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The Guardian
21-07-2025
- Business
- The Guardian
‘Significant gap' between Australian companies' climate commitments and how they actually invest, analysts find
Investment analysts have uncovered what they say is a 'significant gap' between the climate commitments of major Australian companies and how they actually spend their money. A report from climate consultancy group Pollination included analysis of the public climate disclosures of 12 major Australian companies, looking especially at their decisions on how and where to spend capital. 'What we've found is a significant gap between ambition and action,' said Richard Proudlove, the director of corporate engagement at the Investor Group on Climate Change, which commissioned the research. IGCC's members manage some $35tn of assets globally. Proudlove said the report was the first 'deep dive' on whether Australian companies 'are actually backing their net zero commitments with real investment'. The companies analysed were AGL, BHP, BlueScope Steel, Dyno Nobel, Orica, Qantas, Origin, Rio Tinto, Santos, South32, Woodside and Woolworths. All those companies have been targeted for engagement by investors as part of a project called Climate Action 100+. But the report does not single out individual companies, or name which companies had performed better than others. Sign up for Guardian Australia's breaking news email Researchers at Pollination assessed companies against eight criteria related to capital investment, and found only one 'achieved high alignment' in more than half the criteria. For example, one criteria asked whether a company was moving capital away from fossil fuels. A company with no policy to phase out the use of oil, gas and coal and no meaningful cuts in investments would have 'low alignment'. A company with public commitments on fossil fuels, and that had cut fossil fuel spending and quantified the financial implications of those decisions, was in 'high alignment'. Only three out of eight applicable companies on that question were in 'high alignment', with three assessed as being in 'low alignment'. The report, called Financing Australia's Corporate Climate Transition, also describes a framework and set of guiding principles for companies on how they source, manage and spend capital. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Zoe Whitton, the managing director at Pollination Group, said: 'Companies are announcing capital expenditure numbers, but our analysis shows these disclosures don't provide enough detail for investors to assess whether the capital is sufficient or appropriately targeted to achieve their stated decarbonisation goals.' The Australian government is expected to announce its 2035 emissions reduction target by September, and is also working on detailed plans to reduce emissions across six different industry sectors. Whitton said: 'Without clear policy frameworks like sectoral pathways, companies lack the guidance they need for effective capital allocation, and investors can't properly evaluate their transition strategies.' Proudlove said the level of ambition articulated in the government's plans and in the target would influence the capital investment decisions of many Australian companies. 'We're in a year where the Australian government needs to ratchet up its [climate goals] with a 2035 target. It's important that's an ambitious target. 'The detail in those [industry sector] plans and the ambition of the climate targets is an essential signal for investors and companies to commit.'
Scoop
21-07-2025
- Business
- Scoop
Australia's Big Companies Face Critical Net Zero Investment Gap
New research reveals Australia's highest emitting companies are failing to back their net zero commitments with adequate investment, highlighting the need for a strong 2035 emissions reduction target and net zero plans to ensure Australia's transition. The Investor Group on Climate Change (IGCC) and Pollination have released the first comprehensive analysis of how Australian companies translate climate commitments into capital allocation decisions. The Financing Australia's Corporate Climate Transition report finds a significant disconnect between corporate ambition and investment reality. Despite 66% of ASX200 companies making net zero commitments, few have adequately integrated climate considerations into their capital allocation processes. This investment gap between ambition and action highlights a weakness in Australia's transition to net zero without strong policies that ensure adequate private investment. Testing a new evaluation framework against 12 major ASX-listed companies in high emitting sectors highlighted the concerning gap. Only one company achieved high alignment in more than 50% of criteria, while three companies showed low alignment across half or more criteria. While 75% of companies demonstrated medium or high alignment in transition investment quality, only one company met the high alignment criteria for actual capital quantity. Policy certainty needed This investment gap demonstrates why Australia needs a credible 2035 emissions reduction target coupled with comprehensive sectoral pathways that provide clear direction for each part of the economy to reach net zero by 2050. A strong policy framework will give companies and investors certainty to make substantial capital commitments that align with their decarbonisation goals. The Climate Change Authority has recently released a sector pathways review which provides the foundation, but government action is needed to translate this into clear Sectoral Emissions Reduction Plans. 'This is the first deep dive into whether Australian companies are actually backing their net zero commitments with real investment,' said Richard Proudlove, IGCC Director of Corporate Engagement. 'What we've found is a significant gap between ambition and action. "Australia has the opportunity to lead in the transition, but without clear policy signals and adequate capital deployment, we risk being left behind and missing out on huge economic opportunities.' A framework for better capital alignment The report introduces a comprehensive framework with seven Guiding Principles across capital sourcing, management, deployment and enabling activities. It includes practical tools for investors and identifies 'red flags' indicating inadequate climate ambition. 'Companies are announcing capital expenditure numbers, but our analysis shows these disclosures don't provide enough detail for investors to assess whether the capital is sufficient or appropriately targeted to achieve their stated decarbonisation goals,' said Zoe Whitton, Managing Director at Pollination Group. 'Without clear policy frameworks like sectoral pathways, companies lack the guidance they need for effective capital allocation, and investors can't properly evaluate their transition strategies. This framework helps fill that gap.' The framework was developed through global case studies, stakeholder interviews and evaluation of 12 major Australian companies. It supports the Climate Action 100+ initiative by providing sophisticated tools for investor-company dialogue on decarbonisation progress. Effective climate transition requires capital allocation across entire sectors. This research provides crucial insights for policymakers designing the sectoral plans needed to accelerate Australia's transition. As the government prepares 2035 emissions reductions targets, this analysis reinforces the need for comprehensive sectoral pathways. Without clear policy signals, it will be increasingly difficult to close the investment gap, and Australia could miss out on the economic benefits of a decarbonised economy.
ABC News
17-07-2025
- Business
- ABC News
Business look for certainty on environmental protection law
Executive Director of Pollination, which advises businesses how to mitigate risks to the environment, Laura Waterford says businesses want to know what the playing field is going to be over the next few decades as they anticipate Environment Protection and Biodiversity Conservation Act reforms.
