News & Views

Business and Climate Forum: Business Leadership and Collaboration in the Spotlight

On 6 December 2017, the Global Compact Network Australia (GCNA) held its inaugural Business and Climate Forum in Melbourne. The Forum showcased business leadership on climate action including change in the areas of mitigation, adaptation, scenario modelling and explored outcomes from COP23 and the future of work in the green economy.

The Forum was aimed at building understanding of the current state of play and providing concrete examples of successful action, collaboration and engagement from which other organisations could draw information and inspiration.

Alice Cope introduced the Forum in the context of the Sustainable Development Goals (SDGs). Climate change is particularly emphasised in SDGs 7 and 13 – affordable clean energy and climate action. However there are some obvious and some less obvious interlinkages with broader SDGs. The obvious set includes; biodiversity, responsible consumption and production, sustainable cities, industry and innovation, water, health, decent work and economic growth and hunger. However it is also important to consider that climate change has disproportionate effect on poorer countries, compromising the goal to eliminate poverty. Climate change also has a greater impact on women, as they constitute the majority of the world’s poor, which in turn effects efforts towards improving gender equality. While climate change causes disruption to societies it therefore also impacts Goal 16 – the goal to promote peace, justice and strong institutions.

Not only do the effects of climate change silently impact on livelihoods and human rights, there are now examples of groups taking formalised action. The most prominent example comes out of the Philippines, where typhoon survivors and civil society groups submitted a complaint in 2015 to the Philippines’ Commission on Human Rights against 47 large fossil fuel and cement companies over their role in human-induced climate change that interferes with the enjoyment of Filipinos’ fundamental rights including to life, food, water, sanitation, adequate housing and self-determination.

Overview

To frame the initial discussion, Sasha Courville of NAB emphasised the importance of making the Forum about business action; applying a business lens to climate change, focussing on unpacking examples of how businesses concretely come to groups with risks and driving forward in an uncertain future. Sasha reiterated the complexity of tackling climate change and how far reaching and interdependent actions on climate change can be – between the private sector, government, civil society and within national and international contexts. In order to overcome this, unprecedented collaboration, new ways of working and new tools are required, and a space which encourages sharing of ideas and solutions where we can all learn and build on actions already in progress.

The Forum then proceeded with an overview of the recent COP23, which had the largest contingent of business representation to date. Efforts by the business community are vital to achieving the ambitions of the Paris Climate Agreement, and if Australia is to meet a below 2 degree target, an estimated $2 trillion investment will be needed by 2030. At the same time it was noted that Australia is well positioned to become a green super-power given our abundant natural resources.

There was general agreement that the conversation around climate needs to shift from risk and policy to one of embracing tangible opportunities. Already as a result of this shift in approach, a number of companies are looking over the horizon at opportunities, together with state and local governments, which are setting concrete objectives for emissions reductions and mobilising resources to tackle climate change.

The role of financial markets, including through green bonds, was discussed. In addition to increasing demand for green bonds, companies are also noticing that investor interest in and active engagement around climate risks is growing alongside demands for greater transparency in relation to how companies manage climate risks and impacts.

The Forum’s opening noted the challenge in communicating the importance of the below 2 degree target to the broader public with more needing to be done on this. Specifically, the public may not fully comprehend how a 2 scenario translates into real impacts and that changes may not necessarily occur in a linear fashion. To assist with public awareness and action, the public discourse must pivot from climate change being considered exclusively as a future risk to one that shows  that serious impacts are already being observed, such as recent widespread coral bleaching events and extreme weather patterns.

Mitigation

The Forum then showcased various mitigation initiatives. It was noted that while mitigation and adaptation are often viewed as separate response strategies, they are inextricably linked; in mitigating, we are adapting in the present to avoid future impacts.

The importance of collaboration was emphasised, with the City of Melbourne sharing an example of working with 14 different parties on the Melbourne Renewable Energy Project, a collective power purchasing agreement supporting the construction of a new wind farm. The crucial role that cities can play beyond their own direct footprint, by setting a vision, influencing, acting as knowledge brokers and stepping in as an aggregator when required, was highlighted. This collaboration helped bring efficiencies to the organisations involved and brought smaller organisations into the project, which may have otherwise been too small to act alone or at scale.

Melbourne Water and Yarra Valley water also shared their comprehensive approach to climate change mitigation and the successful deep collaboration that exists between them and neighbouring water authorities. By virtue of their emissions intensity, hydrological interdependencies and focus on adaptive management due to existing exposure to droughts and floods, water authorities have had an early start on considering climate risks and forming networks with various parties to tackle various climate related challenges.

Qantas and the Aboriginal Carbon Fund shared their domestic carbon offset partnership, highlighting the value derived from co-benefits such as building opportunities for Aboriginal people to remain on country, connected to their communities and integrating both land management techniques and traditional knowledge to assist Qantas in achieving quantifiable emissions reductions. The success of the programme has drawn interest from Canadian, African and New Zealand organisations looking to capitalise on learnings from the Australian programme.

Adaptation

The Forum then showcased adaptation initiatives.

Agribusiness is critical to the Australian economy and is likely to be one of the sectors most impacted by climate change. Treasury Wine Estates shared their adaptation response and reiterated the importance of having an adaptive management approach rather than a fixed plan, given the variables in production and now climate variability.

Specifically, the impacts of climate change are already being felt in the wine industry, including by way of compressed harvest times, requiring new logistics solutions. TWE collaborated with other primary producers to make use of additional capacity in their fleets during these critical harvest times, creating a win-win out of necessity.

The Red Cross discussed the Australian Business Roundtable’s efforts on disaster resilience and reminded the Forum of the depth and breadth of personal and financial costs on the community of climate change related disaster. Direct and indirect costs of disasters is expected to increase 2.5 times between now and 2050.

Brisbane Airport shared insights from their comprehensive climate adaptation strategy. Across the various activities the theme of synchronising asset life with expected climate impacts was highlighted, particularly in the context of building, retrofitting or upgrading facilities. This is also relevant when discussing investor expectations and time horizons.

Future of Work

Communicating job creation as a key opportunity of the necessary transition to a green economy was highlighted, with green jobs emerging in a number of fields including agriculture and farming, recycling, manufacturing of green materials and products, research, construction and reporting.  In addition to the emergence of new industries is the greening of existing industries, which will be extensive. This includes anything from the building and operation of green transport through to the upskilling of electricians, mechanics and salespeople.

Leaving nobody behind as this transition takes place should be a key aim. A few positive examples emerged from the recent closure of Hazelwood, where a number of programmes assisted workers to transition into new roles, including mine site rehabilitation and redeployment to other Latrobe Valley power generation facilities.

A transition to decent, sustainable new work requires the broadest possible set of coordinated policies, adequate investment and formation of partnerships between the community, government and business. Finally, skills shortages must be identified and coordinated efforts from business, colleges and government are required to ensure a smooth transition to a green economy.

Scenario Modelling and Methodologies

While scenario modelling is important for supporting target setting, strategy development and decision-making, there is no one agreed methodology. The session explored the value of scenario analyses and modelling for internal decision-making, noting these need to be embedded in business strategies as early as possible. The risk of not doing so is needing to make deep cuts in emissions closer to the target date, which may be costly or unachievable.

The work of the new Energy Transition Hub was introduced. AGL shared their approach to scenario analysis and Optus presented their newly approved Science-Based Target. A pilot project bringing together a number of banks from around the world to explore what the recommendations from the Taskforce on Climate Related Disclosures mean for the sector and to jointly develop scenarios, models and methodologies was also shared by NAB, one of the participating banks.

As there is currently no single agreed approach to climate scenario analysis and modelling, it is important to have companies willing to lead and take early steps in this space, although there are challenges in multiple approaches emerging including for investors. Collaboration and working together in a pre-competitive spirit – including exploring open source efforts around climate modelling – could play a significant role in addressing these issues.

Reflections on the day

Participants acknowledged that businesses are working steadily on their climate strategies, however further conversation and collaboration is required if the private sector is to contribute significantly to the below 2 degree target. Participants noted the value of further opportunities to bring business, government and academics together to enhance the collective response to climate change, and to encourage a greater public awareness and understanding of the current and nearer term impacts of a 2 degree scenario and to explore innovative and collaborative responses.

The Forum was kindly hosted by KPMG.

Please click here for the final agenda