+1 862 207 3288 Background to the Case
Fortex Construction Services Ltd is a newly listed Company on the Australian Stock
Exchange. The company was created in 1991 and currently owns 14 sites throughout the
Eastern states of Australia. You have just been recruited in a graduate accountant
position with the Company in their head office based in Chatswood, Sydney. Fortex has
two main divisions – one leases and rents-out corporate vehicles’ and the other division
leases and rents out equipment for construction sites. The major cost to Fortex is the
purchasing of equipment for rental, with equipment being shipped predominantly from
China and the UK.
Fortex CEO, Richard Davies, is concerned about the impact of the new carbon pricing
mechanism on Fortex’s business model and its reported profits. He is especially
concerned about the possible impact on the Fortex share price, which has been gradually
falling since the company was listed a year ago.
Richard has asked you to consult with him on the business implications of the new
carbon price on the business, and the actions Fortex can take to mitigate this impact,
illustrating how Fortex’s position might be communicated to investment analysts.
After discussions with Richard, you agree that you will undertake to advise him on the
following activities:
• Complete a greenhouse gas (GHG) inventory of the business to establish the
company’s current carbon footprint
• Identify the information which will need to be captured from now on in order to
monitor the GHG footprint of Fortex
• Identify what information should be reported to investment analysts to enable
them to accurately reflect the financial impact of the carbon tax in their
valuation of Fortex
• Identify opportunities and make recommendations to cost effectively reduce
elements of the company’s GHG footprint over time and capitalise on business
opportunities arising from the introduction of a carbon tax.
An old university friend, now a graduate at PwC and working in their sustainable
energy department, has sent through to you the following reference documents:
• The National Greenhouse and Energy Reporting (Measurement) Technical
Guidelines 2011, available at:
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