ENGIE Impact senior director, Joshua Martin, raises concerns about Australia’s commitment to net zero and examines whether companies are engaging in greenwashing. He warns the devil is in the detail.
Rhetoric around reducing emissions and Net Zero targets has reached fever pitch. Are we really entering an era of overdue action, or will this prove to be a period of disingenuous greenwashing unlike anything we have seen before?
On the surface, the signs of action are looking positive. More than half of the market capitalisation of the ASX200 is now covered by Net Zero commitments. This uptick is a clear sign that decision makers at the highest levels are increasingly coming on board.
The escalation comes on the back of the collective and clear message from consumers, investors, and global capital markets that a failure to decarbonise will result in reputational and financial damage. But, as Australia’s largest polluters signal their intent to make deep cuts in emissions, the devil will be in the detail.
ENGIE Impact’s recent survey of 200 of the world’s leading executives found that less than 30 per cent believed their initial sustainability efforts had so far been successful.
Further, on a local level, recent analysis from Greenpeace Australia Pacific has called out prominent Australian companies for “hiding behind public carbon neutral goals” while neglecting to release concrete plans for switching to clean energy.
Unfortunately, many organisations boldly declare a target before developing a clear and detailed plan outlining the path they will take to decarbonize.
Even those companies with a clear transition plan have not signaled adequate investment in the core enablers of large-scale rapid transformation. These range from data and digital tools to sustainable financing, solutions design and governance that combine to deliver Net Zero targets.
The UK has recognised this trend. And, in an attempt to stave off greenwashing, has become the first country in the world to force companies to detail their plans for achieving Net Zero under a new green investment strategy.
Will Australia follow suit? For now, what is known is that Australia’s race to Net Zero will depend entirely on whether intent can be turned into action.
With suspicion of greenwashing already on high alert, there is a growing emphasis on transparency concerning how Net Zero targets will be realised.
The stakes are becoming increasingly high and company directors have been warned those that blindly announce Net Zero targets without comprehensive analysis of the company’s ability to meet them could be found guilty of “misleading or deceptive conduct” and face regulatory or legal penalties.
Investors are upping the stakes too. Many are becoming increasingly vocal about their requirement for companies to decarbonise, as we saw when Aware Super, Australia’s second-largest superannuation fund, declared it will pull capital from organisations that are not acting upon sustainability goals.
Leaders need to put together a solid roadmap detailing how they will achieve specific targets at the asset level, and this roadmap should inform the target – not the other way around. Decarbonisation analysis and planning is becoming more sophisticated and useful for business decisions.
The transformation agenda should be based on the industry in which the organisation operates, as well as its footprint capabilities and culture. It should also include the technologies available to achieve these goals, where funding will come from, a review and audit of the value chain and supply chain, and the rate at which the business will decarbonise, with intervals aligned to strategic investment decisions. It should flesh out the strategy to make the right decisions at the right times.
Australia’s ability to decarbonise will play out on the bridge between intent and action.
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