Business told to lift its green game, or else

More than 40 per cent of Australia’s largest companies have “insufficient” climate change plans, analysis reveals.

Federal Energy Minister Angus Taylor says it’s time for ­companies to “translate commitments and ambition into real and tangible outcomes”. Picture: Sean Davey.

More than 40 per cent of Australia’s largest companies have “insufficient” climate change plans, with only one-fifth of the nation’s biggest firms disclosing science-based targets aligned with goals under the Paris Agreement.

Analysis of the climate change ambitions of ASX 200 companies by accounting firm PwC found half of businesses with environmental, social and governance arrangements had not “adequately” linked those ESG plans with core business strategies.

The analysis comes amid moves by the Morrison government to establish new rules forcing hundreds of the nation’s largest businesses — including Commonwealth Bank, BHP, ANZ and AMP — to be transparent about climate change targets or face being publicly named.

PwC Australia chief operating officer Liza Maimone said many companies viewed their ESG strategies as a “risk-mitigation exercise, or even an afterthought”, with 42 per cent registering “insufficient reporting”.

“Our findings indicate many companies are struggling to bring the necessary rigour to their non-financial reporting when compared with their financial reporting,” Ms Maimone said.

She said companies — which are coming under increased pressure from investors and stakeholders — must become more transparent in outlining their “performance indicators and ­targets and regularly report against these”.

“Stakeholders are becoming increasingly vocal about wanting to see clear accountability to ensure ESG targets are met, such as linking executive pay and bonuses to the achievement of the targets,” Ms Maimone said.

Federal Energy Minister Angus Taylor, who last month wrote to the chief executives of every ASX200 business, said on ­Tuesday that it was time for ­all the companies to “translate commitments and ambition into real and tangible outcomes”.

The Clean Energy Regulator is working on establishing an annual Corporate Emissions Reduction Transparency report, which will oversee emissions pledges by corporations.

Companies that dodge involvement will be named and shamed by the government.

In the letter to 530 businesses, including the big four banks, mining giants and insurance firms, Mr Taylor said he expected them to be clearer in how they will reach net-zero emissions by 2050.

Mr Taylor on Tuesday told The Australian: “Reducing emissions requires a practical plan and a commitment to transparency and accountability.

“The Corporate Emissions Reduction Transparency report will be voluntary and will add to the many initiatives the government has in place to help companies translate commitments and ambition into real and tangible outcomes,” Mr Taylor said.

With lenders flagging an ­aggressive shift away from big-emitting clients and coal-linked customers under their net-zero emissions strategies, The Australian last month revealed ANZ had pulled funding support for the Port of Newcastle, the world’s largest coal export hub.

The PwC report, to be released on Wednesday, recommends companies take steps to meet investors’ expectations and embed climate targets into their core business strategies.

“Little motivation should be needed to increase this focus, with growing evidence that companies which are transparent in addressing stakeholder interests — including their ESG strategy and performance — may have their market value increase over time,” the report states.

Ms Maimone said with companies soon to be required to publicly report how they are tracking against their commitments on net zero emissions targets, businesses will need to “get ahead of the game”.

Also on Wednesday, the CER will release its quarterly carbon market report, revealing that the second-highest number of emissions reduction fund projects were registered last year, four-times higher than in 2019.

Mr Taylor said the ERF projects had the “potential to deliver 50 million tonnes of emissions reduction over their lifetime”. The CER report also shows the supply of Australian carbon credit units hit a record 16 million in 2020, with 17 million ACCUs expected to be issued this year.

The federal government’s push to increase transparency over the climate ambitions of corporate Australia comes as states and territories ramp up support for businesses to lower emissions.

NSW Energy Minister Matt Kean on Monday announced $750m to help businesses slash emissions. He said the Net Zero Industry and Innovation Program was aimed at “co-investing with industry to reduce our carbon emissions”.