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Can Australia transition to a low-carbon economy?

17 November 2021

#Renewable Energy, #Planning, Environment & Sustainability

Published by:

Harriet White

Can Australia transition to a low-carbon economy?

In September, Holding Redlich partner David Harley had the privilege of moderating an exciting panel discussion hosted by the French-Australian Chamber of Commerce (FACCI) on the opportunities and challenges presented by Australia’s transition to a low-carbon economy. David was joined by Richard Kirkman, CEO and Managing Director at Veolia Australia and New Zealand, Melinda Cilento, CEO of the Committee for Economic Development of Australia, and Pascal Sefrin, Group Country Head for Australia at Société Générale. 

The session kicked off with a keynote presentation from the Honourable Matt Kean MP, NSW Minister for Energy and Environment, who spoke about the need for action on climate change and those policies and plans being put in place in NSW, before moving into opening remarks from Richard Kirkman at Veolia and then the broader panel discussion. The discussion broadly covered three key themes – the opportunities, the challenges, and the role of environmental, social and corporate governance (ESG) in driving investment for the ecological transformation.

The challenges

For generations, the world has adopted the traditional linear development model of “take, make and dispose”. However, the panel identified that it is time for a fundamental reshaping of this traditional model. To successfully develop a circular economy, Australia needs to create ways to keep resources and products in the economy longer, if not indefinitely. The panel identified that while this transition would be significant, the challenges would by no means be insurmountable.

The panel also discussed the need for clear, transparent and effective government regulation and policy and, crucially, leadership. Much of the running to date has come at the state and territory level rather than at the federal level, and it is the private sector, not the government, which is currently the driving force in the ecological transformation.

The role of ESG

The Australian investment landscape has transformed significantly in recent years, with ESG goals and targets now playing an important role in financial and investment decisions. The panel discussed trends in investment decisions suggesting that a point will be reached where financing is simply no longer available for companies that have not embraced the transition to net-zero or operate in areas at odds with the ecological transformation (for instance, thermal coal).

The panel identified that various financial instruments are now available, encouraging businesses to meet ESG targets to access better financing. Green loans, green bonds and other forms of sustainability-linked financing are becoming increasingly prevalent in the market. The panel further highlighted that businesses that do not transition to net-zero will find it increasingly difficult to access financing.

The opportunities

Throughout the discussion, the panel agreed that Australia’s transition to a low-carbon economy presented win-win opportunities for Australian businesses – that is, it is not a case of the environment versus the economy. Generally, companies that have embraced the transition, or are in the process of transitioning, are outperforming those companies that have not. The panel challenged Australian businesses to fundamentally change the way they think about resources, returns and the economy.

Unanimously, the panellists agreed on a fundamental point – the consequences for governments and businesses of not transitioning is that they would, quite simply, be left out and left behind.

Held before the recent COP26 conference in Glasgow, this session highlighted the importance of greater policy leadership and expectations within the business community for bolder action on the climate change front.

If you would like to learn more about Australia’s journey to net-zero, read our article on the Government’s Long Term Emissions Reduction Plan and what it means for renewables investment in Australia. We welcome you to speak to us or contact us here if you have any questions.

Authors: David Harley & Harriet White

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Harriet White

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