Sustainability now a non negotiable for Australian businesses: Capgemini Australia
Australian businesses are surpassing global peers when it comes to preparing for tough new climate-related disclosures, according to a report by consulting firm Capgemini.
Australian businesses are striding ahead of global peers as they race to prepare for tough new climate-related disclosures required in the new year.
Despite geopolitical challenges and economic pressures, Australian companies are moving faster than others to embed sustainability measures into their core business strategies, a new report reveals.
And the number of large companies measuring energy consumption has grown by more than half in the past two years.
Consulting firm Capgemini’s ‘‘A world in balance 2024’’ report shows Australia’s corporate landscape ranked first on progress in sustainability, and revealed a six-fold increase in the past year to 70 per cent of local corporate executives who were worried about public trust on the issue.
The findings come ahead of the enforcement of amendments to the Corporations Act, which will from January 1 require large companies and asset managers to prepare annual sustainability reports containing mandatory climate-related financial disclosures.
The proposed reporting standards cover scope one, two and three emissions.
One in four Australian organisations now measured energy consumption and shared sustainability data widely, compared to 47 per cent in 2022.
Seventy-eight per cent of local companies reported training employees on sustainable practices in the office, up from 55 per cent in 2022.
And 79 per cent had implemented a water stewardship program, up from 55 per cent two years earlier and one of the highest rates around the world.
Capgemini Australia head of sustainability Lynette Ryan said businesses had come a long way in a short time and had matured in relation to sustainability, no longer viewing it as a future problem to tackle but one to be faced today.
“Five years ago, these were future problems, but now, if I’m making decisions today, I need to understand what the world looks like tomorrow,” Ms Ryan told The Australian.
Regulation has been a key driver, with seven in 10 Australian businesses saying they would not have taken as much action without mandatory climate reporting law coming into effect in 2025 and the financial regulator’s “crackdown” on greenwashing.
The local arm of Vanguard Investments was last week ordered to pay a $12.9m penalty for misleading environmental, social and governance claims, after a lawsuit by the Australian Securities & Investments Commission.
“Australian companies are looking at what’s happened overseas, and they’re anticipating (those changes) and looking to get ahead of the curve,” Ms Ryan said.
“Regulation provides clarity and a framework that businesses are grateful for.”
Businesses have also faced increased pressure in the past two years from activist shareholders taking boards to task over their green credentials.
Woodside came under fire at its last annual meeting from proxy investors and shareholders who demanded the energy group act faster action on its energy transition. BHP and ANZ have also faced a backlash over links to fossil fuel.
Meanwhile, 72 per cent of Australian consumers want businesses to play a larger role in reducing greenhouse gas emissions.
Ms Ryan said businesses were facing pressure from stakeholders who wanted to influence boards and executives, but senior leaders were viewing sustainability and the climate in terms of dollars and cents. “There is a shift from leaders questioning how they can stay profitable in a world that’s changing around them. Decisions made today are becoming more about understanding what the world will look like tomorrow and how to align their company to keep it profitable,” she said.
“Boards and executives understand sustainability is an investment in the future, and it’s already embedded in the way they think about creating value. We are seeing businesses looking to find ways to create a competitive advantage by anticipating these changes,” she said. More than two-thirds of Australian companies agree that geopolitics is driving a slowdown in sustainability investments, with 68 per cent per cent worried about the impact of the US political environment on global sustainability investments.
Ms Ryan also pointed to the role of data and digital infrastructure in supporting sustainability goals. Many businesses are now focused on building systems that not only allow them to meet reporting requirements but also use data to make better, more informed decisions.
She said businesses saw it as an investment in the future and there would be sustainability benefits as a result of those efficiency measures.
“It’s important to their customers, to their employees and their other stakeholders, and now they’re going to have to measure it (with mandatory reporting), and they’ve got a proof point to build trust over time,” she said.
“It’s no longer a story about sustainability, it’s a story about business value, and that data will help to tell that story, because they’ve now got the evidence to call on.”
Capgemini surveyed 2152 executives employed at 727 organisations, each with more than $US1bn in annual revenue.
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