staff training and welfare
$5,810
$1,947
Stamp duty
-
$635
Staff recruitment
-
$830
Subscriptions
-
$1,278
Superannuation contributions
$81,253
$79,920
Telephone
$10,343
$16,009
$2,598,889
$2,531,303
Net Operating Profit
$1,036,933
$132,096
Retained profits at the beginning of the financial year
$1,030,013
$897,917
Total Available for Appropriation
$2,066,946
$1,030,013
Retained Profits at the End of the Financial Year
$2,066,946
$1,030,013
Less Expenditure
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Looking Ahead
2010-11 was a challenging year. It reminded us both of the complexity of what confronts us and the renewed urgency we need to find. As we look ahead, whilst we are aware of the challenges, we are also energised by the partnerships and connections we have forged in 6 short years that continue to give us optimism that the solutions will continue to emerge. These solutions need to come thicker and faster. To do this we will need to continue to find new partnerships and supporters in the months and years ahead and new ways to accelerate the solutions and continue to connect the remarkable people and organisations who are already rising to the challenge. Another challenging year no doubt awaits!
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2012 +
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The Climate Institute works to minimise its own carbon footprint and promote sustainability within its office operations. The main office in Sydney occupies a resource-efficient, 5-Star Green Star space retrofitted by the Green Building Council of Australia. A five hectare site of permanent mixed indigenous planting at Mark Wootton’s Jigsaw Farm in Hamilton, Victoria is dedicated to offsetting the non-transport emissions of The Climate Institute. Climate Friendly offsets all flights, hire car and taxis used by Climate Institute staff, consultants and international guests on a calendar year basis. All carbon credits purchased through Climate Friendly are sourced from accredited renewable energy projects.
Throughout history, there are countless examples of people drawing on tremendous courage in the face of adversity to effect fundamental social change: rights for Indigenous peoples, women’s rights, and ending apartheid and slavery, to name but a few. All these profound generational shifts occurred because communities worked together over many years for a better world. The Climate Institute
Platform + Design
GLIDER
We invite you to join us in making a better Australia; resilient, prosperous and proud in a zero-carbon world.
The Climate Institute Level 15/179 Elizabeth Street Sydney NSW 2000, Australia +61 2 8239 6299 info@climateinstitute.org.au www.climateinstitute.org.au Printed on Carbon Neutral, FSC Certified 100% Recycled Paper
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