ClimateWorks chief executive, Anna Skarbek

Corporate leadership on reducing emissions is a growing trend in Australia, but companies could do better to ensure their strategies align with global science and international leadership, according to a new report by ClimateWorks. 

Chief Executive Anna Skarbek said companies were generally underestimating the pace of change required if they are to be in line with limiting warming to 1.5 degrees and should be doing more, including meaningful interim targets and addressing Scope 3 emissions from their supply chain.

The climate think-tank conducted an audit of 30 ASX-listed companies, and found that the strategies of property giant Dexus and mining company Fortescue were the most on track with the 1.5 degree temperature goal of the Paris Agreement. 

Companies were assessed against four main criteria, developed by ClimateWorks, based on science and global standards. They were: 

  • a commitment to net zero emissions by or before 2050
  • medium-term targets that are appropriate and ambitious
  • tangible actions to support achieving these
  • commitments that cover all emissions, such as value chain, customer and financed emissions – not just operational. 

Of the 30 companies assessed, only Dexus and Fortescue were found to have met all four principles. 

Dexus has committed to reduce total scope 1 and 2 emissions by 70 per cent and total scope 3 emissions including tenant electricity emissions by 25 per cent by 2030, in line with the property sector’s decarbonisation pathway for Australia to stay within the 1.5 degree scenario.

Similarly, Fortescue has set targets for its entire value chain and operations, covering the operations of its customers including crude steel manufacturers, in line with a 1.5 degree trajectory.

“There are consistent principles emerging globally that demonstrate what 1.5 degrees alignment looks like – and this is what Australian businesses should look to,” ClimateWorks system lead Wei Sue said. 

Most companies reviewed, including Lendlease, Australia Post, ENGIE, Wesfarmers, BlueScope, Stockland, Coles, Woolworths, EnergyAustralia and six superfunds were found to have commitments in line with at least two principles. 

While Sanjeev Gupta’s business and investment empire GFG Alliance, was aligned to just one of the four best practice principles. 

“The 30 companies assessed in the report include those with among the highest emissions profiles and most prominent climate targets,” Ms Sue said 

“We found examples of strong performance, but action is not occurring at the scale and pace required to meet international expectations.”

Additionally, the report found some companies’ net zero commitments lacked clarity of scope regarding what emissions were included, and excluded, and how they were measuring reductions and against what baselines. It stated that scope 1 and 2 should cover operational emissions and scope 3 should cover value chain, customer and financed emissions.

The Corporate climate action for 1.5 degrees: Best practice for Australian company net zero commitments report drew on two years of analysis and assessments through the ClimateWorks Net Zero Momentum Tracker series, which spans resources, property, energy and transport companies, banks and superfunds. 

The 158 companies assessed in the series represent two-thirds of Australia’s national emissions as well as two-thirds of the ASX 200. 

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