There has been much political and consumer controversy over the introduction on July 1 of a carbon tax in Australia, but of particular interest is the impact it is already having on the behaviour of business.

A groundswell of support has emerged for the tax from groups such as the Businesses for a Clean Economy, which believes the pricing of carbon allows a business to choose how it reduces emissions and provides incentives for clean technology innovation. Carbon pricing unlocks jobs and investment in new industries, products and services, the group holds.

A total of 397 Australian and international businesses operating across the nation’s economy have signed an agreement that endorses the need for a carbon price as the mechanism to boost the transition to a clean economy.

The group, which includes private and public sector organizations such as AGL, City of Sydney, General Electric, Gadens Lawyers, Grocon, Ikea and Westpac, is also supported by a number of associations, including The Climate Group, The Climate Institute and the Investor Group on Climate Change (IGCC).

Similar backing is coming from investors, according to Nathan Fabian, chief executive of the IGCC. “Investors believe that carbon pricing is the only real, long-term policy solution for Australia,” he says. “There are many benefits, including the efficiency of using a cap on emissions and a price to reach Australia’s 2020 emissions reduction target, and the fact that the policy framework can respond to the need for deeper emissions cuts in the future.”

Fabian says policy responses other than carbon pricing, such as regulation, do not allow efficient market forces to determine where in the economy emissions are reduced and by how much.

The IGCC is a collaboration of Australian and New Zealand investors with a combined $700 billion in Australian dollars (roughly $740 billion Cdn), who believe that the financial return of an investment will be meaningfully impacted by climate change. The group aims to ensure that the risks and opportunities associated with climate change are built into investment decisions.

While there is some, mostly politically driven, uncertainty among consumers about the effect the carbon tax will have on their cost of living, consensus in the investor community is that it will have little effect on investment returns.

This is backed up by research. The top body for the $450-billion (Aud) not-for-profit superannuation sector, the Australian Institute of Superannuation Trustees (AIST), commissioned a report by U.K. environmental analysis firm Trucost to measure the likely impact of the carbon tax on super fund returns. These funds are greatly exposed to Australian-listed companies, with pension funds on average allocating about 30 per cent of their assets to the relatively carbon-intensive Australian stock market. The AIST research measured various aspects of 88 equity portfolios held by the funds.

The genesis was that super funds, as owners of Australia’s major corporations, need to know how the value of their investments may change under a carbon price scheme. So AIST looked to measure the carbon footprint of the funds’ portfolios.

It found that among the 14 largest pension fund portfolios there was a vast difference in carbon footprints, with a 46 per cent variance between the smallest and largest footprints. An even wider variation in carbon risk was found across all 88 equity portfolios held by the funds – with carbon footprints ranging from 44 to 457 tonnes of carbon per million dollars of revenue. The Trucost research, meanwhile, found that the 10 best performing portfolios had a 7 per cent lower carbon footprint than that of all 88 portfolios combined.