Much of corporate Australia is outdoing the government on climate ambition but some have little more than motherhood statements and no firm plan to achieve net zero, a business forum has been told.
Company directors have gathered in Sydney to discuss how Australian firms are responding to the threats and opportunities posed by climate change.
Former Reserve Bank deputy governor Guy Debelle, who recently became chief financial officer of Fortescue Future Industries, was among the speakers to welcome Labor’s moves to legislate its emissions targets.
He said corporate Australia needs a sense of certainty and the government’s first steps last week to enshrine a 43 per cent cut by 2030 are an important part of that.
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“It certainly sends a positive signal which wasn’t there before,” Dr Debelle told delegates. But he also called it a baseline.
He noted many corporations had been leading by example for some time, with much bolder ambitions than the government’s.
“I take our own case at Fortescue with net zero by 2030, not 43 per cent down by 2030.
“There’s a fair chunk of corporate Australia which is already out in front of that which to some extent makes the objective easier to achieve if you’ve already got people doing it.”
Dr Debelle warned company boards yet to articulate and fund their emissions reduction strategies are already behind.
“These investment decisions … needed to be taken a couple of years ago but at the very least they need to be taken now,” he said.
“It’s going to be interesting, as we see people reporting over the next little while, in terms of their sustainability agenda.
“It’s like ‘OK that’s nice’ but what are you actually doing to achieve it? Where is your decarbonisation plan, show me the investment you are needing … to achieve that outcome rather than just having a nicely articulated objective without any of the detail about the strategy to achieve it.”
NAB chair Philip Chronican said companies must to grasp the shifting mindsets of lenders that are now very aware their customers and investors want to know what they are financing.
For NAB, that means working towards a lending portfolio consistent with net zero by 2050.
“We are winding down our financing of fossil fuels … we have set an upper limit on oil and gas extraction,” he said.
“We’ve put restrictions on lending to greenfields gas projects. We won’t finance any greenfield oil extraction project or onboard any new customers focused on oil extraction.
“We will not lend to new thermal coal mining projects or take on new thermal coal mining customers.”
Mr Chronican said high-emitting businesses could expect a future of higher risks and costs.
“It’s hard to think of a use for thermal coal or a use for oil in a world where you are operating in net zero because unless we’ve got electricity generation from other sources, or other transport fuels, we’re not going to get there,” he said.
“Eventually if you are in a high emissions sector the economics will make your business riskier, either because you will end up with stranded investment assets or your cost of business will be higher because you will have to pay somebody to provide you with offsets.
“If we do achieve a net zero 2050, high emissions businesses will have business models that are under threat. And those that have sustainable business models will look like better credit risks.”
The Climate Governance Forum was hosted by the Australian Institute of Company Directors.