Operating in the context of continuing environmental, social and governance uncertainties

Abstract

Successful businesses manage risk by identifying threats, quantifying them and taking steps to minimise the business impacts. Industry participants have often accommodated evolving regulatory frameworks for environmental, social and governance matters. Industry actions have been constructive and responsible in relation to resource developments, and delivering energy to consumers. The direction presently being followed by Australian governments with vacillating change is continuing to create difficult-to-manage risks. This paper demonstrates the great difficulties in managing risk and operating in the present context of business uncertainties and develop a logic that states that if we continue down the present path, businesses will not invest or will need to increase project economic thresholds to account for greater risk – both will increase costs for all Australians. We have drawn on experience from running multiple industrial businesses over decades, as well as ongoing contemporary interactions with senior executives and public domain information. Capital investment risk has increased due to uncertainty with several nationally significant capital projects facing deferral or being abandoned. These include onshore and offshore hydrocarbon developments, strategic import terminals, solar arrays, wind turbines and power lines. There is a widespread industry view that the federal goals for emissions and a transition to renewables is extreme and based on idealism not reality. A consistent theme is that industry responses in the present highly uncertain conditions, will result in consumers paying more for energy, whether directly or indirectly.