How to Pass on the Impact of the Carbon Price

August 31, 2012, 10:32 am Climate Friendly Yahoo!7

We’re now two months into the carbon price. What impacts have you seen? Do you know your exposure and how you can legitimately pass on cost increases without attracting the watchful gaze of the ACCC?

How to Pass on the Impact of the Carbon Price

Some businesses have experienced price increases but the dire predictions of massive impacts, forcing businesses to close in droves, have not materialised.

Many SMEs have used carbon pricing as an opportunity to review their use of resources, become leaner and get ahead of the competition by talking about what they are doing for the environment.

Carbon Price Claims

As with any legitimate increase in your costs of production, the carbon price impact can be passed on to your customers. However if you wish to make a carbon price claim it is important not to overstate the impact.

So far, 1,260 complaints have been received by the ACCC regarding price gouging by businesses. Here are 3 simple things you can do to make sure you aren’t on their list.

1. Review ACCC Guidelines

Our first tip is to review the ACCC website for a general overview of what you can and cannot say. You will find clear guidelines on how to message the impact of the carbon price to your customers in their guide available here.

"Businesses are free to set their prices as they see fit but must carefully consider the basis for making carbon price claims and ensure such claims are truthful and have a reasonable basis," says the ACCC’s Chairman, Mr Rod Sims.

2. Calculate The Impact

If you think it’s reasonable to pass on some of the price increases, the next step is to calculate what the actual impact has been.

Calculators on the ACCC website will assist you in determining this, teasing out the exact carbon price impact versus increases due to non-carbon price related factors.

For example, with electricity, the Independent Pricing and Regulatory Tribunal (IPART) estimates around half of the price increases in mainland states are due to infrastructure upgrades. So it would be false to claim that all of the increases are due to the carbon price.

3. Communicate Effectively

Once you have determined what action to take, accurately communicating your decision internally and externally is vital.

Ensure your staff have a clear understanding and deliver a consistent message to your customers.

In a perfect example of what not to do, baking franchisor Brumby’s issued an internal memo to franchisees which included the statement, "Let the carbon tax take the blame, after all your costs will be going up due to it."

As a result of that statement and the coverage around the claim, the ACCC investigated and Brumby’s Managing Director Deane Priest resigned.

There is a great deal of hysteria about the new carbon price, but don’t be distracted by the noise.

As in all your business decisions, if you keep a cool head and act with integrity you can turn this challenge into an opportunity.

How has the carbon price impacted on your business? We’d love to hear your experiences since the introduction of the carbon price. Join in the conversation today on Facebook, Twitter and LinkedIn or email us at takeaction@climatefriendly.com.