We’ve had an energetic quarter in ESG. Details emerged of the Future Made in Australia tax incentives for critical minerals – yet left us wanting more. New consumer energy resources rules will prove critical to remaking the energy system. And we’ve seen updates to standards for reporting mineral resources and reserves that embrace more of an ESG focus and progressive biodiversity legislation in New South Wales.
It makes for a dynamic and interesting time, not least for the Australian Energy Market Commission (AEMC). We were privileged to host AEMC Chair Anna Collyer in a conversation with KWM’s Shirley Cheng as part of the KWM Digital Future Summit. Anna had this to say about the energy transition:
“People say it’s the biggest change in 100 years. My personal favourite comes from Dr Finkel, who described this as a once-in-human-history transformation, because we’ve never stopped using a fuel source before. Over history, we have added different fuel sources and ways of producing energy, but we’ve never actually stopped. That gives it a new level of significance, complexity and degree of difficulty. If you look at the traditional energy trilemma of reliability, affordability, sustainability, they all have push-and-pull and trade-offs, and it’s something that at the Commission, we do every single day.”
You can watch the session on demand for more market-leading insights.
The past quarter was also another pivotal one for sustainability reporting and accountability. Australia has taken significant strides with the Senate’s passage of a bill mandating climate reporting, setting a new precedent for transparency in environmental risk management. Owl Advisory by KWM shared must-read tips on preparing in the latest edition of ‘The Hoot’. Meanwhile, the EU has established due diligence requirements that extend across global value chains.
Looking across our region, the phenomenal AI-driven growth in data centres is prompting efforts to ensure they’re powered sustainably. Our colleagues in China explain the rise of carbon trading between governments. And as we gear up for the next UN Conference of the Parties in Baku (‘COP29’ as its more popularly known), we share insights on efforts to improve standardisation in sustainability reporting globally.
Keep reading below for our wrap of ESG developments you might have missed over the last quarter.
Until next quarter – stay sustainable.
ESG Governance, Risk and Litigation
Mandatory climate reporting will come into effect from January 2025, after the Federal Senate passed a seminal bill. More than 6000 entities (those that meet set financial thresholds) will report on their governance, strategy and greenhouse gas emissions. This move aligns Australia with global standards and spurs non-bank lenders to get ready for compliance, as Emma Newnham, Anne-Marie Neagle and Linda Le explain.
Another significant legislative shift was in the anti-bribery and corruption space. An absolute liability on corporations for foreign public official bribery conducted by associates came into effect in September. Potential penalties reaching the greater of $31.5 million, triple the benefit gained, or 10% of annual turnover. Jasmine Forde, Emma Lawrence, Michelle Mizutani and Sati Nagra explain the implications and how businesses can prepare.
On the flipside, just before the quarter started a would-be law change failed to pass. A Senate committee recommended against passing Senator David Pocock’s Climate Change Amendment (Duty of Care and Intergenerational Climate Equity) Bill 2023. The bill sought to impose statutory duties on government decision-makers to consider the health and wellbeing of current and future children in decisions that are likely to contribute to climate change, and to prevent approvals for fossil fuel projects where resulting emissions are likely to pose a material risk of harm to current and future children. The Senate Committee supported the intentions of the bill but identified concerns with its operation. It suggested using the Child Rights Impact Assessment Tool for policy development and decision making instead.
Meanwhile, ASIC is combatting greenwashing, reporting 47 interventions and urging alignment with forthcoming Sustainability Standards. Combined with the new climate reporting regime, this signals a critical step in transparent climate accountability and the fight against misleading ESG claims. Tim Bednall, Claire Rogers, Emma Newnham, Michael Mazengarb and Linda Le explain the implications for entities to adapt robust reporting practices.
In the EU, the Corporate Sustainability Due Diligence Directive (CSDDD) requires large companies to scrutinize their entire value chains for environmental and human rights impacts. As Scott Gardiner and Tiffany Kwong share, this sets a precedent for global corporate sustainability and may influence similar global regulations.
Staying in the EU, businesses that are subject to sustainability reporting requirements have better clarity and simplicity with the release of a 33-page guide. The European Commission and the International Sustainability Standards Board crafted the guide to align their respective standards and demystify the reporting process. Emma Newnham, Scott Gardiner, Linda Le and Emily Fox share details on this step towards standardised sustainability disclosures.
KWM and the ESG journey
“Fairer Futures describes KWM’s committed and holistic efforts to improve equity of access for people seeking to join the legal profession, professional services, and / or corporate workplaces. Fairer Futures encompasses the ways KWM connects to educational settings – like schools, TAFEs, Polytechnics, and universities. It links to our policies and practices in recruitment, diversity, inclusion, and wellbeing. Fairer Futures also builds on key partnerships and collaborations with community organisations in both Australia and Singapore. Together, we are striving to learn from each other as we work towards reducing inequalities within our spheres of practice and influence.” Responsible Business KWM
Carbon and Nature
New South Wales is poised to shift from ‘no net loss’ to ‘net positive’ biodiversity outcomes with the Biodiversity Conservation Amendment Bill. This complements federal ‘nature positive’ reforms and aligns with global moves towards ‘nature positivity’, driving urgent action to reverse biodiversity loss. If passed, developers must prioritise avoidance and minimisation before offsetting, embracing a hierarchy that could set a precedent for future environmental legislation. Michelle Astridge, Kate Dean, Michael Causer, Matthew Austin, Sarah Charak and Jessica Owen give details on this critical moment for biodiversity conservation and its implications for both policy and practice.
In construction and real estate, a mix of existing and proposed policies are looking at cutting emissions and embodied carbon. A new NABERS Embodied Carbon Rating Tool is due for release later this year, a future minimum embodied carbon standard is under investigation and Infrastructure NSW will require carbon quantification in government projects, as Michelle Astridge, Alec Kibblewhite, Felicity Savage, Alice Nelson and Peter Henshall share in an update.
Widening the lens to the global landscape, the Internationally Transferred Mitigation Outcomes (ITMOs) market is gaining momentum as a strategic tool for countries to meet climate goals and leverage their carbon sink resources. Under the Paris Agreement’s Article 6.2, ITMOs allow countries to trade emission reductions, fostering global collaborative efforts. Molly Su, Suodi Xi and Jinyu Xiao share insights on the fresh opportunities for enterprise involvement and its significance as the world gears up for COP29.
Energy Transition
Australia’s $22.7 billion Future Made in Australia plan is set to turbocharge the nation’s journey to net zero. Central to the strategy are the innovative tax incentives for Critical Minerals Production and Hydrogen Production. In a comprehensive take, Jason Barnes shares what you need to know about the incentives – and why there are calls for a deeper dive into tax reform. Precise and potent tax policies are (like the minerals needed in the transition…) critical.
There is an increasing focus on the integral part consumers will play in the nation’s shift to sustainable energy. The National Consumer Energy Resources Roadmap lays out a vision to seamlessly blend consumer-owned resources, like solar panels and EVs, into the national grid. Shirley Cheng, Aaron Brooks and Miranda Hutchesson give the details you need to know about the policies that could spare billions in grid investments.
Staying in the Consumer Energy Resources realm, we saw the announcement of new rules by the AEMC, set to take effect by November 2026. These game-changer regulations empower both households and businesses to earn money from their energy setups like solar panels or batteries, as Shirley Cheng and Nick Forbutt explain.
Looking to the skies, Australia’s ‘Aviation White Paper – Towards 2050’ outlines a long-term vision for the sector, highlighting safety, competitiveness and sustainability. It signals a deliberate move towards sustainable aviation fuel (SAF) to decarbonise the sector by mid-2028, with an SAF certification scheme in the pipeline. This proactive step mirrors global trends, though actual mandates are pending further consultation. Craig Rogers, Adam Black, James Aldridge and Matteo Bernardini explain.
“The Federal Government views sustainable aviation fuel (SAF) as a long-term catalyst to decarbonise aviation but change is not expected overnight. SAF mandates (if any) aren’t expected to get off the ground any sooner than mid-2028, being the earliest Government predicts it will deliver a complimentary SAF certification scheme.” Craig Rogers, Partner, Brisbane
And down to the ground – and what lies beneath. The JORC Code, developed by a trio of Australian mining industry groups, sets the standards for reporting mineral resources and reserves. The 2024 Draft JORC Code is now out for public feedback. Proposed updates include emphasising ESG reporting. Stakeholders have until October 31, 2024, to provide feedback – read more in this guide from Scott Langford, Antonella Pacitti, Heath Lewis, Lorenzo Pacitti, Jennifer Bell and Adam Caldwell.
The quarter was also dominated by talk of nuclear. Australia’s position as the top holder of uranium reserves marks it as a key player in this global supply chain, set to support the surge in nuclear energy—crucial for achieving a decarbonised future. Lorenzo Pacitti, Jennifer Bell, Scott Langford, Maddy Shellabear, Adam Caldwell, Emma Higgins and Emily Annand unpack developments, including alignment with the Sapporo 5’s strategic push for a resilient global nuclear supply and nuclear’s ascendant role in the clean power hierarchy.
KWM Compass fact of the quarter
1.2+ tonnes
The estimated annual climate footprint from the average Australian diet according to the Climate Change Authority’s 2024 Sector Pathways Review – or, for a daily rate, around 3.4kg of carbon dioxide equivalent (CO2-e) per person.
That’s a wrap.
Before we sign off, a nod to the recent AFR Asia Summit held in September and sponsored by KWM. Bringing together esteemed business and political leaders from across the region, topics were wide-ranging and triggered plenty of engaging discussions. In their write-up, Daryl Cox, Nicola Yeomans and Scott Gardiner draw attention to the incredible growth of data centres across Asia, driven by tech and AI developments. In Malaysia, Johor is rapidly transforming into a tech powerhouse, with its proximity to Singapore catalysing a data centre boom. Investments are skyrocketing and, importantly, steering towards sustainability. Enjoy the read!
Almost 2000 years ago, the compass was invented in China. A magnetic needle to help sailors to navigate when it was hard to see the sun and the stars. In the KWM ESG Compass, our experts bring the insights clients need to navigate complex and evolving economic territory.
