Embracing Sector-specific Decarbonisation Strategies

Last week, Federal Minister for Climate Change & Energy, Chris Bowen announced intentions to introduce sector-specific decarbonisation strategies.

In the Law:

The Climate Change Authority passed its recommendation to the federal government to revise Australia’s Net Zero 2050 strategy, supported by plans for six major economic sectors. The new plans will include sectors relating to energy and electricity, industry (including waste), the built environment, agriculture and land, transport, and resources.

Sector-specific decarbonisation pathways aid in focusing collective efforts on actions with the highest value. Australia has the opportunity to ensure that the long-term strategy to achieve net-zero emissions includes establishing the framework to drive the required transformation of the Australian economy.

The government has written to the Climate Change Authority requesting statutory guidance on the 2035 target under the Climate Change Act, expected to be received in late 2024

In the Company Boardroom:

The government will devise sectoral decarbonisation plans in collaboration with industry, the climate movement, experts, unions, and the community. Industry groups have advised the government previously to establish optimal decarbonisation pathways for all sectors of the economy to promote fairness in the decarbonisation effort required across industries in achieving climate commitments.

This places the onus on companies operating directly or indirectly in these sectors to develop their own decarbonisation plan. To do this, the first step is to determine the carbon footprint of the organisation to understand where there are opportunities to decarbonize through use of more energy efficient processes, or renewable electricity supply, etc.

For many sectors there are levers to pull to decarbonise their operations, but some sectors will also have to comply with these decarbonisation expectations as they are part of the supply chain and may be at risk of losing contracts.

In the Investment Houses:

Government-led sectoral plans should attract significant investment into Australian decarbonisation. This could lead to changes in investment analyst modelling regarding the future tailwinds for companies they research, potentially changing forecast revenue also, perhaps making companies a more investable target.

Investors want to see companies set clear emissions reduction pathways as it shows they are aware of the risks related to carbon and climate change. The government’s sector-specific plans provide guideposts for companies to develop these pathways.

Our View:

In order to combat escalating climate-related impacts, we know we require a robust economy-wide response. The government’s sectoral decarbonisation plans will assist directly to curb carbon emission increases and set a precedent for the remaining sectors.

Perhaps other sectors in Australia will also be privy to government-led decarbonisation plans – we hope Australian businesses feel supported and prepared for these expectations.

For additional information on this important topic or ESG assistance, contact us today at info@anabranchesg.com.au

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