Climate Action 100+ has just released the assessments of the 14 Australian focus companies, based on disclosures up to the end of May 2023. The results show many companies are lagging in their climate ambition.
The assessments reveal that while Australian companies have commitments aligned with Australia’s national goal of net zero by 2050, and are enhancing their climate disclosures, significant gaps and challenges remain.
Companies’ interim targets, plans and associated allocation of capital still fall short in both scope and ambition. Companies are also failing to plan for the impact of decarbonisation on workers and key stakeholders.
Crucially, companies are missing the opportunity to advocate for policies that enable rapid and effective decarbonisation that would help them meet their commitments.
Sector Pathways
An immediate example is the Australian Government’s current work to craft sectoral plans for phasing out or transforming emissions-intensive processes and products.
If done well, sector-by-sector climate plans will give companies the necessary confidence for capital expenditure in line with their net zero goals. Company and investor input into their development is essential to ensure they are both credible and useful.
Key findings
- Many companies are making progress in the scope and detail of their emission reduction commitments.
- However, despite the widespread adoption of targets for the 2030s and beyond, emissions from Australian focus companies are continuing to either rise or not decline significantly.
- Companies are still failing to:
- Align targets in this critical decade with the 1.5° Paris goal (with 79% of companies only partially aligned, and 21% of companies being misaligned with the goals of the Paris Agreement).
- Align capital allocation with their decarbonisation strategies and commitments.
- Adequately address value chain (Scope 3) emissions in targets and plans. These emissions, which are associated with suppliers and the use of products and services, often represent the biggest transitional risk for Climate Action 100+ focus companies.
- Plan for a just transition with adequate provisions for the impact of decarbonisation on their workers and communities (with 71% of companies failing to meet the criteria for this indicator).
The results also reveal that there is a lack of active lobbying for policies that enable rapid and effective decarbonisation of the Australian economy. In some cases, companies are lobbying against the very policies that will facilitate an effective, economy-wide transition to net zero.
This is the first assessment based on the revised CA100+ Net Zero Company Benchmark Disclosure Framework, which places a stronger focus on short- and medium-term transition planning and alignment with 1.5°C pathways.
Where to from here
- Investors: can leverage these assessments to inform their engagement strategies with CA100+ focus companies, holding companies accountable for their climate commitments and decarbonisation strategies.
- IGCC: will continue to advocate for enhanced transparency and granularity in company disclosures, and national sector decarbonisation pathways aligned with the 1.5C Paris goal.
- Government: has initiated the process of crafting decarbonisation plans for six key sectors. IGCC remains committed to actively engaging and advocating for these pathways to be ambitious and meet the following criteria:
- they need to be credible,
- support investor and company risk assessment and decision-making
- and comprehensively address the full scope of company emissions and investor needs.
- Ultimately, these plans must give companies and investors the certainty they need to realise their decarbonisation goals through capital allocation decisions in line with Australia’s emission reduction targets and the internationally agreed temperature targets in the Paris Agreement.
- Climate Action 100+: will continue to facilitate engagement with companies to ensure they make tangible progress towards their net zero commitments.
About the Benchmark Disclosure Framework
Climate Action 100+’s Benchmark assessments provide a rigorous, independent, and detailed understanding of how heavy emitting companies are progressing towards sustainable business models in a net zero economy.
The updated Benchmark Disclosure Framework 2.0 in 2023 has ratcheted up ambition for corporate decarbonisation, in line with the Paris Agreement. This sends a critical signal about the type and ambition of disclosures that investors need to see from investee companies to have confidence in the management of climate-related risks and opportunities. The underlying methodology has changed significantly this year and we urge investors to review the annual assessments as standalone scores, rather than year-on-year comparisons. Full details are available here.
Australian focus companies
- Adbri Limited
- AGL Energy Limited
- BHP Group Limited
- Bluescope Steel Limited
- Boral Ltd.
- Incitec Pivot Limited
- Orica Ltd.
- Origin Energy Ltd.
- Qantas Airways Ltd.
- Rio Tinto Ltd.
- Santos Ltd.
- South32 Ltd.
- Woodside Energy
- Woolworths Group Ltd.
Please click here to view each company’s assessment. The assessments of the 14 Australian focus companies have been released before global focus companies to provide investors with critical benchmarking data ahead of the Australian proxy season and upcoming annual general meetings.
Climate Action 100+ will publish a further 145 assessments covering the rest of the initiative’s focus companies in mid-October. Each official company scorecard page will be updated in mid-October when the initiative will publish the full set of assessments.