Decarbonisation of the Nation

May 16, 2024

What are the practical steps being taken towards net-zero in Australia?

Australia has a target of reaching net zero CO2  emissions by 2050. But what are the issues and opportunities that this might bring for businesses throughout Australia?

Whilst there is no law requiring everyone to decarbonise, there are plenty of incentives to encourage business owners and company officers to take decarbonisation seriously.

Legal considerations

Greenwashing is a focus of ASIC and the ACCC – both entities are focusing on unsubstantiated claims of decarbonisation and empty emissions targets (those without plans and allocated funding). ASIC have shown they are willing to issue infringement notices and legal proceedings for unsupported claims and targets.

But it isn’t just the regulators who are bringing climate litigation, Australian courts have also seen investor or activist led (and funded) claims designed to obtain declaratory and injunctive relief and change corporate governance and behaviours with regard to climate policies and claims.

Reputational impacts

Climate and emission policies can impact a company or a board’s reputation. There are websites that assess climate strategies for all to see, and if the public can see this analysis so can shareholders who may be voting in board member re-elections.

Business factors

Big corporations are pledging big money to invest in the transition to renewables. There is money to be made in the transition towards renewables.

But it’s not just the private sector who are looking to invest in the road that will take the country to net zero, the Australian Government is also pledging big money. Rewiring the Nation is a government scheme where the Clean Energy Finance Corporation are offering direct investments and other finance solutions to businesses and farmers for their clean energy investments.

More regulation

The centralised approach to transforming Australia’s energy sector is likely to result in more regulation throughout Australia’s economy, and reforms are already underway.

The Australian Carbon Credit Unit Scheme is currently under reform. The Climate Active Programme which certifies businesses as being ‘carbon neutral’ is being upgraded to tighten the use of offsets and increase emission reduction accountability.

The introduction of mandatory climate reporting will have a big impact on the regulation of corporate climate policies. The specific standards that corporations will need to report on are yet to be finalised, but they are expected to include material climate risks and opportunities, governance policies in relation to climate and some quantitative forward-looking statements. They will also be required to include plans for climate scenarios. These reporting requirements will be legislated in the Corporations Act and will operate similarly to annual financial reporting requirements.

Mandatory climate reporting is due to commence from 1 July 2024 for publicly listed companies and then smaller companies (all public companies and large proprietary companies) will be phased in later so that by 1 July 2027 all public companies and large proprietary companies will be subject to mandatory reporting requirements.

Watch this space as the specific requirements begin to unfold.

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Tim Cannon

Director

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