Small and medium-sized businesses will be hit by carbon tax reporting requirements when the new tax starts on July 1, according to new research.
While SMEs are not part of the formal reporting requirements, an Australian Institute of Management (AIM) survey published today found SMEs are likely to be forced to reduce their carbon emissions as part of the flow on impact of the tax.
The survey of 963 business leaders and management personnel revealed 58% of participants believed “major polluters will require their SME suppliers to limit their carbon emissions”.
Of those surveyed, 60% of chief executives and board members and 51% of senior managers surveyed believe the carbon tax will have a negative impact on their organisations.
“Increased costs” and “reduced profitability” were the two main negative factors of the tax according to survey participants.
Just under 60% of respondents believe the tax will increase costs to their business.
Less than a quarter of those surveyed said their organisations were prepared for the ramifications of the carbon tax.
Those least prepared were SMEs employing 51-100 people as only 14% said their organisations were ready.
Susan Heron, chief executive of AIM, says the research confirms that a lot of SMEs are in for a shock.
“I think it has been pitched that the carbon tax would impact on the 500 top polluters and the message is there is no impact to others, but the reality is that there is an impact.
“SMEs can expect a growing number of the major organisations they supply to will require them to have systems and plans in place to measure and reduce their carbon emissions.
“SMEs need to be ready to meet that requirement.
“We have already seen larger companies like ANZ and Westpac putting together supplier codes of practice and requiring SMEs to meet those codes.”
Heron said corporations had realised that in order to measure the real carbon footprint of their business operations they needed to know the carbon emission levels of the products and services delivered to them by their SME suppliers.
“Although this is not a formal reporting requirement of the tax to be introduced on July 1, it is emerging as a flow on consequence as major corporations seek to demonstrate their sustainability credentials to the general community.”
The AIM survey revealed little support for scepticism about climate change with just 12% of respondents, including only 3% of chief executives and board members, saying they did not believe in global warming or carbon reduction measures.
However, Heron said despite the general goodwill in the business community towards the principles behind the carbon tax a lack of communication had created an atmosphere of fear.
"Without clear communication there is fear and uncertainty. A lot of executives think the carbon tax will impact on cost and profitability but lower level personnel have a different view.
“This makes it really hard for SMEs to show leadership as they need the right communication to get the right employee engagement.”
Steven Wojtkiw, policy head and chief economist at the Victorian Employers’ Chamber of Commerce and Industry (Vecci), said the AIM results were no surprise.
“While SMEs are not direct emitters, they will be caught up in supply chains and many will be required to take steps to reduce and report their own carbon footprint,” he says.
“Many are not familiar with this operation of the impending carbon tax and what it means for their business in terms of how they might need to report to customers and other suppliers about their own environmental credentials.
“But what they can do is reduce their CO2 levels as small businesses.
“If there is pressure to substantially change their processes that is likely to increase costs for small businesses and place greater pressure on their resources at a time when the existing environment is fragile and very competitive.”