Top 10 ESG Markers - August 2021

Yet another month passes under lockdown, and yet another busy month for ESG.?This month’s feature includes the latest IPCC report warnings, legal actions against Santos and NSW EPA and net zero commitments by ASX companies rising.

Again, if I happen to miss some key markers in a particular month. Just drop me some comments, and I will pick them up next month!?

*‘ESG Markers’ – like biomarkers that tell us how healthy our body may be, ESG Markers showing us the big movements in the field of ESG in Oceania and globally.?

So, here are my Top 10 for August 2021, again not in any particular order.

No all-male boards milestone reached on ASX 200

For the first time in history, there are no all-male boards at Australia’s top 200 companies, the Australian Institute of Company Directors (AICD) has revealed.?When the AICD began its quarterly reporting of women on ASX 200 boards in 2015, there were 28 all-male boards.?With the last two all-male mining boards appointing highly qualified women NEDs this month there are no longer any all-male boards on the ASX 200.?To continue the momentum of gender diversity in Australia, the AICD supports a 40:40:20 model of gender balance. Under this approach, boards aim for at least 40 per cent of director seats to be held by both men and women on a consistent basis, with flexibility over the remaining 20 per cent of seats.

Santos facing legal action over Net Zero Claim, a world’s first on carbon capture and storage viability

In the first of its kind to test the Noel Hutley opinions on Director duties relating to climate change in Australia, an Australian environmental group, the Australasian Centre for Corporate Responsibility (ACCR) is suing the country's second largest independent gas producer Santos, alleging the company's statements about gas being "clean" and having a clear pathway to net zero by 2040 were deceptive. Santos has said it aims to get to net zero by 2040 with the help of carbon capture and storage (CCS) projects - including plans to store carbon dioxide in depleted oil and gas fields - and with soil carbon projects such as tree planting.?CCS, which is mainly used today for enhanced oil recovery projects, is generally seen as untested and unnecessarily prolonging the life of the fossil fuel industry.

Australian Bill to end import of forced labour products approved by Senate

A law aimed at ending Australia’s participation in international slave labour has passed through the Senate.?The Customs Amendment (Banning Goods Produced By Forced Labour) Bill 2021 – proposed by independent senator Rex Patrick – seeks to ban the import of products that are produced in whole or part by forced labour. This is a response to rights groups, researchers, former residents and some Western lawmakers and officials claiming that Xinjiang authorities have facilitated forced labour by detaining around a million Uyghurs and other primarily Muslim minorities since 2016 and facilitating the mass transfer of detainees to factories across the country. But, the Customs Amendment (Banning Goods Produced By Forced Labour) Bill 2021 covers a far greater scope than just the human rights abuses occurring in China.

If the bill passes though the House of Representatives, goods from any country that are found to have been produced by forced labour will be subject to the same penalties that apply to the importation of other prohibited items, including pornography, firearms and other weapons, ammunition and counterfeit goods.?The bill will need to be approved by the House of Representatives in the coming months before it can be become official Australian law.

The US Government has also taken steps to respond to this issue. Most recently, in mid-July the US Senate passed legislation to ban the import of products from China’s Xinjiang region. The Uyghur Forced Labor Prevention Act would create a “rebuttable presumption” assuming goods manufactured in Xinjiang are made with forced labour and therefore banned under the 1930 Tariff Act, unless otherwise certified by US authorities. That Bill must also pass the House of Representatives before it can be signed into law by the President. The bill would go beyond steps already taken to secure US supply chains against rights abuses in?China, including existing bans on Xinjiang tomatoes, cotton and some solar products.

?Quarter of ASX 200 set net zero targets, and half have emission reduction goals

The number of ASX200 companies that are committed to eliminating carbon emissions by 2050 has risen to 49, almost triple what it was a year ago, says a report from the Australian Council of Superannuation Investors (ACSI).?In addition to this, almost half of the ASX200 have set emission reductions targets, up from 74 in 2019. Companies that committed to net-zero emissions in the past 12 months include AGL Energy, Ampol, Blackmores, Brambles, Downer EDI, Coles, Charter Hall, Newcrest Mining, Sydney Airport, Transurban and Origin Energy.?These ASX200 companies that have made net zero commitments account for a market capitalisation of over $1tn, and include giants such as BHP, Rio Tinto, Fortescue Metals, Transurban and Wesfarmers.

The Intergovernmental Panel on Climate Change (IPCC) releases landmark sixth assessment report

The latest update (AR6) to the IPCC climate assessment, endorsed by governments from 195 countries, will provide the shared evidentiary basis for decision-making at the crucial COP26 UN climate conference in November 2021.?The report is produced by scientists from 66 countries based on peer-reviewed science from more than 14,000 studies.?This Insight summarises the key takeaways from the IPCC report for government and corporate decision-makers, and the implications for governance, strategy, risk management and oversight.

The key findings are as follows:

-?????????The world is warmer than it has been in at least 125,000 years.?Global average surface temperatures are on average 1.09°C above pre-industrial temperatures, and now on par with temperatures not seen for at least 125,000 years. Australian land areas are already 1.4°C above pre-industrial averages. 1.07°C of the 1.09°C is due to human influence.

-?????????This human-induced warming has increased, and continues to increase, the intensity and/or frequency of extreme weather events?such as heatwaves, flooding, drought, bushfire and tropical cyclones, as well as melting glaciers and warmer oceans, sea level rise and acidification of rain.

-?????????There have been substantial developments in the climate science, particularly the attribution of observed weather events and their impacts to human-induced climate change. For example, globally, once in 50-year heat waves now happening every decade and with 2°C average warming will happen every three to four years. In Australia, heat extremes have increased, cold extremes have decreased, and relative sea level has risen at a rate higher than the global average contributing to increased coastal flooding and shoreline retreat along Australia's sandy coasts.

-?????????We have five new emissions scenarios – with 'Shared Socio-economic Pathways' (SSP's) replacing the 'Representative Concentration Pathways' (RCP's).?Climate change will get worse before it gets better: global average surface temperature will increase until at least mid-century under all five scenarios.?The report provides an update on progress against Paris Agreement goals. It is now more likely than not we will exceed 1.5°C in the early 2030s under all scenarios, even briefly under the very low emissions scenario. The best estimate for warming is 1.5°C in the near term (2021-2040) under all emissions scenarios except the highest emissions scenario (1.6°C). The largest differences in best estimates of temperature are seen in the long-term (2080-2100), ranging from 1.4°C on the very low emissions scenario to 4.4°C in the highest emissions scenario. Also, Land and ocean sinks become less effective in higher cumulative CO2 emissions scenarios.?

-?????????Some of these human-induced climate changes are 'irreversible' for centuries.?While net negative emissions scenarios (such as those involving carbon dioxide removal or CDR) see a gradual reversal in the increase in global average surface temperature, other changes such as ocean acidification, ice sheet melt and sea level rise continue for centuries.

-?????????Although unlikely this century, there is a chance of low-probability high-impact tipping point outcomes, such as abrupt changes from AMOC ('Atlantic Meridional Overturning Circulation') shutting down, Antarctic ice shelf collapse, or Amazon dieback. These should be part of risk assessments.

-?????????Addressing climate change requires net zero carbon emissions globally as soon as possible.

There are new tools: the IPCC is making freely available online an Interactive Atlas which allows for users to explore the state of the climate science underling the report across geographies, datasets, variables, values and periods, and seasons. There is a new shared language for physical events and trends: 'climate impact drivers' or CIDs. There are updated carbon budgets. All of this can inform infrastructure and operations, adaptation planning, contractual risk allocation, and transition planning.

Australia’s biggest climate poll shows support for action in every seat

Voters in every federal seat in Australia support increased action on climate change and the adoption of renewable technology over the government’s plan for a gas-led recovery, according to the largest poll ever conducted on climate change and politics in the country.?The survey of 15,000 Australians conducted by YouGov on behalf of the Australian Conservation Foundation found 67 per cent of voters believed the government should be doing more to address climate change, including a majority in all 151 national seats.

It found support for increased climate action was similar across states and territories, with the highest being the Northern Territory where 71 per cent supported more action and the lowest being NSW, where 65 per cent wanted more. In Victoria 69 per cent wanted more or much more action.?It found that regional voters were almost as concerned about climate as those in the city. In NSW 66 per cent of metropolitan voters wanted more action compared with 63 per cent in the regions. In Victoria 42 per cent of metropolitan voters wanted to reach net zero before 2050 compared with 41 per cent in the regions.

Grattan report suggests green steel may solve the climate policy conundrum in Australia

A new Grattan report suggests Australian green steel industry could create tens of thousands of jobs in regional areas reliant on coalmining, particularly in central?Queensland?and the Hunter Valley, giving them a future as demand for carbon-intensive goods falls, as well as make Australia a green energy superpower.

The report found green steel made with?renewable hydrogen?could become a multibillion-dollar export industry employing 25,000 people in regions likely to be hardest hit by global steps to cut greenhouse gas emissions, helping with the just transition of 55,000 carbon workers in these regions. Rather than exporting renewable hydrogen, the analysis found the most economically viable path appeared to be to use it within Australia to produce steel with near-zero emissions.?Pilot plants are being built or planned in Germany and Sweden, where steelmaker SSAB recently has?set a target of green steel production by 2026, a decade earlier than was previously considered possible. German manufacturer Thyssenkrupp made headlines in November when it demonstrated that a steel blast furnace?could in part run on hydrogen.

The Cool Down launched by 250 Australian athletes to tackle the climate crisis

A who’s who of Australian sport, spearheaded by the former Wallabies captain,?David Pocock, have been brought together in a new initiative that aims to use the platforms of high-profile sportsmen and women to tackle the climate crisis. The group, which includes Pat Cummins, Cate and Bronte Campbell, Lance Franklin, Rohan Browning, Darcy Vescio, Mick Fanning, Craig Foster, Ian Chappell, Liz Ellis and Mark Webber, hopes to encourage Australians to make their voices heard. Other sportspeople to lend their names to the campaign include current Wallabies captain Michael Hooper, AFL footballer Nat Fyfe and AFLW star Daisy Pearce, the NRL’s Nathan Cleary, golfer Karrie Webb, cricketer Rachael Haynes and Matildas duo Tameka Yallop and Alanna Kennedy. It has backed scientific calls for Australia to cut greenhouse gas emissions at least in half by 2030 and reach net zero emissions before 2050.?The campaign highlights the connection between extreme weather events and sport – including how heat has impacted the Australian Open tennis tournament in recent times and how bushfire smoke has affected professional sport.

Black Summer Bushfire survivors win landmark climate change case against NSW EPA

In a landmark ruling for the 2020 Black Summer bushfire survivors’ group, Bushfire Survivors For Climate Action (BSCA), the Land and Environment Court of NSW has?ordered the New South Wales Environmental Protection Authority (EPA)?to take steps to safeguard against climate change.?BSCA took the EPA to court over its climate change policy, arguing the that the EPA had not done enough to stop the pollution of the atmosphere with greenhouse gases.

The EPA issued a statement saying it was reviewing the judgement and implications. It said the authority was an active government partner on climate change policy, regulation and innovation and was a part of the whole-of-government approach to climate change.