The Climate Institute Annual Review 2011-12

The Climate Institute

Annual Review

RE VIEW 2 0 1 1 - - - - 2 0 1 2 How Our World Looked In 2011-12

TODAY’S STORY OF CLIMATE CHANGE IS A HUMAN STORY. THE IMBALANCE WE’VE CREATED AFFECTS US ALL AND THE IMPACTS OF A WARMING PLANET WILL BE INCREASINGLY FELT IN ALL ASPECTS OF OUR LIVES. IMPORTANTLY, WE ARE THE ONLY ONES WHO CAN MAKE A DIFFERENCE. THE SOLUTIONS TO CLIMATE CHANGE DO EXIST – IN POLICY, SCIENCE, INDUSTRY, TECHNOLOGY AND COMMUNITIES AROUND THE COUNTRY AND THE WORLD. FINDING THEM WILL CALL ON THE BEST IN ALL OF US TO MEET THE CHALLENGES WE FACE TOGETHER, AND DARE US TO TAKE A DIFFERENT, BUT NO LESS REWARDING PATH.

Annual Review 2011-12 07 Purpose + Role Mark Wootton, Chairman Reflections on the last seven years as we look at our refreshed purpose and role for the coming year.

01 Foreword John Connor, Chief Executive Officer A year of challenges but also historic achievements.

09 Strategic Focus

03 Snapshot A quick look at some of our key achievements in 2011-12.

John Connor, Chief Executive Officer An increasing focus on our three strategic pathways: Economic Transformation, International Accountability and Societal Leadership.

29 Development Sam Meers, Chair of Development Sub-Committee.

A look ahead at our ongoing need to develop a sustainable financial future for the Institute.

13 Economic Transformation Our ongoing focus on the transitions needed for a zero-carbon future.

31 Partners + Supporters

19 International Accountability

Our work would be impossible without the ongoing support of a broad range of individuals and organisations.

Continuing to ensure Australia plays a relevant leadership role in international climate action.

33 Staff + Board Members of The Climate Institute Team and Board.

23 Societal Leadership Our continuing journey to find new ways to connect people with the solutions to climate change.

37 Financial Statements A Financial Overview of 2011-12.

2011-12

Foreword The last 12 months have been as gruelling as they have been rewarding. I am proud of the achievements of The Climate Institute, our supporters and partners and determined to work the outcomes to their full potential in the coming year.

The last year saw a phantom and phoney war on the carbon laws now in place. The price and tax scare campaign was part predictable, but part precipitated by an unfortunate and inaccurate description of the carbon laws as a “tax”. The consequences of that description in March 2011 resonated throughout the bitter and divisive debate.

Our small team at The Climate Institute worked as relentlessly and as strategically as possible against numerous myths and distortions on the laws, prices and climate science.

In partnership with groups from Greenpeace through to ACTU, from GetUp to WWF, we worked to mobilise and demonstrate support for reforms that price and limit carbon pollution. In doing so, we sought to learn from mistakes of the Carbon Pollution Reduction Scheme (CPRS) on which the new laws are based.

We could not allow these laws once again to be perceived as “friendless”.

This was an unprecedented broad coalition which effectively mobilised colourful counter-rallies to those organised by the anti-carbon tax and climate skeptics movement. It reached out to millions of people through an innovative online operation and on-ground approach.

We made mistakes and the headwinds were huge.

But the legislation and supporting package passed and the challenge is now to make the most of its potential.

An unusual alliance of skeptics and cynics from the Left and the Right appear determined to ignore the laws’ potential and focus just on the minimum reductions of 5 per cent below 2000 levels by 2020.

In fact, both major parties support a range of reductions from 5 to 25 per cent dependent on global action and this must not be forgotten.

For both, 5 per cent is based on little or no global action and is not our fair share of the current or necessary global action. Cracking this cultural and economic cringe is a key challenge.

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Action across the globe is in fact significant albeit clearly insufficient. The Durban UN climate talks removed an important barrier to a global agreement and with one now to be negotiated by 2015, Australia’s climate diplomacy and action will need to be closely watched. Australia squandered a chance for leadership in Durban and should lift its game this year in Doha and beyond. It certainly should not return to its devastating white-anting of early this century.

We also continued to build and leverage our investment focus work into global arenas. We nurtured the development of the Asset Owners Disclosure Project, now a separate organisation chaired by former Liberals leader, John Hewson, and with an impressive Board, including Sharan Burrows the General Secretary of the International Trade Union Confederation.

With public finances in such tight supply, the management of the almost $60 trillion pool of our retirement funds or taxes in superannuation and sovereign wealth funds will be a key determinant of the future of the low-carbon economy.

This year we started our approach of flagship research projects as an annual architecture to house our ongoing strategic work. We also embraced new creative communications approaches with a concerted effort to make our materials more dynamic, accessible and human. This is a response to the changing media climate as well as honing the fundamentals of communication excellence as we seek to engage with Australians mostly turned off by the politics and scaremongering of this and previous years.

I’d like to thank the supporters of The Climate Institute, its Board, Strategic Council and staff for enabling this year’s achievements and creating the potential that we will all avidly seek to realise in the coming months and years ahead.

John Connor CEO

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Snapshot 2011-12

Rating the Pollution Policy Package 7 July 2011 The Climate Institute developed five key tests to assess the Government, Independents and Greens-supported carbon pollution policy package.

The agreement was a vital and long overdue step forward with great potential for Australia to cut pollution, clean up the economy, reduce energy waste and join the global effort to tackle climate change.

$5B

The treatment and management of mental health problems already costs taxpayers over $5 billion per year, while the cost in lost productivity is estimated at another $2.7 billion.

The Climate Institute

A Climate of Suffering Mental health and community wellbeing in the wake of extreme weather

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A Climate of Suffering 19 August 2011 The damage caused by a changing climate is not just physical. Recent experience shows extreme weather events also pose a serious risk to public health, including mental health and community wellbeing, with serious flow-on consequences for the economy and wider society. The Climate Institute’s A Climate of Suffering report sought to raise awareness of the mental health consequences of extreme weather events and climate change and prompt governments, businesses and communities to act early, to avoid further unnecessary suffering and cost.

Regional Opportunities in a Low-Carbon World 5 October 2011 With the support of the Hamer Family Fund and Digger & Shirley Martin Environment Fund, The Climate Institute hosted seminars in Port Macquarie and Armidale, New South Wales where local opinion leaders and decision-makers were invited to take part in discussions centred on business and community development opportunities.

The seminars were a forum for discussing regional opportunities in the emerging low-carbon economy as well as national and international clean energy and carbon farming policy developments.

For further details on our work in 2011-12 please visit www.climateinstitute.org.au

0.6%

Australia’s carbon pollution price will add 0.6 per cent to inflation in 2012-13.

That’s $0.02 on a loaf of bread.

Carbon Price and the Cost of Living 11 November 2011 Launched by The Climate Institute, in partnership with consumer advocate CHOICE and the Australian Council of Social Service, this important study provided Australian households with the tools to weigh up their own costs, financial support and potential savings under the carbon price. The commissioned CSIROAECOM research underpinned the online tool (www.yourcarbonprice.com.au) and supporting material. It also informed an outreach program that included over 120 organisations including councils, schools, faith, environment and business groups.

Say Yes Australia Welcomes Carbon Laws 8 November 2011

Durban Climate Summit: Implications for Australia 19 December 2011

In an unprecedented partnership of groups ranging from Greenpeace through to ACTU, from GetUp to WWF, The Climate Institute worked to mobilise and demonstrate support for reforms that price and limit carbon pollution. It reached out to millions of people through an innovative online operation and on-ground approach that provided a much needed positve counter to the anti-carbon tax and climate skeptics movement.

Following the significant process made at the latest UN climate negotiations in Durban, South Africa, The Climate Institute published its analysis of the outcomes. We noted that for the first time, all major greenhouse gas emitters (including China and the US) would be negotiating as equal partners towards a legal agreement by 2015. Because current commitments still risk a temperature rise of around 3-4 degrees, The Durban Agreement also included a commitment to build on existing actions and increase the level of ambition all countries are taking.

The negotiations have important implications for Australia’s domestic climate change policies in 2012 and as we head towards a legally binding agreement by 2015.

In addition to its written analysis, The Climate Institute also produced a six-part video series with Deputy CEO Erwin Jackson that tracked real-time progress in Durban.

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Snapshot 2011-12 Global Climate Leadership Review 19 March 2012 The Global Climate Leadership Review 2012 was our first flagship research project and positioned Australian climate policy in a global context. It featured an update of the 2009 Lord Nicholas Stern-endorsed Low-Carbon Competitiveness Index which showed which nations were leading the low-carbon economy. It also looked at who was leading the international negotiations and examined a potential leadership role for Australia in the establishment of regional emissions trading coalitions.

3-4 C o

Current commitments aren’t enough. They still risk a temperature rise of around 3-4 degrees.

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For further details on our work in 2011-12 please visit www.climateinstitute.org.au

National Energy Savings Initiative March 2012

Climate Partners Program Year 3 May 2012

Australia must improve its energy efficiency to maintain its competitiveness in a carbonconstrained world. The Climate Institute supports a national Energy Savings Initiative as a critical component of this objective, unlocking socially cost-effective emissions reduction opportunities across the Australian economy. The Climate Institute lodged a full submission to the National Energy Savings Initiative Working Group.

The Climate Institute’s strategic partnerships with leading businesses continued to grow with Mirvac joining in November 2011.

Current partners include: Westpac KPMG Mirvac Ogilvy Earth Pacific Hydro AGL Australia Post Better Place GE Jemena

Carbon 101 July 2012

Carbon laws come into effect July 2012

Carbon, the way we view it, measure it, control it and price it has come to dominate debates of all kinds and yet confusion persists. Carbon 101 provided some much needed clarity with descriptions of the jargon and a graphical explanation of the carbon cycle imbalance. The primer was accompanied by a video and podcast narrated by Andrew Demetriou, CEO of the Australian Football League and Dr Graeme Pearman, former head of CSIRO Atmospheric Research, both of whom are Board Members of The Climate Institute.

The Climate Institute welcomed the start of the Australian carbon laws which marked the historic end of a free ride for carbon emitters.

The Institute was an active commentator on the laws, helping to explain both the impact of the price domestically and how it sits in context to global action.

55% Earth’s natural systems are only able to absorb approximately 55% of our current annual CO2 emissions.

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Purpose + Role Mark Wootton Chair

When we set up The Climate Institute, it was intended to last for only five years. We were keen to have an organisation that would accept its death as a mark that it had been a success in reaching its objectives.

Disappointingly, this has not been the case.

This October marks the Institute’s seventh birthday.

We feel that we are not ready to proclaim our end, as, unfortunately, the needs which led to the start of The Climate Institute have not diminished. In 2005, we wanted to move the debate to a place which would see Australia acting decisively on climate change.

This did not happen in the desired time frame.

We wanted to encourage Australia to become an international leader, not a follower or, even worse, a blocker. In order to do this, we needed an independent voice which could deliver innovative solutions in a creative and effective manner. We have filled that role.

This is how, even though it was meant to be a short term project, The Climate Institute is in fact needed more now than ever. The messaging about the urgent need for action has become fatigued. Partisan voices dominate the debate. The independent role played by the organisation is even more critical than before.

The solutions to climate change will be varied. Some are known now but many are not. The Climate Institute does not pretend to be able to pick the winners. But it does provide critical research and rigorous analysis to highlight 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 it will continue to be in the future.

While it is sometimes a challenge to stay true to our original objectives of setting up The Climate Institute, we feel a sense of pride that we actually have done so. We have at times needed to enact a strategy of principled pragmatism. This has caused some frustration, as we see the science demands increasingly more urgent and whole-of-society action.

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As the solutions to climate change will be varied, so will the methods organisations employ to get action undertaken. We respect that there are a variety of legitimate roles for different players.

At The Climate Institute, 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. This role has produced real and measureable results. This is ultimately the test we need to pass.

The organisation has seen significant change this year.

It has transitioned from being a spending organisation to an earning organisation. It is with pleasure that I note the staff and Board have shown great commitment to ensuring our independence by supporting a dominant role for private philanthropy. We have also seen the strengthening of our business partnerships. These relationships are important as they continue to insert critical thinking into our policies and provide great sounding-boards for our ideas.

Climate change is the most formidable global challenge of our era, requiring solutions at every scale of every level of society. Ensuring we do our bit as part of the larger puzzle ultimately requires collaboration across business, community and government and an ability to shift the way we have traditionally seen things, to re-imagine the future.

A core objective of our work is articulating a response that is both positive and pragmatic.

So after seven years, I reflect that The Climate Institute was established in 2005, inspired by a clear understanding that climate change was a challenge demanding a whole-of-society response. Furthermore, we recognised and are now even more sensitised to the urgency and the scale of action required. We realised that, while important, individual actions were not enough in themselves to address climate change. We’ve made a start, but there’s still a long way to go. Hopefully, with continued and growing support we will get there.

The alternative is simply not an option.

Strategic Focus John Connor CEO

Surveys and discussion groups conducted at the end of 2011/2012 for our Climate of the Nation 2012 report painted a picture of Australian attitudes that was disturbing, but not without hope.

Australians were sick of the politics, scared about prices, confused on the science and unconvinced by the solutions in the carbon laws. The survey found concern about climate change had dropped but was still in the majority. Some 66 per cent of people thought there were too many conflicting opinions for the public to be sure about climate change. Those who agree that climate change is due at least in part to human causes had also slid, albeit still above two thirds of Australians.

Despite this, some 67 per cent of people still thought the Federal Government should be taking a leading role in taking action on climate change; only 10 per cent saw no role for government or business action on climate change.

Concerns about actual climate impacts on the environment, food security and drinking water supplies were still high. In addition, it was clear that there is strong support for renewable energy, particularly solar and wind, while support was split for gas as part of the future energy mix.

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The end of the year found businesses were also mixed in their opinions. Some larger players or their associations maintained bellicose positions. Some were shifting focus to other matters, while many were coming to grips with the new legal status quo. A survey of affected industries

by The Economist Intelligence Unit showed that 85 per cent had a carbon reduction strategy. Across all businesses surveyed, almost three-quarters agreed that carbon pricing is here to stay in one form or another.

Together these figures provide a challenging backdrop as we plan for the year and years ahead. The Board strengthened our vision for 2050 to see a resilient Australia prospering in a zero-carbon global economy, participating fully and fairly in international climate change solutions.

In the year ahead, the focus of public conversation needs to expand from just the costs of action. We do need to focus on the realities of the investment needed, who will deliver it and the consequences. But we also need to illuminate the opportunities and prosperity that can come with a zero-carbon future. We also need to honestly discuss the costs of inaction to date and the consequences of further inaction for the resilience of our well-being, economy and environment.

Our purpose is to catalyse and drive the change and innovation needed for a zero-pollution economy and culture. In 2012/13 The Climate Institute will seek to deepen its work across the key areas of economic transformation, international accountability and societal leadership.

Economic Transformation

The task of transforming our economy is urgent.

Australia is one of the biggest polluting nations in absolute and per capita terms. It is also a high-carbon economy with poor energy productivity that is high risk in a world slowly but surely turning to low-carbon solutions.

The transformation is also urgent because a high-carbon economy creates resistant forces in economics, law and politics - a high-carbon political economy. As Bill Clinton might have said: “It’s the political economy, stupid!”

Unfortunately, more than half of current funds are held in high-carbon assets and less than 1-2 per cent in low-carbon solutions. Our work with the globally focussed Asset Owners Disclosure Project (AODP) that we founded last year will put more and more focus on the key players in the investment chain and their responsibilities. We intend to produce further flagship and other research into the investment chain and Australia’s high-carbon economic exposure.

Domestic policy and action will continue to be vital.

We will continue our efforts to broaden and deepen support for the carbon laws, which not only put a price on carbon, but also provide a flexible system of limits. We will support renewable energy legislation and seek stronger policies that improve Australia’s poor track record on energy efficiency. We will also seek to ensure the Carbon Farming Initiative provides credible opportunities for rural and regional Australia in cutting greenhouse gas levels.

We will also extend our work in helping to make Australia more resilient to the impacts of climate change that we know are already locked in regardless of future cuts to carbon pollution. It is now our responsibility to help manage the unavoidable impacts as well as avoid the unmanageable impacts. Our resilience projects will put a spotlight on the risks to Australian infrastructure of extreme weather and other events. They will also engage with leading businesses to build scenarios and create tools that will enable them to better engage in managing these risks.

As discussed following, we will also continue our pioneering work regarding the gate-keepers of the political economy, which happens to include you and me through our retirement superannuation funds.

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International Accountability

Societal Leadership

While domestic reforms are important, it is crucial that domestic debate doesn’t lapse into self-obsessed carbon nationalism. This is a global problem requiring global solutions.

A sustained transition to a low-carbon economy needs to be a fair transition. The Climate Institute will continue to work with representatives from welfare and labour sectors to forge policies that are both equitable and urgent.

Global emission reductions purchased through our carbon laws matter. Public and private investments to assist developing countries prepare for climate impacts matter for regional economic stability as well as for their contributions to global climate negotiations.

Our performance in climate diplomacy matters – a lot.

We will also continue to build the partnerships with businesses that see opportunities in the inevitable transformation towards a zero-carbon global economy and those that see opportunities in doing more with less.

Our Climate Partners have provided crucial support for us and for our shared goals; we look forward to doing more with them and also with progressive voices such as those who are members of Businesses for a Clean Economy (B4CE).

Whilst Australia in many ways squandered an opportunity for leadership in the 2011 UN climate meeting in Durban, it has a significant role to play in helping to boost the significant if not sufficient action happening at a global level.

As well as its membership of the G20, Australia holds a number of key responsibilities within the UN process.

It has recently been appointed co-chair of the Green Climate Fund and is a convenor of the Cartagena Dialogue between ambition-focused developing and developed countries. This is in addition to its long-term role as chair of the Umbrella group, which is mostly comprised of high carbon economies such as the United States, Canada, Japan, Russia and Ukraine. In this and other international forums, Australia has proven itself to be an influential middle power and one whose performance will need to be closely scrutinised and held accountable.

Finally, the challenging public attitudes and underlying culture require innovative and creative approaches to communication and engagement. The Climate Institute has put significant effort to make its materials more dynamic, human and accessible. We have revamped our website, launched numerous interactive interfaces and boosted social media engagement to reach new audiences.

In addition, we have begun a creative fellowship program that seeks to find new ways to encourage engagement with scientific, technological and political developments as we seek to help build a low-carbon economy and culture.

Organisational Development While the financial statement in this Annual Review once again shows a healthy balance sheet, we are in new and challenging waters. The Climate Institute’s establishment support from the Poola Charitable Foundation (Tom Kantor Fund) has now ended.

We have secured some ongoing philanthropic commitments but these equate to a 50 per cent cut to average historic budgets. As such, achieving broader support this coming year will be crucial to the shape, scope and ambition of our work. We look forward to your support!

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Economic Transformation Future prosperity in a carbon-constrained world

Achieving prosperity in a carbon-constrained world demands a transformation of Australia’s economy.

Current systems of consumption and investment are overly reliant on fossil fuels and are vulnerable to rising fuel costs, the global spread of carbon pricing, and the impacts of climate change.

One of the many challenges in turning our high-carbon economy to one based on clean technologies has been the vicious misrepresentation and genuine misunderstanding of the impact that the carbon laws – finally enacted on 1 July 2012 – would have on average Australians.

The Climate Institute’s work aims to support this economic transformation. We work to ensure the right policy frameworks are established, that key sectors of the economy are heading down the transformation path and that the institutional capital required to invest in the low-carbon economy is in place.

Alongside the consumer advocate CHOICE and the Australian Council of Social Service (ACOSS), We commissioned CSIRO and AECOM to research the cost of living impact of the carbon price on households.

This independent analysis found the impacts are smaller than many anticipated and calculated that Australia’s carbon pollution price would add 0.6 per cent to inflation in 2012-13. This is less of an impact on the economy than estimated by Treasury modelling, and may be even smaller as the modelling assumes a 100 per cent pass-through of costs by businesses to consumers.

For example, Australia’s electricity generation currently relies predominantly on carbon-intensive coal-fired power.

To shift the sector to low- and zero-emissions electricity production, we support three complementary policy pillars: carbon pricing; support for research and development; and policies to drive clean energy deployment and cost reduction through market experience.

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The study also compared the effect of the carbon price with other inflationary events such as the introduction of the GST, Cyclone Yasi and the mining boom. It found that the impact on prices of the 2001 GST was more than four times bigger (2.5 per cent) than the carbon price, while fruit prices – led by bananas – spiked by a massive 70 per cent after the damage of Cyclone Yasi. The study reported that without domestic and global action to slow down climate change, the impact on basic food prices is likely be 20 times greater than the carbon price impact by 2050 because of extreme weather events.

The Climate Institute, CHOICE and the ACOSS also gave households the option to weigh up their own costs, financial support and potential savings under the carbon price with an independent online tool – www.yourcarbonprice.com.au As part of the project, a national information campaign was rolled out targeting councils, schools, faith groups, business groups and other organisations through information leaflets, face-to-face meetings and community events and networks.

This work was not just limited to urban centres.

Sponsored by the Hamer Family Fund and Digger & Shirley Martin Environment Fund, and with help from the Mid-North Coast Regional Development Authority, the CRC for Future Farm Industries, and national and local experts, The Climate Institute hosted well-attended community seminars in Port Macquarie and Armidale in October 2011 – exploring regional opportunities in a low-carbon economy.

Similarly, alongside various experts, The Climate Institute took part in a tour of regional centres organised by Landcare. It participated in numerous media interviews aimed at raising farmers’ awareness of the climate policy and the risks and opportunities associated with the carbon market.

All of our work is underpinned by research and policy expertise. During 2011/12, much of this work was focused at direct engagement with the Multi-Party Committee on Climate Change. This included practical policy suggestions and discussion papers on how the carbon laws can maintain the flexibility to meet Australia’s emission targets, while at the same time driving domestic emission reductions.

We also had an ongoing contribution to the development of the Carbon Farming Initiative – the federal programme that allows landholders to earn carbon credits for emissions avoidance and carbon sequestration in the landscape.

In late 2011, The Climate Institute began work with AECOM and primary industries in Queensland to look at how farmers might adapt to a price on pollution and take advantage of the opportunities it is likely to create.

Outside carbon pricing, The Climate Institute retained a focus on energy efficiency policy and as a member of the Government’s reference group on the development of a national Energy Savings Initiative has been quite active speaking up about the benefits of such policies.

The Climate Institute also maintained a strong interest in the development of policies around the Renewable Energy Target and published a number of statements and briefs on the costs and benefits of this policy.

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Investment

The role of long-term institutional investors is also critical to achieving economic transformation.

Today, some US$52 trillion of assets are under management by pension and superannuation funds around the world. If only five per cent of these funds were re-allocated to low-carbon industries such as clean energy and low emissions transport, the world would be much closer to meeting greenhouse gas emission reduction targets and avoiding dangerous climate change.

The Climate Institute’s key engagement with institutional investors is through the Asset Owners Disclosure Project (AODP), which seeks to gain information from the world’s 1,000 largest asset owners regarding how they manage climate change risks and opportunities. This covers every aspect of their operations: from how they incentivise their fund managers and advisers to how they invest in low-carbon assets; from how they build risk strategies through to governance and how they communicate with their members.

This information allows us to pinpoint trends in best practice, and significantly, it allows us to create a league table of how these funds are performing in terms of managing climate change-related risks and opportunities. Once pension and superannuation members make the connection between their retirement nest eggs and the ability to create a low-carbon, resilient society, we believe there will be increased emphasis placed on long-term sustainable investments.

As part of this work, The Climate Institute has increasingly focussed on harnessing the power of ‘citizen investors’; enabling Australians and others to recognise the potential of their retirement nest eggs to influence not only their financial future, but also the Earth’s climactic future. These investors, in collaboration, have the power to influence how vast amounts of capital – their capital – is invested.

This reconnection of the investment chain, from corporations to institutional investors to fund members, is critical in the fight against escalating climate change and will continue to underpin The Climate Institute’s work with the business and investment communities.

In short, aligning the trillions of dollars in our retirement savings with investment in the zero-carbon economy can help us more urgently respond to the real and rising risks of climate change.

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White no background below

BEST PRACTICE METHODOLOGY

Our primary focus in 2011-12 from an investment point of view was in the following three areas: 1. Influencing Companies

2. Encouraging Disclosure

3. Working with Super Funds

This year saw The Climate Institute discontinue its collaboration with Australian Ethical through the Climate Advocacy Fund. The Climate Institute is investigating alternative means through which the business community can be influenced to reduce emissions and better manage climate change risks and opportunities.

We continue to support the Fund’s efforts to improve disclosure in these areas.

The AODP has expanded from being solely focused on Australian superannuation funds to now covering the world’s 1000 largest asset owners – including pension and superannuation funds, insurance companies and sovereign wealth funds.

The Climate Institute has continued to revise and promote the most comprehensive guide for institutional investors on climate change risk management – the Climate Change Best Practice Methodology.

Along with launching a new website (www.aodproject.net), the AODP has commenced assessing the climate change capability of those asset owners.

It is also preparing for a memberbased social media campaign to spearhead its efforts to improve disclosure of climate change risks by the world’s largest investors.

The Methodology has been added as a tool on the AODP website and forms the basis for the expanded, global version of the annual AODP survey.

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Climate Partners

A key part of our 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 in Australia over the coming years, it is clear that business will play an essential role. This is one of the primary reasons we launched the Climate Partner program in 2010 with a select group of leading businesses.

Our current Climate Partners spearhead sectors that include finance, energy, infrastructure, transport and communications. All share a growing understanding of both the risks and opportunities for Australia inherent in the climate challenge. They include Lead Partner Westpac/BT; Major Partners KPMG, Mirvac, Ogilvy Earth and Pacific Hydro; and Climate Partners AGL, Australia Post, Better Place, GE and Jemena. Mirvac are the most recent addition to the program.

We deliberately partner with a small group of strategic leaders rather than a broad group of companies.

We are currently looking to add a small number of additional leading companies in specific sectors as we look beyond the current Australian policy debate towards the broader opportunities for 2012–15.

Our work with Climate Partners in 2011-12 was once again broad-ranging and often thought-provoking.

It included partnering with them on our Flagship Reports, such as the Global Climate Leadership Review and Climate of the Nation 2012, as well as undertaking more tactical joint research and analysis on energy, carbon and climate policies. Regular roundtable discussions enabled the sharing of ideas and discussion of relevant climate change issues facing business.

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There was an obvious focus on domestic carbon pricing policy during the year and we were pleased to work with many of our partners and others in demonstrating support through initiatives such as Businesses for a Clean Economy (B4CE).

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 of 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, but the rigour of engagement helps ensure that our policy ideas are ambitious and achievable.

As with all our partnerships, any Climate Partner relationship is subject to full Board scrutiny and must be agreed to by them prior to commencement. Included in this decision making process is a full due diligence process, where we carefully scrutinise the potential partner to ensure they meet our criteria for partnership.

Throughout the duration of the partnership, assessments are made as to whether the circumstances of the partnership remain the same. In instances where there is a conflict, every effort will be made to reconcile it.

If a resolution cannot be reached, the Executive Team and Board may make a decision to cease (or alter the arrangements of) a partnership.

* We ensure the majority of our funding comes from independent, philanthropic sources and have strict governance policies at a board level. In 2011-12 the total financial support from our Climate Partners was less than 12% of overall income.

Lead Climate Partner

Major Climate Partners

Becoming a Climate Partner Due to the limited number of partner spaces available, we are currently only exploring Major Climate Partnerships. However, there are a variety of other ways in which you can partner with us, so we welcome contact from forward-looking companies at any time.

To discuss partnership options with The Climate Institute, please email us at support@climateinstitute.org.au or call +61 (0)2 8239 6299.

Climate Partners

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International Accountability Joining the dots: domestic policy and international diplomacy

Australia is not acting on climate change in insolation.

We are influenced by, and in turn influence, the actions of others. As a country, Australia has a great opportunity to play a strong role in international efforts to address climate change.

The emission reduction policies of other countries matter a great deal to us. With strong collective global action, the impacts of climate change on our fragile continent may just be manageable. With a failure of collective action, the impacts on our lives, economy and environment will be significant.

Strong action on climate change by our trading partners will also reverberate through our economy. Global cost reductions in renewable energy are making it easier for the number of solar PV systems on our roofs to grow dramatically. This has impacted the entire electricity market and contributed to the collapse in electricity demand growth in the eastern states.

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As carbon markets become increasing linked, the actions and decisions made in major markets will also increasingly impact Australia’s carbon laws. Over the next two years, decisions in the European Union (EU) may see carbon prices in Australia stagger along at around $15/tonne or rise to a credible level of $30/tonne by 2020.

Critically, in an economy increasing built around mining and exporting resources such as coal, gas and iron ore, efforts by China and South Korea to limit investment in energy intensive industries will increasing impact on Australian exports.

It is these interrelationships and physical and economic realities that force The Climate Institute to look beyond our shores to the actions of other countries and into the halls of the UN’s climate negotiations.

International climate diplomacy plays an important role in raising ambition to tackle global warming. International negotiations, not just treaties, both shape countries’ actions and can support investment in clean energy through establishing mechanisms like carbon trading.

For example, in advance of Copenhagen, an unprecedented number of countries advanced pledges to act to reduce emissions. These were not just hollow words. All the major emerging economies are now implementing domestic policies to meet their commitments. South Korea’s emissions trading scheme is based on its international target. South Africa’s carbon tax and other policies are framed around meeting its pledges. China’s international pledge has been translated into domestic carbon and energy targets that it is setting for regional carbon trading schemes. Mexico’s recent climate laws are similar. The list goes on.

3. Policy analysis of the impact of the climate change negotiations on Australian and other countries’ emission policies. This included analysis of the diplomatic and business implications for Australia’s decision on whether to take on a new commitment under the Kyoto Protocol. Along with World Vision and the Australian Conservation Foundation, we also commissioned leading research from the Australian National University to quantify Australia’s fair contribution to global public and private sector financing of climate change adaptation and clean energy investment in the developing world.

In 2011-12, The Climate Institute continued its ongoing engagement on climate diplomacy through:

The Climate Institute continues to engage with leading organisations around the world in analysing policy development and country climate change action.

1. Real time analysis and commentary of the Durban climate talks in December 2012. The Durban talks saw, for the for the first time, all major emitters committing to capture their emission reduction targets under the same legally binding framework. The Global Climate Leadership Review 2012 provided analysis of Durban and profiled Connie Hedegaard, the European Commissioner for Climate Action, who led the EU push for greater ambition at the meeting.

2. Thought leadership on how to build regional emission trading coalitions. Carbon markets are at the forefront of domestic climate policy in Australia. They are now also a core question of diplomacy, as illustrated by Australia linking its emissions trading scheme to that already underway in the EU. In a paper with other policy experts, the Institute suggested that Australia (currently facing a choice on how it interacts with international carbon markets) has a unique opportunity to act strategically in our neighbourhood and boost domestic and international efforts to reduce emissions.

As 2012 wraps up, a report on Australia’s emission reduction efforts is being finalised for the Open Climate Network. This is an independent, international partnership that tracks and reports on the progress of key countries on climate change and includes groups such as Instituto Centro de Vida (Brazil), Pembina Institute (Canada), Renmin University (China), Tsinghua University (China), IDDRI (France), Oeko Institute (Germany and European Union), TERI (India), Institute for Global Environmental Strategies (Japan), Mario Molina Center (Mexico), IDASA (South Africa) and the World Resources Institute (USA).

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2012 Low-Carbon Competitiveness Index

2008

2000 1995

Index Score

2005

Note: 2012 Index is based on latest available data (2008)

Global Climate Leadership Review The Climate Institute’s Global Climate Leadership Review 2012 is the organisation’s flagship international project.

The Review identifies who is leading the low-carbon economy, who is leading international climate change cooperation and outlines where Australia can lead most effectively.

The 2012 Review happened with the support of GE, Pacific Hydro, OgilvyEarth, Bloomberg New Energy Finance and the British High Commission. For the report’s core analysis, we partnered with Vivid Economics, an internationally recognised climate change economics consultancy based in London. The resulting headline element was The Climate Institute/GE Low-Carbon Competitiveness Index, an innovative index that measures a country’s ability to prosper in the emerging global low-carbon economy. In 2012, Australia rated the worst of any advanced economy. Ranked 16th among the G20 nations, Australia is the only country which has a current score lower than it had in 1995.

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Vivid Economics examined nearly 20 indicators in three areas: sectoral composition (historical snapshot of current economy – e.g. transport, trade emissions intensity); early preparedness (e.g. investment in clean energy, growth in emissions); and future prosperity (e.g. investment in education and infrastructure).

Countries that performed well in the 2012 rankings are those who have recognised the inextricable link between economic, resource security and climate change policies and are acting accordingly.

Other key findings in the index included: • France, Japan, the United Kingdom, South Korea and Germany are leading the global low-carbon economy.

• Australia is amongst those countries facing the biggest challenge in remaining competitive in a low-carbon future, ranked lower than Russia, Argentina, South Africa, the United States and Saudi Arabia, in large part due to the emissions intensive structure of our economy.

In line with The Climate Institute’s commitment to pursuing new and innovative communications platforms, we also partnered with renowned data visualisation firm Pitch Interactive to create a unique online interface that allows individuals to delve deeper into the findings of the index.

The innovative use of HTML5 and Canvass technologies saw it profiled on prominent data visualisation blogs including Infosthetics and FlowingData. The visualization received extensive positive feedback through social media from Scientific American, TckTckTck, the Clean Energy Council, and other prominent commentators.

The Global Climate Leadership Review 2012 also found that far from acting alone on climate legislation, Australia is now among more than 100 nations that have climate policies targeting pollution limits and clean energy. Other countries including Sweden, UK, Norway and Switzerland have or are implementing higher carbon prices than Australia.

The Climate Institute has since expanded this research to include the implementation of emission targets, renewable and energy efficiency goals, emission standards on power stations and cars, and policies to promote carbon storage in the landscape across over 50 countries. This has been captured in an interactive online tool which recently launched on www.climateinsitute.org.au and will be regularly updated as countries continue to act on climate change.

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Societal Leadership A continuing journey to spark societal change

While the economy is a key piece of the puzzle, it is by no means the only one. A challenge as monumental as climate change requires an all of society response.

Ultimately, Australian society needs to work together to ensure broad over-arching support for climate action.

A key role for The Climate Institute is to raise awareness abut climate risks and opportunities and to highlight stories of resilience and action.

Over the past year we have worked with numerous others in pursuit of our goals. The Climate Institute is a member of various networks including the Southern Cross Climate Coalition, the Open Climate Network and the Australian Religious Response to Climate Change. Our business networks have included our Climate Partners and last year’s outspoken Businesses for a Clean Economy (B4CE) alliance of progressive companies seeking action on climate change.

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We have matched this with community outreach and comprehensive public opinion research that captures the pulse of the nation on concern for climate impacts and a path towards solutions. We have been an active media commentator on Australian climate action domestically and in international press, particularly in the time around the start of the carbon laws in mid-2012.

Throughout 2011–12, The Climate Institute worked with leading scientists to improve public understanding of climate change and counter campaigns misrepresenting climate science. We were often called upon by the media to comment on climate science development Looking ahead, we are increasingly using interactive tools and social media, and humanising the climate story via blogs, videos and photography by newly joined Creative Fellow, Michael Hall.

A rapidly changing, more hostile climate is already adding to Australia’s mental health toll. Rural and regional communities are particularly affected. A Climate of Suffering draws together the work of scientists, health and community care practitioners, and the first-hand accounts of survivors of disasters. Depression, anxiety, post-traumatic stress, substance abuse: these are some of the mental health costs of extreme weather. If climate change goes unchecked, scientists predict a sharp rise in the frequency, intensity and extent of heat waves, bushfires and drought, as well as more torrential downpours, and tropical storms of increasing ferocity. Financial distress also brings psychological distress, as businesses struggle to deal with the economic damage and fall out.

The direct and acute mental health impacts can include the trauma of bushfire, the anguish of losing loved ones in a storm, or the despair that comes with prolonged drought. There are also broader impacts on society, the economy, and the environment: heat-related violence, conflict over deteriorating resources (such as rivers), tensions arising from the displacement of communities, the dissolution of families, the deterioration of environmental quality and economic opportunity, and the sense of insecurity that results from inaction on climate change.

A Climate of Suffering In August 2011, The Climate Institute produced a seminal report which brought the mental health consequences of climate change into the mainstream media. The report, A Climate of Suffering, explored the risks for mental health and community wellbeing arising from extreme events, such as worsening drought, fire, and storms.

Assistance was gratefully received from experts at the Australian Psychological Society, ANU’s National Centre for Epidemiology and Population health, the University of Canberra’s Centre for Research and Action in Public Health, the Brain and Mind Research Institute in Sydney, the University of Melbourne, and the Mental Health Association of NSW.

The report was prepared following a thorough review of the scientific literature, and used advice and stories from survivors of recent floods, fire, and cyclones.

Doctors, psychologists, and specialist researchers reviewed the report for scientific accuracy.

The launch of the report was generally received well as a fresh perspective on climate change. It continues to be reported by news services in Australia (metropolitan and rural) and around the world, and has been re-broadcast by health professionals, and advocates for action on mental illness and climate change.

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The Carbon Price and the Cost of Living research showed that likely household impacts from the carbon laws were exaggerated. It put Australia’s carbon pollution price as adding 0.6 per cent to inflation in 2012-13. This is less of an impact on the economy than estimated by Treasury modelling, and may be even smaller as the modelling assumes a 100 per cent pass-through of costs by businesses to consumers.

$2.40

The study also compared the effect of the carbon price with other inflationary events such as the introduction of the GST, Cyclone Yasi and the mining boom. It found that the impact on prices of the 2001 GST was more than four times bigger than the carbon price, while fruit prices spiked by 70 per cent after the damage of Cyclone Yasi.

Bread White Loaf + $ 0.02

Apples 1KG + $ 0.03

Milk 1L + $ 0.02

Weekly Fruit+Veg + $ 0.14 Meat 1KG + $ 0.11

Carbon Price and the Cost of Living The Climate Institute, with grant funding from the Department of Climate Change and Energy Efficiency, commissioned CSIRO and AECOM for economic modelling on the impacts of the carbon price on Australian households. The results were published in a comprehensive report calculating the costs to families of different sizes and incomes, including the offsets received through the government assistance package, savings opportunities via everyday energy efficiency measures, and anticipated cost increases on basic products like bread, milk and meat.

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An online calculator was designed allowing individuals to input their own circumstances and get an idea of the impact on their own lives. Nearly 70,000 people used the online tool through a dedicated website and Facebook application resulting in thousands of social media references.

Community outreach was a key feature of this project.

Partnerships were formed with nearly 150 organisations across Australia, including local government groups, environment groups, faith groups and unions.

With presentations, door-knocking and other activities running from November 2011 until July 2012, the estimated reach of the project was close to 6 million Australians.

Climate of the Nation 2012 showed that majority concern about climate change was moderate, but there was greater concern about associated impacts. This disparity may be due to climate change, once considered a scientific and ecological issue, becoming a highly politicised discourse being played out in the media.

The research found that Australians are prepared to do their bit so long as government and business shoulder responsibility and perform better. Business performance got a far stronger net performance disapproval rating than the Federal Government.

Only the media’s performance is rated worse than business.

Attitudes have been, unsurprisingly, overwhelmingly impacted by the bitterly partisan public policy debates and eroding trust in political parties and institutions. A key issue was also cost of living, which has generally been more centre stage in media coverage in recent years.

The carbon pricing laws were unpopular, but support grows when the laws are explained. There is strong support for renewable energy, particularly solar power, and greater energy efficiency for industry and households.

Climate of the Nation Since 2007, The Climate Institute has conducted comprehensive on-ground research into attitudes to climate change and related policies. We have published a number of Climate of the Nation reports and aim to publish annual mid-year updates tracking evolving attitudes and actions.

The 2012 report was based on research carried out in late May, a time of highly politicised debate that preceded the start of the carbon laws. This debate was intensified by issues of honesty in politics and household expense fears; it was compounded by a global economic slowdown, incorrect perception of international climate inaction and the ending of years of drought in Australia.

In short, the research found that Australians are sick of the politics and scared about rising costs of living.

They are uncertain about the science, unconvinced by carbon pricing solutions, but remain ‘up for grabs’ on both. How these concerns mix with underlying values, views of prosperity and trust in messengers will determine the climate of the nation in coming months and years.

This report is a benchmarking exercise against intended 2013 research, scheduled for release prior to the next federal election.

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A Rejuvenated Approach The Climate Institute was born out of the desire to not simply produce reports that sit on the shelf and gather dust but to make sure the evidence and ideas get to the people best placed to make a difference. A big part of this is about how we communicate our work.

27

The journey started in 2011 as we started to use a new creative approach for all our research reports and associated materials, and continued through the creation of new fundraising materials. This is all part of our concerted approah to concerted effort to make our materials more dynamic, accessible and human.

In mid-2012, just as the carbon laws came into effect, The Climate Institute completed its branding and communication transformation with the launch of a new website.

The platform is easy to navigate and rich in visual and graphic data. Content is easily migrated for use in social media tools, and The Climate Institute and some of its key staff are now on Twitter and Linkedin.

The Institute’s Facebook page has become more interactive, with polls, compelling imagery and online tools engaging users more than in previous years.

Flagship and other major reports are also visually enriched by the use of imagery by our first Creative Fellow, world renowned photographer Michael Hall, who formally started with The Climate Institute in July 2012.

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Development Building a sustainable future for The Climate Institute

Sam Meers Chair of Development Sub-Committee

I wrote in last year’s Annual Review of two particular issues that motivate me to work with The Climate Institute. Firstly, the development impact of climate change – the way in which, in our increasingly interconnected world, the effects of climate change are exacerbating and entrenching some of our most significant global issues, such as inequality, poverty and famine.

My other motivation is my two young daughters, and my determination to do whatever I can to ensure that this generation bequeaths to the next a world which offers, as we have had, a bright and optimistic future.

The protracted and often fractious debate on climate change policy that we have witnessed since our last Annual Review has only served to underscore these concerns, and to accentuate the vital need for an independent change-maker organisation such as The Climate Institute.

As an independent, non-profit research organisation, the Institute relies heavily on philanthropic, corporate, government and individuals’ support to undertake its work in catalysing systemic and structural change to minimise the growing risks of climate change.

With the end of the historic seed funding from the Poola Charitable Foundation (Tom Kantor Fund), in 2011/2012 The Climate Institute implemented a number of new funding structures, both internal and external, to enable it to work with a wider range of individuals and companies keen to support the Institute’s vision of a resilient Australia prospering in a zero-carbon world.

29

In an ever more competitive marketplace, these new funding and support structures are critical to the ongoing sustainability of the organisation. Of particular note has been the creation of a formal development process; our establishment of a Development Sub-Committee, which reports directly to the Board; and the production of a range of high quality publications which articulate The Climate Institute’s vision and recent work.

The Development Sub-Committee has been particularly important in ensuring an increased whole of organisation focus upon development. Comprised of individuals from the Board, Strategic Council members and staff, current members include Andrew Demetriou, Simon Holmes à Court, Michael Kantor, Adam Kilgour, Clare Martin, Mark Wootton and Richard Plumpton. I would like to thank each member for their support throughout the year.

Looking ahead at the challenges climate change will bring, The Climate Institute must be as resilient as possible if it is to effectively catalyse the society-wide changes that are needed. While, from a development perspective, the most pressing of these is securing sustainable funding, we are also focussed on building essential long-term partnerships and strategic collaborations in order to extend our reach and broaden our influence.

I invite you to join with us in accelerating the transition to a zero-carbon future. To discuss ways you can support The Climate Institute, or if you would like further information on the organisation’s new funding and support structures, please contact Richard Plumpton at support@climateinstitute.org.au.

Partners + Supporters

Supporters + Funders The Poola Charitable Foundation (Tom Kantor Fund) Eve Kantor & Mark Wootton The Dara Foundation Digger & Shirley Martin Environment Fund Hamer Family Fund Michael & Silvia Kantor (Palombara) Milan & Anne Kantor (Darinka) Oak Foundation Kate Kantor Surrowee Simon Holmes Ă Court Martin Kantor (Stromovka) Australian Communities Foundation Department of Climate Change & Energy Efficiency (DCCEE) Clean Energy Council Energy Efficiency Council Queensland Department of Environment and Heritage Protection The Mullum Trust

Climate Partners Financial + In-Kind Support Westpac KPMG Ogilvy Earth Pacific Hydro Mirvac AGL Australia Post Better Place GE Jemena Gadens Lawyers Baker & McKenzie Lawyers

Lead Climate Partner

Major Climate Partners

The Climate Institute Board & Strategic Council Members

Climate Partners

31

Other Partners 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) Climate and Health Alliance Climate Bridge ClimateWorks CHOICE EcoPerspectives Ernst & Young GetUp! Glider Global Climate Network Green Building Council of Australia Greenpeace Australia Pacific NetBalance Open Climate Network Oxfam Oxygen IT Solutions 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)

As an independent not for profit 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 zero-carbon economy.

Whilst the list on these pages is not exhaustive, we would like to thank all those included here 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 individual and anonymous supporters who have provided financial support.

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The Team

John Connor CEO

Fiona Skewes Investment Analyst

Garrett Stringer Communications Manager

Julian Poulter Business Director

Erwin Jackson Deputy CEO

33

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 those who made such valuable contributions to our 2011/12 work. In particular, we are thankful to Linda Cargill and Lynda McCarthy for their efforts.

Esther Green Office Manager

Jenny Recio Administrative Officer

Corey Watts Regional Projects Manager

Kristina Stefanova Communications Director

Richard Plumpton Development Director

Olivia Kember Policy + Research Manager

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The Board

Mark Wootton

Adam Kilgour

Andrew Demetriou Clare Martin

Graeme Pearman

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.

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.

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.

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.

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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.

Awards include: CSIRO Medal; UNEP Global 500 Award; Order of Australia; Federation Medal.

Boards/advisory panels served include: START International (Washington); National Research Foundation (Singapore), Greenfleet Australia, RMIT Global Cities Institute, Goyder Institute, South East Australian Climate Initiative, National Climate Change Adaptation Research Fund.

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 58 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.

Hugh Saddler

John Connor

Sam Meers

Susan Jeanes

Tony McMichael

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.

John Connor, is a lawyer who has worked as a researcher for Dr Peter Macdonald the Independent member for Manly, as a leader in environmental 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.

Sam Meers is Executive Deputy Chairman of the Nelson Meers Group, a property and investment group, and Executive Director of the Nelson Meers Foundation, a family foundation dedicated to supporting innovation and engagement in the cultural sector. Sam is currently a trustee of the Art Gallery of NSW, a director of the State Library of NSW Foundation and a member of the Advisory Councils for the Centre for Social Impact Advisory Council (University of New South Wales) and the Sherman Contemporary Art Foundation. Sam has formerly held a wide range of not-for-profit board positions, including as Deputy Chairman of Philanthropy Australia and of the Australian Subscription Television and Radio Association.

Previously, Sam practised as a commercial lawyer for many years, subsequently holding senior management positions in the media sector.

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 worked 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.

Professor Tony McMichael is an Environmental Epidemiologist, at the Australian National University (ANU) and a Member of the US National Academy of Sciences. During 20012007 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.

36

Financial Statements 2011-12

+ =

Financial Statements 2011-2012 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 2012.

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 Adam Kilgour Andrew Demetriou Clare Martin Graeme Pearman Hugh Saddler John Connor Samantha Meers Susan Jeanes Tony McMichael The loss of the company for the financial year after providing for income tax amounted to $2,639.

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 2012.

No significant changes in the company’s state of affairs occurred during the financial year.

The principal activities of the company during the financial year were: Research into climate issues. o significant change in the nature of these activities N occurred during the financial year.

39

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.

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.

The company was not a party to any such proceedings during the year.

Snapshot

Ingoings + Outgoings 2011-2012

Funding Sources 2011-2012

Loss -$2,639

Revenue + Other Income $3,379,188

Business Partnerships (Climate Partners) 13.5%

Miscellaneous (eg online donations, speaker fees + interest) 5%

Government Grants + Funding 13%

35.7% 50%

50%

14.3% Outgoings + Expenditure $3,381,827

Philanthropic Grants + Donations 68.5%

Comparison 2010-2011 + 2011-2012

Our ongoing focus on maintaining the majority of our support from philanthropic sources is once again clearly reflected above.

2010-2011

Expenditure $2,598,889

The Financial Statements for 2011-12 also represent an important point in our ongoing transition to a broader sustainable funding model as the historic funding from the Poola Charitable Foundation (Tom Kantor Fund) comes to an end. Whilst this annual review once again shows a healthy balance sheet, we are in new and challenging waters.

Income $3,635,822

2010 2011-2012

Expenditure $3,381,827

Income $3,379,188

We have secured some ongoing philanthropic commitments but these equate to a 50 per cent cut to average historic budgets. As such, achieving broader support this coming year will be crucial to the shape, scope and ambition of our work.

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Financial Statements 2011-2012 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 directors:

Director: Mark Wootton

Director: John Connor

28 September 2012 Date

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Financial Statements 2011-2012 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 2012 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 Robert Cuffe Principal: Wearne & Co Audit Pty Limited Chartered Accountant

28 September 2012 Date

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Financial Statements 2011-2012 Income Statement

Note

2012

2011

Revenue

2

$2,197,060

$3,230,795

Other income

2

$1,182,128

$405,027

Employee benefits expense

($1,110,268)

($1,042,298)

Depreciation and amortisation expenses

($24,243)

($18,301)

Other expenses

($2,247,316)

($1,538,290)

Profit (loss) Before Income Tax Expense

($2,639)

$1,036,933

Income tax expense

-

-

Profit (loss) for the Year

($2,639)

$1,036,933

Profit (loss) attributable to member of the company

($2,639)

$1,036,933

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Financial Statements 2011-2012 Comprehensive Income

Note

2012

2011

Profit (loss) for the Year

($2,639)

$1,036,933

Other Comprehensive Income:

-

-

Other Comprehensive Income for the Year, Net of Tax

-

-

Total Comprehensive Income (expense) for the Year

($2,639)

$1,036,933

Total comprehensive income (expense) attributable to member of the company

($2,639)

$1,036,933

The accompanying notes form part of these financial statements.

44

Financial Statements 2011-2012 Financial Position

Note

2012

2011

Cash and cash equivalents

6

$2,002,169

$2,018,787

Trade and other receivables

7

$174,220

$246,270

$2,176,389

$2,265,057

$86,521

$56,365

Total Non-Current Assets

$86,521

$56,365

Total Assets

$2,262,910

$2,321,422

Assets Current Assets

Total Current Assets Non-Current Assets Property, plant and equipment

8

Liabilities Current Liabilities Trade and other payables

9

$91,610

$192,388

Provisions

10

$80,815

$62,088

$172,425

$254,476

$26,178

-

Total Liabilities

$198,603

-

Net Assets

$2,064,307

$2,066,946

Retained earnings

$2,064,307

$2,066,946

Total Equity

$2,064,307

$2,066,946

Total Current Liabilities

Non-Current Liabilities

Provisions

10

Equity

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Financial Statements 2011-2012 Changes in Equity

Retained Earnings

Total

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

Balance at 1 July 2011

$2,066,946

$2,066,946

Profit (loss) attributable to the member of the company

(2639)

(2639)

Balance at 30 June 2012

$2,064,307

$2,064,307

The accompanying notes form part of these financial statements.

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Financial Statements 2011-2012 Cash Flows

Note

2012

2011

Grants & gifts received

$3,233,403

$3,563,711

Interest received

$145,785

$72,110

Payments to suppliers & employees

($3,341,406)

($2,554,910)

$37,782

$1,080,912

Payments for Plant & Equipment

($54,399)

($27,462)

Net Cash Provided by (used in) Investing Activities

($54,399)

($27,462)

Net increase (decrease) in cash held

$16,617

$1,053,450

Cash and cash equivalents at beginning of financial year

$2,018,786

$965,336

$2,002,169

$2,018,786

Cash Flows from Operating Activities

Net Cash Provided by Operating Activities

12

Cash Flows from Investing Activities

Cash and cash equivalents at end of financial year

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12

Financial Statements 2011-2012 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 Basis of Preparation

(a) Income Tax

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. The entity is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income). The Company’s income is exempt from income tax under Division 50-5 of the Income tax Assessment Act (1997)

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, except for cash flow information, 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. The amounts presented in the financial statements have been rounded to the nearest dollar.

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.

Plant and Equipment 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.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, 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 recognised as expenses in 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.

48

Financial Statements 2011-2012 Notes

(c) Financial Instruments

(i) Loans and Receivables

Initial Recognition and Measurement

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. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

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 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 calculated as 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.

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

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.

49

(ii) Available-For-Sale Financial Assets Available-for-sale financial assets are classified as non-current assets when they are expected to be sold within 12 months after the end of the reporting period. All other available-forsale financial assets are classified as current assets. (iii) Financial Liabilities Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

Impairment At the end of each reporting period, the company assesses whether there is objective evidence that a financial asset has been impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a ‘loss event’) having occurred, which has an impact on the estimated future cash flows of the financial asset(s).

In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point.

In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.

Financial Statements 2011-2012 Notes

When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the company recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered. (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 any 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 shortterm 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 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) 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. (i) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current year. (j) 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.

50

Financial Statements 2011-2012 Notes

(k) New Accounting Standards for Application in Future Periods The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods and which the company has decided not to early adopt.

A discussion of those future requirements and their impact on the company is as follows: AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010-2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements: - Tier 1: Australian Accounting Standards; and - Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

Management believes that the company qualifies for the reduced disclosure requirements for Tier 2 entities.

However, it is yet to determine whether to adopt the reduced disclosure requirements.

51

AASB 13: Fair Value Measurement and AASB 2011-8: Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009-11, 2010-7, 101, 102, 108, 110, 116, 117, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurement.

AASB 13 requires: - inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; and - enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) to be measured at fair value.

These Standards are not expected to significantly impact the company.

Financial Statements 2011-2012 Notes

AASB 2011-9: Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1 July 2012).

The main change arising from this Standard is the requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently.

This Standard affects presentation only and is therefore not expected to significantly impact the company.

AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) [AASB 1, AASB 8, AASB 101, AASB 124, AASB 134, AASB 1049 & AASB 2011-8 and Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2013).

These Standards introduce a number of changes to accounting and presentation of defined benefit plans. The company does not have any defined benefit plans and so is not impacted by the amendment.

AASB 119 (September 2011) also includes changes to: - require only those benefits that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service to be classified as short-term employee benefits. All other employee benefits are to be classified as other long-term employee benefits, post-employment benefits or termination benefits, as appropriate; and - the accounting for termination benefits that require an entity to recognise an obligation for such benefits at the earlier of: for an offer that may be withdrawn - when the employee accepts; for an offer that cannot be withdrawn - when the offer is communicated to affected employees; and where the termination is associated with a restructuring of activities under AASB 137: Provisions, Contingent Liabilities and Contingent Assets, and if earlier than the first two conditions - when the related restructuring costs are recognised.

The company has not yet been able to reasonably estimate the impact of these changes to AASB119.

52

Financial Statements 2011-2012 Notes

Note

2012

2011

2(a)

$145,785

$72,110

Climate Partner fees

$355,455

$208,637

Gift fund

$ 1,695,820

$2,950,048

Total Revenue

$2,197,060

$3,230,795

Other income

$25,483

$23,058

Special project grants

$1,156,645

$381,969

Total Other Income

$1,182,128

$405,027

(a) Interest received from: other corporations

$145,785

$72,110

Depreciation

$24,243

$18,301

Employee benefits expense: Superannuation contributions

$83,816

$81,253

Short-term benefits

$194,838

$190,986

Total compensation

$194,838

$190,986

$8,160

$7,220

2. Revenue and Other Income Interest received

Other Income

3. Profit (Loss) for the year Profit (loss) from continuing operations includes the following specific expenses:

4. Key Management Personnel Compensation

5. Auditors’ Remuneration Auditors’ remuneration

53

Financial Statements 2011-2012 Notes

Note

2012

2011

Gift fund

$4,385

$151,283

Petty cash imprest

$400

$400

Bank guarantee

$36,281

$34,179

Cash at bank

$9,732

$12,168

*Express Saver Cheque Account

$694,923

$1,819,478

*Special project - TCISP power saver account

-

$1,279

Term Deposits

$1,256,448

-

$2,002,169

$2,018,787

Trade receivables (less provision for doubtdul debts nil)

$150,425

$245,250

Other debtors

$23,795

$1,020

$174,220

$246,270

Office furniture and equipment - at cost

$164,709

$143,380

Less accumulated depreciation

($110,964)

($91,410)

$53,745

$51,970

Furniture and fittings - at cost

$2,181

$2,181

Less accumulated depreciation

($1047)

($480)

$1,134

$1,701

Website development - at cost

$129,508

$98,738

Less accumulated amortisation

($97,866)

($96,044)

$31,642

$2,694

$86,521

$56,365

6. Cash and Cash Equivalents

7. Trade and Other Receivables Current

8. Property, Plant and Equipment

Total Property, Plant and Equipment

(a) Movement in carrying amounts For disclosure on movement in carrying amounts please refer to note 13(a).

54

Financial Statements 2011-2012 Notes

Note

2012

2011

Trade creditors

$32,464

$118,782

Other creditors

$59,146

$73,606

$91,610

$192,388

Provision for holiday pay

$80,815

$62,088

Provision for long service leave

$26,178

-

$106,993

$62,088

9. Trade and Other Payables Current

10. Provisions

Provision for Holiday Pay: Opening balance at 1 July 2011

$62,088

Movement during the year

$18,727

Balance at 30 June 2012

$80,815

Analysis of Total Provisions Current

$80,815

$62,088

Non-current

$26,178

-

$106,993

$62,088

55

Financial Statements 2011-2012

11. 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

2012

Cash

$400

$400

Cash at bank

$2,001,769

$2,018,386

$2,002,169

$2,018,786

($2,639)

$1,036,933

Provision for holiday pay / long service leave

$44,906

$10,765

Depreciation

$24,244

$18,301

(Increase)/decrease in other debtors

($22,776)

($1,020)

Increase/ (decrease) in trade & other payables

($100,778)

$111,308

(Increase)/decrease in trade receivables

$94,825

($95,375)

Net Cash Provided by Operating Activities

$37,782

$1,080,912

12. 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 Profit after income tax Non-cash flows in profit:

Changes in assets & liabilities:

56

Financial Statements 2011-2012 Notes

Office Furniture and Equipment at Cost

Furniture and Fittings - at Cost

Web Development - at Cost

Total

Balance at 1 July 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

Additions

$23,630

-

$30,770

$54,400

Depreciation expense

($21,854)

($567)

($1,822)

($24,243)

Carrying Amount at 30 June 2012

$53,746

$1,134

$31,642

$86,522

13. (a) Movement in Carrying Amounts Movements in carrying amounts for each class of property, plant and equipment.

57

Financial Statements 2011-2012 Directors’ Declaration

Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592

In accordance with a resolution of the directors of Climate Institute (Australia) Limited, the directors of the company declare that: 1. The financial statements and notes, as set out on pages XX to XX are in accordance with the Corporations Act 2001: (a) comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and (b) give a true and fair view of the financial position as at 30 June 2012 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 2012 Date 58

Financial Statements 2011-2012 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 2012, the income statement, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: ‘Presentation of Financial Statements’, that the financial statements comply with International Financial Reporting Standards (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. Those 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 company’s preparation 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

59

Financial Statements 2011-2012 Independent Auditors Declaration

Climate Institute (Australia) Limited A Company Limited By Guarantee ACN 116 713 592

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 directors of Climate Institute (Australia) Limited, would be in the same terms if provided to the directors as at the date of this auditor’s report.

Auditor’s Opinion In our 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 2012 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 Robert Cuffe Principal: Wearne & Co Audit Pty Limited Chartered Accountant

28 September 2012 Date: 60

Financial Statements 2011-2012 Profit and Loss Statement

2012

2011

Interest received

$145,785

$72,110

Climate Partner fees

$355,455

$208,636

Gift fund

$1,695,820

$2,950,048

Special project grants TCI

$1,156,645

$381,969

Other income

$25,484

$23,059

$3,379,189

$3,635,822

Advertising

$1,377

$5,590

Auditors’ remuneration

$8,160

$7,220

Bank charges

$1,542

$1,695

CEO

$211,192

$115,347

Communications

$1,147,848

$542,374

Research

$366,524

$321,867

Organisational Development

$75,668

$28,554

Business

$168,157

$184,130

Rural

$116,111

$149,928

Contingency

-

$842

Courier fees

$1,276

$904

Depreciation

$23,676

$17,821

Depreciation - furniture and fittings

$567

$480

Directors’ expenses

$37,304

$31,756

Income

Less Expenditure

Project Expenses:

61

Financial Statements 2011-2012 Profit and Loss Statement

2012

2011

Electricity

$2,476

$1,981

Emissions offset

$3,079

$2,954

Employees entitlement

$44,905

$10,765

Food & Beverage

$4,375

$4,597

Equipment

$792

$180

Filing fees

$42

$108

General expenses

$475

$5,811

Insurance

$10,127

$11,092

IT Services

$7,447

$40,463

Printing and stationery

$5,812

$9,886

Rent

$100,133

$89,643

Repairs and maintenance

$943

$1,568

Salaries and wages

$939,868

$913,927

Staff training and welfare

$9,745

$5,810

Superannuation contributions

$83,816

$81,253

Telephone

$8,391

$10,343

$3,381,828

$2,598,889

Less Expenditure

Income

$3,379,189

$3,635,822

Less Expenditure

$3,381,828

$2,598,889

Net Operating Profit (Loss)

($2,639)

$1,036,933

Retained profits at the beginning of the financial year

$2,066,946

$1,030,013

Total Available for Appropriation

$2,064,307

$2,066,946

Retained Profits at the End of the Financial Year

$2,064,307

$2,066,946

62

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.

As an independent organisation we are always looking for additional partners and supporters for the future challenges we face.

If you are interested in learning more about the different ways we work with individuals and organisations, please contact Richard Plumpton at support@climateinstitute.org.au

The Climate Institute Level 15/179 Elizabeth Street Sydney NSW 2000, Australia +61 2 8239 6299 info@climateinstitute.org.au

The Climate Institute

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