Sustainability solutions firm publishes report on state of decarbonisation
Australian organisations have achieved most of the decarbonisation ‘quick wins’, but struggle with harder to address challenges due to major barriers, according to ENGIE Impact, a sustainability solutions advisory firm.
The finding is based on analysis of data from ENGIE Impact’s latest Net Zero Report titled 'Six Actions to Accelerate Decarbonisation'.
The annual global report delves into corporate perspectives on decarbonisation transformation readiness, challenges to implementation and the major decarbonisation roadblocks companies must overcome to reach Net Zero.
The study surveyed more than 500 senior executives from the world’s largest companies, each employing more than 10,000 people. Australian organisations surveyed ranged in annual turnover from US$500 million to over US$10 billion, and included businesses in the automotive, technology, retail, mining, industrial manufacturing, healthcare, real estate, and food and beverage industries.
Jamie Ayers, ANZ Director, ENGIE Impact, comments, "For most organisations today, the biggest barrier to effective decarbonisation is not a lack of organisational will. Instead, the biggest barriers centre on the very practical implementation activities and decisions required to achieve meaningful decarbonisation."
According to the report, Australian organisations seem to be among the most committed to science-based targets. The report found that 37% of Australian businesses surveyed say they have a Net Zero science-based target commitment to reduce emissions across their entire value chain.
This is compared to the global average of just 16%, and compared to just 19% of their neighbours across the APAC region.
Ayers comments, "Australia is setting a strong example of environmental leadership with its dedication to science-based targets. Many of its businesses have made a commitment to reach net zero emissions across their entire value chain, which puts the nation in a strong position compared to many global counterparts.
“Many Australians and pundits consider to Australia to be slow movers on sustainability initiatives, but this puts that unearned reputation to rest.”
The report found that the drivers behind Australian decarbonisation goals and strategies are financial, rather than environmental. Australian organisations rank achieving long term cost savings as the top driver of their decarbonisation strategy and goals (44% of respondents), compared to the leading response from global counterparts in which “safeguarding the future of our planet” was the leading driver (47%).
When asked “To what extent do you believe having a leading sustainability strategy with excellent execution will provide your company with a material competitive advantage versus your industry peers?”, 52% of Australian organisations responded “a large extent” compared to 30% of global peers. These findings suggest that financial considerations are driving sustainability initiatives and discussions among Australian organisations.
Ayers comments, "Economic motivations can be just as powerful a driver to enact change as the greater good. Australian organisations may take a more pragmatic financial approach to change but the end result will remain the same as those driven by other factors: a more sustainable future both environmentally and economically."
The report also finds there are still significant obstacles. Only 19% of Australian respondents believe that their execution of sustainability programs are meeting or exceed the ambitious goals set as many still face significant barriers when it comes to achieving net-zero readiness.
Navigating regulatory challenges remains a significant hurdle, with 70% of businesses reporting difficulty in navigating regulatory requirements across different jurisdictions.
Stakeholder engagement is another area of concern, as 74% of businesses cited a lack of cross-functional approach to decarbonisation goals, 67% reported a lack of incentive or ownership at the executive level to drive decarbonisation action, and 66% identified challenges in working with their supply chain to deliver carbon reductions.
Australian organisations also cited financial challenges, such as the difficulty in meeting front-loaded capital expenditure requirements (74% of respondents), lack of government incentives to fund projects (63%), and pressure to deliver short-term returns on investment (ROI) on decarbonisation investments (59%), as posing obstacles.
Finally, organisational unpreparedness also poses a significant challenge, with 67% of businesses reporting lack of a clear decarbonisation roadmap, and 63% reporting a lack of data to measure and track progress against their goals.
Ayers says, “Businesses need to consider these challenges when planning their decarbonisation journey, and look for ways to address them - such as finding alternative funding sources, collaborating with other business and organisations or seeking expert help to navigate regulations."
The report summarises six key actions companies and executives can implement in order to understand the gaps to Net Zero targets, overcome barriers to implementation and accelerate decarbonisation within their organisation.
The six actions include:
- Maintain long-term focus and belief.
- Establish governance and accountability.
- Close the implementation expectation gap.
- Increase executive accountability.
- Activate the right decarbonisation enablers.
- Collaborate with the supply chains to address Scope 3 emissions.