The Most Significant Environmental Development In Years
When Labor passed the Climate Bill into law on 8 September 2022, it was the first piece of environmental legislation passed in 11 years.
This inaction from a federal level is what led Australia to be ranked last in a 2021 OECD report on policy response to the climate crisis.
However, at NetNada, we believe this bill will jump-start our approach to sustainability in this country and bring a plethora of opportunities for forward-thinking businesses.
We have broken the bill into its most essential parts, used overseas trends to forecast developments, and outlined specific opportunities available.
Three Key Takeaways From The Bill
- Legislating the emissions reductions of at least 43% by 2030 and net zero by 2050
- The Climate Change Authority is given back authority to monitor progress against current targets and inform future targets.
- Minister for Climate Change will report annually to parliament on Australia’s progress.
Current and future governments will use this bill to guide Australia’s journey towards net zero emissions. It is not a detailed plan but rather the foundation of the government’s commitment to take action.
This bill does not outline measures to cut emissions in the private sector. It is thought that these will follow in subsequent months when the government attempts to change the safeguard mechanism.
The safeguard mechanism requires Australia’s biggest emitters, such as coal mining companies, to keep their emissions below certain limits. There is reason to believe other sectors of the economy will be subject to legislation encouraging emissions reductions.
Climate Change Authority
The climate change authority is an independent body that advises the government on climate change by conducting regular reviews and research. The Climate Change Authority has been allocated minimal funding and limited powers under the Liberal Government for the past ten years.
The new bill devotes more funding to the authority, supporting its increasingly active role in outlining recommendations for the government, including its annual corporate plan, which directs businesses to increasingly sustainable operations.
The corporate plans are currently vague, including terms like “electrify” and “produce efficiently”, but they may be increasingly influential over the private sector because of their recent funding and government support.
Annual Reports From Energy Minister
In his second address before the Climate Bill was passed, Chris Bowen outlined the new annual reports that review “Australia’s progress towards meeting those emission reduction targets, as well as on climate change policy”.
This reporting provides a level of accountability for the nation’s progress, encourages further action from businesses and individuals, and keeps climate change front of mind among the public.
We can expect greater media coverage following the measurement, improvement and announcement of Australia’s emissions. With this comes ample opportunity for businesses to align themselves with greater market trends.
What To Expect Next: A Global Perspective
Globally, Australia has long been considered 4-5 years behind many other developed economies such as the UK and the US. Looking overseas at these two nations particularly provides a strong blueprint for understanding the potential evolution of our new climate bill.
In 2008, the UK introduced their Climate Change Act and, with it five, year Carbon Budgets that set out caps on total carbon emissions for the period. Currently, they are on track to outperform their 3rd Carbon Budget of a 35% reduction by the end of 2022.
In May of this year, the UK government passed the new and updated Climate and Ecology Bill, similar to Australia’s climate bill. It requires annual reporting on progress towards its 50% emissions reduction target by 2030.
One poll of UK businesses found that in 2019, 46% of those surveyed already had plans to be carbon neutral by 2050. With Australia’s increased climate disclosure, we can expect to see a similar trajectory as the UK.
On 10 August 2022, the US federal government passed a landmark climate bill, pledging $370 billion in climate action investments. This bill directly incentivises individuals to invest in green initiatives such as home improvements and clean cars through tax credits.
This legislation provides a strong indication of the potential schemes of the Australian government to involve businesses and individuals to reduce their emissions. This is due to Australia’s tendency to base its policy toward global issues on other leading nations.
To feel confident about your business’s future, understanding the developments of governments and preparing for how to respond is essential. Imagine if companies had a few years to prepare themselves before the global lockdowns beginning in 2020. How different would their approaches have been?
Opportunities For Business
After analysing the Climate Bill 2022 and global trends, we have identified three key opportunities for SMBs in the Australian sustainability space. These insights are available to all businesses regardless of whether they are starting or strengthening their journey towards a greener future.
The Proliferation Of Carbon Accounting
You can’t improve what you can’t measure, so the first step to improving your business’s sustainability performance is understanding where you are currently.
Carbon accounting refers to analysing spending patterns, utility usage and the partners you work with and understanding how these activities relate to carbon emissions.
Being able to measure and track emissions is enabled through carbon accounting, which constitutes the most significant component of the government’s climate bill. Accurate data is easy to communicate and is an excellent way to ensure you track in the right direction.
We recommend responsive emissions reduction strategies to allow you to save costs, for example, through efficient energy use and to be well positioned for partnerships in the future if you can demonstrate and communicate your sustainability commitments.
Carbon accounting is beginning to become mainstream among businesses worldwide, but many companies are yet to utilise technology to help them get clear and actionable insights.
Just over half of Australia’s top 80 emitting companies are setting net zero or carbon neutral goals; however, many SMBs are lagging.
Become A Market Leader
There is no denying that we are standing at the base of the mountain when it comes to sustainability, which is why acting now demonstrates leadership and positions your business as future-focused and innovative.
Not often do clear opportunities to enjoy such benefits present themselves so readily. Thanks to NetNada and other companies, implementing carbon accounting and sustainable strategies in your business is no longer time-consuming or expensive.
It’s attractive for potential partners or clients if you are clear on the sustainability strategy of your business. It communicates that you’re open-minded, proactive, and thinking as a long-term player in the space.
We are in the early stages of Australia’s progress toward net zero emissions; however, we will see legislation that will increasingly affect businesses and individuals.
Tax And Investment Incentives
The incentive schemes that target individual households are expected to be expanded to businesses themselves
The UK’s carbon emissions have already fallen 51% since their benchmark in 1990. This is halfway to net zero and demonstrates their more advanced sustainability position than Australia.
Australia is also lagging the US, who have implemented detailed tax incentives schemes this year under the Inflation Reduction Act. It is almost certain that Australia will follow the US in the near future with direct tax incentive schemes to reduce emissions.
In Australia SMB’s account for 30% of carbon emissions, more than the total emissions of Sweden Norway and Ireland combined (SMH 2021). Getting businesses personally invested in improving these figures through tax incentives will be a key strategy employed by the government.
At NetNada, we believe in enabling organisations to make sustainability a strength for their business. With unprecedented changes in the operational requirements of businesses, it is crucial to understand where you are, develop a plan, take action, and be responsive to future developments.
Ready To Make Sustainability A Competitive Advantage?
We would be happy to jump on a call at any time to take you through the opportunities specific to your business. Simply book a call via this link below to speak with one of our friendly team about NetNada.