A new survey of the Australian business community has shown that there is strong support amongst companies for adopting strong targets on climate change, with almost unanimous agreement that governments are not doing enough to tackle climate change.
The 2019 Australian Climate Policy Survey, prepared by the Carbon Markets Institute, has shown there is very little confidence amongst Australian businesses that the federal government’s set of climate change policies are sufficient, and more must be done to reduce climate change related risks.
The vast majority of companies surveyed said that the ongoing political fight over climate and energy policy, which has raged for more than a decade at a national level, would ultimately lead to greater disruption for businesses, and the longer the delay, the more abrupt the disruption will be.
95% of responders agreed with the proposition “that the longer Australia delays decarbonisation, the more abrupt, forceful and disruptive the policy response will need to be, especially for carbon intensive industries.”
The Carbon Market Institute surveyed 220 Australian businesses on their views of climate risks and national policies, with most responses coming from company executives. Around a third of responders represented ’emissions intensive’ companies with reporting obligations under the National Greenhouse and Energy Reporting scheme.
Almost 95 per cent of respondents to the survey said that they did not believe Australia’s current climate policies are adequate to address the growing risks faced by companies due to climate change or support a transition to zero net emissions.
A similar proportion of responders said that they did not think the current set of climate policies was sufficient to meet Australia’s targets under the Paris Agreement and 76 per cent of respondents did not support the use of surplus Kyoto units to meet Australia’s 2030 emissions reduction target.
83 per cent of responders also said that Australia should set a formal, economy-wide target to reach zero-net emissions by 2050, with at least one respondent saying they would much prefer a consistent national target than several state-based targets.
“This survey tells us that many in Australian business – including Australia’s highest-emitting companies – are already planning to transition to a net-zero emissions world. Business is looking for more ambitious climate policies to set a defined pathway and assist them in managing this,” Carbon Markets Institute CEO John Connor said.
“Australian businesses are grappling with the knowledge that science requires net-zero emissions by 2050, policy volatility, evolving global carbon markets, investor calls for action and reporting requirements such as those from the G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosures,” Connor added.
The top five long-term policy priorities for companies as identified by the survey include the introduction of a legislated net-zero 2050 target; a coordinated national climate policy, sectoral decarbonisation strategies, the introduction of a price on carbon, and a plan to ensure orderly closure of old coal plants and their replacement with clean energy.
Companies also said that the federal government should look to strengthening some of the existing policies that are in place, including expanding the Emissions Reduction Fund and strengthening emissions caps under the Safeguard Mechanism, to give certainty to businesses when decarbonising their operations.
“We are seeing a gap between business expectations and government policy, and it is concerning business,” Connor said. “Current reviews of the Safeguard Mechanism and Emission Reduction Fund, along with the development of the Long-Term Strategy next year offer an opportunity to close that gap.”
The survey found that most companies expect there will be some form of price applied to carbon emissions, with 58 per cent of responders anticipating a carbon price above $30 by 2030, with a further 31 per cent of companies surveyed expecting a price of between $20 and $30.
84 per cent of responders said that their companies had already recognised that climate change posed financial and strategic risks to their operations in the long term, and just under half said that they had already seen increased shareholder interest in their climate change policies over the last 12 months.
There has been growing pressure on companies to directly assess and prepare strategies to account for climate change related risks to their current and future operations. These pressures have been paired with a growing legal risk that companies, and company directors, could have legal liabilities for a failure to adequately response to climate change related risk.
All three of Australia’s major economic regulators, the Reserve Bank, ASIC and APRA have warned that climate change must be considered a significant financial risk to companies, as well as a physical risk to assets.
While only 9 percent of respondents thought that their legal liabilities had increased over the last 12 months, 77 per cent of respondents to the Carbon Market Institute’s survey agreed that Australia should introduce some form of national regulatory disclosure framework for companies to assess and report on climate change related financial risks.
Many of Australia’s largest companies faced shareholder resolutions at annual general meetings held in 2019, including both Australia’s largest banks as well as energy companies with significant fossil fuel exposures, including miner BHP, and electricity retailers Origin Energy and AGL Energy.