Carbon Risk Management: A Comparative Case Study of Two Companies within the Australian Energy Sector

By Shaun Butterworth, Nava Subramaniam, Michelle M. S. Phang

The purpose of this study is to understand how regulatory uncertainty associated with the Australian Federal government initiatives towards establishing a carbon pricing scheme has affected the perceptions and management of risks related to carbon emission reduction at the organisational level. The present study, based on evidence from archival and interview data from two Australian energy sector firms, provides insights into how managers perceived various risks associated with the Renewable Energy Trading (RET) scheme and the delay in the proposed Carbon Pollution Reduction Scheme (CPRS), and how such risks were seen to impact different features of their organisations’ management control system (MCS). Our findings indicate that regulatory uncertainty and the strategic stance undertaken by organizations affect a variety of internal uncertainties related to financial, information processing and organisational values, which in turn impact risk mitigation and performance management strategies.

JAMARv13 1-Carbon Risk Management