From July 1, the National Greenhouse and Energy Reporting (NGER) Act 2007 requires business to begin collecting mandatory information about their output of greenhouse gas emissions and their production and consumption of energy.
PriceWaterhouseCoopers (PWC) director Sean Lucy says he expects many Australian business will be caught unaware by the mandatory reporting requirements.
Although business must begin collecting the information from this July, the filing of data does not have to occur until August 2009.
"Some people are going to play catch-up ... because they won't have given it the attention it deserved," Lucy told reporters during the National Emissions Trading Summit in Sydney on Thursday.
"The challenge is that people may find they don't have the right systems in place to capture the data with the accuracy (needed)."
A recent PWC study indicated that 67 per cent of business leaders were concerned about regulatory obligations regarding greenhouse emissions.
A separate survey conducted on behalf of carbon consultancy Carbon Planet Ltd found 76 per cent of chief financial officers had only a fair or poor understanding of carbon emissions reporting.
"There is a big piece of education and understanding that needs to go on," Lucy said.
"(But) increasingly (businesses) are seeing that the "do nothing response" is not the right option."
About 700 Australian companies, such as electricity generators, coal mining companies and large manufacturers, and 1700 sites, such as power stations, coal mines and manufacturing plants, will have to report under the NGER Act or face prosecution.
The federal government has said the data collected under NGER was a key plank of its emissions trading system (ETS), due to commence in 2010.
Lucy said an ETS would be one of the key drivers for business change.
He said the picture was now clear that pro-environment equalled pro-growth but many business leaders were slow to understand the opportunities and risks of this paradigm.
Lucy said businesses must be prepared for higher costs and shifts in market share as new products were introduced, as well as effects on share price and risk to brand and reputation.
"The financial impact for a business is not the price of carbon, it will be the extent to which it can pass the cost on to the consumer," he said.
"A key thing any business has to do is understand what their emissions profile might be and what their costs associated with that might be."
Although many details for ETS were yet to be developed, such as legislation and accounting and taxation requirements, businesses could still take action, he said.
In 2008/09 financial year, businesses should set emissions reduction targets and forecast their carbon growth scenarios, Lucy said.
He also said business should create carbon management positions and price carbon into their investment decisions.
Some clarity on the ETS design will be provided when a government Green Paper is released in July.
Department of Climate Change assistant secretary Anthea Harris said the forthcoming Green Paper was a consultation document that would include several preferred positions on ETS.
Harris, who leads the carbon market branch in the department's emissions trading division, said the Green Paper would address some businesses concerns but was not set in stone.
"Although (the cap and trade system) is a simple concept, it will be one of the greatest economic reforms we have ever seen," she told conference.
