A recent UN report predicts that global temperatures will break records in the next five years, with a 98% chance one of those years will be the warmest ever recorded. In Australia, this translates into more droughts, more bushfires and more storms, alongside damage to critical ecosystems like the Great Barrier Reef.
Against this backdrop, the Australian government's actions to move the country away from its status as a climate laggard towards a position of leadership are positive: Australia's Nationally Determined Contribution (NDC) has a new target of 43% reduction of greenhouse gas emissions by 2030, and the Safeguard Mechanism has been reformed to drive emission reductions from the country's highest emitters. The government is also committed to the local carbon market, which was determined to be “fundamentally sound" in the government's recent Chubb Review. This sends a strong signal to investors in carbon projects and buyers of Australian Carbon Credit Units (ACCUs) about the key role that a robust and transparent carbon market will play in Australia's net zero journey. Through its Nature Repair Bill, the government is also seeking to develop a pioneering biodiversity credits market which will help drive investment into environmental conservation projects and protect Australia's precious ecosystems.
However, while these efforts are encouraging, Australia still has a long way to go to establish itself as a global climate leader.
In this article, Business Development Manager Alexandra Staples discusses the challenges and opportunities for the Australian private sector as the country moves to take action on climate. This follows a briefing event, hosted by South Pole at our Sydney office, with more than 40 of our clients and partners on this very subject. We share the key insights from the panel discussion and reflect on the journey ahead for Australia. While the conversation captured the ambition and enthusiasm of climate leaders in Australia, it also highlighted the areas where further leadership and action are needed. Key takeaways from the event are summarised below.
From left to right: John Davis, Director of Asia-Pacific at South Pole, Renat Heuberger, CEO of South Pole, Fiona Reynolds, Chair of UNGC Australia, Pip Stenekes, Director of Compliance and Integrity at Carbon Market Institute, and Jess Miller, Lead of the New Normal Initiative
While governments want to do the right thing, they often struggle with identifying the best course of action because of competing priorities and election cycles. As emphasised in the panel discussion – which included Renat Heuberger, South Pole's CEO, Fiona Reynolds, Chair of UNGC Australia, Pip Stenekes, Director of Compliance and Integrity at Carbon Market Institute, and Jess Miller, Lead of the New Normal Initiative – this is where the private sector has the opportunity, as well as the responsibility, to provide best practice guidance and sound commercial solutions to inform governments. This will yield results much faster than waiting for and hoping that the government will fix things.
"We need to be working with the government. One thing of course that we do know is that it is only really by governments, finance, investment, corporations and civil society working together and all moving in the same direction that we're actually going to get where we need to go, in the timeframe required." - Fiona Reynolds, Chair, UNGC Australia
"Government is going to be very important, but governments alone won't save us. We need the private sector and investors, all of us, to create that transformation we want to see." - Renat Heuberger, CEO, South Pole
Companies are facing increasing scrutiny of their climate claims. While feedback is vital to drive improvement, there is a danger that the amount of negative pressure is leading to “ greenhushing" or, even worse, inaction. We need to combat this by focusing on integrity and transparency in all climate claims, and by applauding those going above and beyond regulation and compliance.
"The integrity of carbon credits has a number of dimensions, from the method and the science of the projects, to the behavioural element of how communities are engaged, to the economic integrity of the markets and how they operate. I think integrity is going to be a really big thing to push forward the investment that we have been talking about, and make companies more confident in investing in the carbon market." - Pip Stenekes, Director of Compliance and Integrity, Carbon Market Institute
"If we focus on criticising each other too much, we will end up creating the perception that climate action is too difficult and complex. Instead, we need to start the journey, take the steps we can take today, and if mistakes are made, be honest and learn quickly from them. Authentic, accurate and transparent communication is key here – we need to talk more about climate action, not less. Only then can companies engage all their stakeholders and achieve their sustainability goals." - Renat Heuberger, CEO, South Pole
Australia has the unique opportunity to become a global climate leader by being more innovative and imaginative with the resources it has. The opportunity for Australia to be a renewable energy leader is widely acknowledged, but as a developed nation with a strong economy and a robust investment sector, Australia should be looking towards becoming a green finance superpower. For example, the vast amount of capital held in Australia's superannuation scheme could be used to fund decarbonisation initiatives and technologies, and frameworks could be developed to incentivise institutional investors with significant property portfolios and landholdings to be more active in the climate space.
"I don't think it's a question of technology or capacity, it's a solution that involves good organisation and a bit of imagination, really. And I think we're more than capable of doing that." - Jess Miller, Lead, New Normal Initiative
"Australia talks about becoming a green energy superpower, and I certainly think that we can do that, but I don't think we should limit our horizons to only the green energy side. As well as being a green energy superpower, we need to be a green finance superpower, and we need to really be doing that in our region. When we look at our finance sector, we've got a great banking sector, we've got the fourth largest funds management industry in the world, superannuation funds growing in size and scale, we also have fantastic infrastructure expertise, that we can export to the world." - Fiona Reynolds, Chair, UNGC Australia
"Government is going to be very important, but governments alone won't save us. We need the private sector and investors, all of us, to create that transformation we want to see." - Renat Heuberger, CEO, South Pole
By working closely with governments, the private sector can direct change to where it is needed most, and by fostering transparent communication, it can continue to learn and improve.
If you're in the Australian private sector, you can also drive this change. Regardless of whether you have already defined your climate goals, and implemented your first reduction and compensation measures, or whether your sustainability journey is just beginning, our experts will be happy to help you find the way on your Climate Journey.
