The past week has been a busy week for ESG in general and climate in particular. A flurry of announcements that started with the Australian Senate passing mandatory climate reporting legislation, ASIC releasing their report on actions taken to deter greenwashing misconduct, the establishment of an expert methane reporting panel and the Australian government releasing their responses to the reviews by the Climate Change Authority on the National Greenhouse and Energy Reporting Scheme (NGER) and the Australian Carbon Credit Unit Scheme.
Spinifex is an opinion column. If you would like to contribute, contact us to ask for a detailed brief.
From 1 January 2025 large businesses and those above the NGER publication threshold, will be required to report on their climate-related risks and opportunities, their greenhouse gas inventory and their net zero accounting and plans. The mandatory Australian Sustainability Reporting Standard (AASB S2 Climate-related Disclosures) that will provide guidance for the content of these disclosures, is in the process of being finalised by the Australian Accounting Standards Board and is expected to be released later this year.
This all means serious climate business as net zero is no longer voluntary but mandatory.
Climate targets like net zero by 2050 with 43 per cent by 2030 are now part of everyday business. This flurry of activity now means a number of serious changes are now required as suggested below.
Serious climate reporting is now clearing the way for accelerated adoption of new technology
The reality is that any investment can now adopt solar, batteries and electric vehicles, indeed electrifying everything, and will usually have good commercial outcomes. Some technologies for industrial processing of minerals and aviation, are still needing further development so must become part of a Transition Plan.
Serious climate reporting is now able to accommodate a transition plan to achieve more and more net zero options
The need to do as much as possible to achieve net zero has always allowed what is left over to be reduced with offsets. Now there are serious issues with offsets being raised by authorities from the UN down to nation states like Australia and all non state entities. The whole process, adopted by all nations at COP 27, has to have “integrity”. The need to establish a transition plan that shows how net zero should be reached in steps can now be a way to proceed. Some guidelines on how to do this are available from the Science Based Targets initiative.
Serious climate reporting is now for everyone
Large and medium sized companies will now be looking seriously for all the parts of their value chain to be net zero. No company can do this task of net zero alone. So every small business that has a few more years to comply with mandatory climate reporting, will need to meet net zero requirements in most of their contracts, if they are to compete.
Serious climate reporting is now going to be subject to serious auditing for greenwashing
Mandatory climate reporting has serious implications for those who don’t take their net zero reporting seriously. The transition to remove all fossil fuels cannot be avoided by advertising or accounting tricks, and guidelines to avoid greenwashing have been made clear by the ACCC and ASIC. The legal cases awarded to ASIC on greenwashing are accelerating, and the case against Mercer Superannuation (Australia) Limited earlier this month saw the Federal Court order them to pay a $11.3 million penalty. This has set a new level of seriousness. Big gas reporting and advertising have still not been addressed but cannot be long away.
Serious climate reporting is now needing serious, on the job training
The best new approaches to net zero are not in textbooks yet as they are emerging from the new technologies and how they can be adapted for multiple new uses. Digital systems like AI and blockchain are providing the integration options that enable the new systems to be highly efficient as well as net zero. We must be learning from each other on the job.
Serious climate reporting will now need multiple new demonstrations of best practice
The need for demonstrations in every period of rapid change has been recognised as an essential part of net zero transition theory. The net zero precincts study being developed at Curtin University with the Cooperative Research Centres RACE for 2030 has set up 12 demonstration case studies where it is possible to see how certification can be trialled to enable grid integration of all local technologies, governance of the precinct to facilitate net zero, and how this can be modelled to show full costs and benefits.
The next phase of delivering net zero will undoubtedly accelerate in Australia now that reporting of net zero has become a serious exercise due to its mandatory requirement from the start of 2025.
