Earlier this month, the Federal Government’s Climate Change Bill passed the House of Representatives. The Bill legislates Australia’s commitment under the Paris Agreement to cut greenhouse gas emissions 43 per cent below 2005 levels by 2030 and to reach net zero by 2050. It is, as the Climateworks Centre’s Laura Simes explains in this piece, ‘framework legislation’: Rather than legislating a particular solution, [it prescribes] an end-goal and interim reporting on that goal, allowing the government to then determine the most appropriate course of action at any given time.
The legislation requires the Minister for Climate Change to deliver an annual statement to parliament on progress made during the year towards achieving climate change targets. There would be something like budget night for climate change as the minister would be expected to address the parliament on progress.
The Bill also gives an advisory role to the Climate Change Authority (CCA). The CCA will provide published advice to the Minister on the statement each year and, at least once every five years, advise on the reduction targets it considers should be included in any new Paris Agreement commitments – commitments that can only be improved on, rather than rolled back, over time.
The Senate has referred the Bill to the Environment and Communications Legislation Committee for inquiry and report by the end of the month. In the likely event the legislation is supported by the Senate, it is expected to become law in September.
A wide cross-section of business, investor and conservation groups, including the AICD, the Australian Council of Superannuation Investors and the Australian Industry Group, issued a joint-statement on 1 August supporting the passage of the legislation:
The lack of a settled national policy has consistently been cited as a key inhibitor to the effective management of climate change risk by investors, directors and other business leaders.
There is bipartisan and broad community and business support for achieving net zero emissions by 2050. The Government legislating a 2030 target of at least a 43 per cent emissions reduction under the Paris Agreement establishes some much-needed policy certainty.
The Government is also now consulting on proposed revisions to the “Safeguard Mechanism” which covers the emissions of the 215 largest industrial emitters, representing 28% of current national emissions. Key proposals include: [CG1]
- gradually reducing baselines to help Australia reach net zero emissions by 2050
- introducing tradeable credits for facilities that emit less than their baseline
- providing tailored treatment to emissions-intensive, trade-exposed (EITE) facilities so businesses are not disadvantaged compared to international competitors and emissions do not increase overseas.
The Government has announced a 1 July 2023 start date for the revised mechanism. The full consultation paper can be found here.
Catch up on the Climate Governance Forum
With close to 1400 attendees, the inaugural Climate Governance Forum held at the start of August was a landmark event bringing together leaders and experts on climate governance and the business response to climate change. The Australian Institute of Company Directors is making selected sessions from the Forum available to readers of this newsletter.
- Phil Chronican FAICD, NAB Chair, on the climate opportunity
- The path to net zero with Dr Guy Debelle, Zoe Whitton, Michael Ullmer AO FAICD and Dr Katherine Woodthorpe AO FAICD
- Lessons from abroad with Sue Lloyd, Katrina Litvack and Silke Goldberg.
For an event wrap, see the Company Director reporting here .
New global reporting standards update
Around the world, company directors are responding to rapidly growing investor and stakeholder demand for high quality, comparable disclosure of the sustainability and climate-related practices of their companies. There is a need to consolidate these frameworks and produce a globally consistent reporting framework, writes AICD Senior Policy Adviser Andrew Heath GAICD.
New international climate change and sustainability standards are set to be finalised in early 2023, the International Sustainability Standards Board (ISSB) Vice Chair Sue Lloyd told the Climate Governance Forum, with a public consultation having recently closed. In parallel, the Albanese Government has recently recommitted to introducing standardised and internationally aligned climate reporting requirements for large companies.
Read Andrew's full piece where he runs through the ins and outs of the ISSB’s draft standards, and what this all means for the Australian market.
CGI Global Summit 2022: Ambition to Action
The Climate Governance Initiative (CGI) is hosting the Global Summit 2022: Ambition to Action, a 24-hour virtual conference on Wednesday, 12th October, 2022 spanning the globe and bringing together highly motivated board members and other eminent speakers who champion effective climate governance. You are invited to pre-register for this event from 26 August.
The event program features globally relevant keynote speakers and panels, as well as region-specific interactive sessions developed and delivered by CGI’s network of non-executive directors (NEDs). Drop-in networking sessions will provide attendees the opportunity to meet NEDs from around the world and discuss the ideas raised by the panels they have attended.
What’s on offer?
The program will feature panels on topics including:
- Sustainability governance structures: How to structure for success, with speaker Tim Stutt, Partner and Australian ESG lead, Herbert Smith Freehills, facilitating a panel discussion (hosted by CGI Australia)
- Financing the Transition to Net-Zero: A Reality Check, with speakers Maria Ariza, Jorge Arce and Iñigo Orvañanos (hosted by Chapter Zero Mexico)
- The climate change challenge in the real estate industry: board responsibility and capacity building in engaging investors and protecting portfolios values, with Raffaele Rizzi, Alfredo Romano and Maria Buttiglieri (hosted by Chapter Zero Italy)
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