Are Australian businesses on track to meet sustainability targets?
The effects of human-induced climate change are becoming increasingly apparent with each passing year. Recent extremes of temperature, flooding and fire have reinforced that there is a vast amount of work to do in harnessing carbon emissions and reducing their impact on our own backyard and far beyond.
We know that these concerns and efforts to combat them are well and truly on the national agenda, for individuals right through to government. But with corporate contributions to the broader sustainability effort so important, are Australian businesses on track to meet their obligations in terms of targets, transitions and new ways of thinking about addressing the issue? We asked a pair of experts in the sustainability field for their informed opinions, finding a shared sentiment that looking firmly forward can help correct the country’s current course.
Associate Professor Ben Neville of Sustainable Business from the University of Melbourne:
“Given the need for rapid reductions in emissions, by and large we are performing very poorly. As it stands we aren’t even on track to meet our watered down national targets, let alone the Paris Agreement goal of zero emissions by 2040-50. However, despite vested interests still steaming in the wrong direction, growing acknowledgement of climate change’s financial implications by the majority of Australia’s mainstream business community means we finally seem to be getting going on action.
The Business Council of Australia and Australian Industry Group have both made statements about support for strong responses. The major banks are making solid commitments around fossil fuels and renewables. HESTA – Australia’s industry super fund for health and community service workers – and First Capital Super are ditching thermal coal investments. Even the big, dirty and entrenched energy companies are making some positive plays.”
APAC Program Coordinator Ciaran McCormack for The Climate Reality Project from the Melbourne Sustainable Society Institute:
“Plummeting costs of renewable energy projects and tightening international emissions regulations mean that, like it or not, the days of an economy reliant on fossil fuels are numbered. Australia has some of the best renewable energy resources in the world, so while we’ve been a laggard internationally to date there remains a real opportunity for us to become the renewable energy superpower of the 21st century.
There are also encouraging domestic examples of business innovation and embedding sustainability into entire business models, such as ASX-listed Brambles which has a circular economy model based on reusing and recycling pallets for the global movement of goods. However, environmental pollution isn’t currently included as a cost on the balance sheets of businesses nor the country’s GDP, so there hasn’t yet been powerful enough disincentive for either to minimise pollution.”
There are significant opportunities for businesses who become (and are seen to become) more sustainable: cost efficiencies, new customers and markets, employee retention, increased shareholder value and enhanced brand reputation. So, what are the fundamentals of fast-tracking sustainable transition in industry to exploit these?
First up is the need to calculate the current environmental footprint of operations – you can’t change what you can’t measure! Also key is enhancing stakeholder engagement and understanding how sustainability doesn’t have to be a trade-off between progressiveness and profitability for firms. In June, one of Australia’s biggest emitters of greenhouse gases, AGL Energy, decided to tie CEO and executive remuneration to reductions in carbon, showing an appreciation that effective change needs to be led from the top.
Then there is the importance of planning, instigating and managing the right projects for the right organisation, based on the sustainability journey they see themselves taking and where they are on it. And finally, identifying which targets are meaningful, quantifiable and achievable enough to ensure they have an impact and return on investment shouldn’t be underestimated. Targets should be benchmarked against industry leaders to encourage best practice, and it’s crucial that results are tracked and reported transparently so that companies remain authentic in the eyes of customers, who can easily detect ‘greenwashing’.
Associate Professor Neville also points to another core area for proactive Australian operators to consider beyond setting UN-supported science-based emission reduction targets – ‘Scope 3’ emissions.
“These are the emissions that customers produce with your product. For example, mining and metals giant BHP don’t generate extensive emissions in the production of coal, but their customers do when they burn it. Fortunately, that particular company are now developing a methodology for incorporating Scope 3 emissions into their broader targets, and hopefully this approach catches on.”
Far from being all about changing process and production, truly successful and sustainable strategies will be those that can combine competitive foresight, savvy technology use, quality marketing and creative communications with good old business sense. They will generate greater demand for cleaner, greener alternatives than more harmful alternatives, not just because their product or service is ‘better’ but because its positioning and promotion are more appealing to the market. Tesla’s cars are a great example of this, and have contributed to them recently overtaking Toyota as the automaker with the highest market capitalisation. It’s also worth remembering that large corporates are increasingly wielding their enormous power over suppliers in the pursuit of positive sustainability outcomes. For instance, in July, Bunnings dropped VicForests as a supplier for logging native forests illegally.
In the end, businesses locally and globally have to accept their part in and respond to the fact that we are crossing planetary environmental limits of which climate change is only one, albeit crucial, component. Plastic waste and biodiversity loss, amongst others, are very serious problems that corporate interests also contribute to, but ones that like global warming they have the resources and resourcefulness to lead the charge on reversing, in theory at least.
Despite good intentions, sustainability is rarely quick to integrate or easy to maintain, so 2020’s social and economic turmoil has no doubt distracted the efforts of even those organisations leading the way. Moving forward, taking active steps to better understand the inputs and implications at play will help professionals and business leaders guide transitions towards a greener future, sooner and more successfully.
With special thanks to:
- Associate Professor of Marketing Management and Marketing, Ben Neville, Faculty of Business and Economics
- APAC Program Coordinator, Ciaran McCormack, The Climate Reality Project
- Melbourne Sustainable Society Institute @ the University of Melbourne