"Raise your climate ambition," and other reflections from Sustainability Leaders in 2023

November 2023

What do the experts think...

“Raising the level of climate ambition” - this is the first goal of the proposed changes to Climate Active. It speaks to the hesitation and lethargy of corporate leaders in their sustainability journey - and to the strengthening of evidentiary burdens for voluntary disclosure. As we welcome a new era of mandatory climate reporting starting from next year, the trusted badges to certify climate action have also come to a point of reckoning. 

Over the past year the government has raised Australia’s climate ambition. It has worked methodically to modernise and reform national climate policy to enable programs to respond to the scale of the challenge we collectively face. This has included:

  • legislating robust national emissions targets,
  • enabling clear accounting standards for climate-related financial disclosure aligned to the ISSBs,
  • reforming the Safeguard Mechanism to require reductions from Australia’s largest emitters, and
  • ensuring the integrity and effectiveness of Australia’s Carbon Credit Units (ACCUs).

The landscape for a voluntary climate disclosure has changed - and the Climate Active certification has responded. Now business leaders have to do the same.

As of October this year, Climate Active has announced proposed changes to the evidentiary burden for organisations seeking certification. There are three main changes that have been proposed:

  1. Reporting gross carbon emissions reduction
  2. Replacing the carbon neutral status with another, more appropriate, term 
  3. Mandating renewable energy consumption

What better way to navigate change, than with community. That's why we brought Sustainability leaders from responsible investing, loyalty technology, digital design and facilities management to talk about the impact of dynamic obligations on business operations. This blog post is designed to reflect our talking points and unanswered questions - so that we all may feel like a stakeholder in our changing definition of climate ambition.

Bringing Sustainability Leaders together to talk about their climate ambitions

Ambitions are often defined by the most lofty or idealised state. Climate ambitions used to be generally labelled with net zero commitments, low emissions decisions and recycling. Today, however, we are working through the most profound shift in how we define an ideal state of climate behaviour - particularly when it comes to business. Climate Active is tackling these changes by attempting to redraw the lines on our ambitions.

Reporting gross carbon emissions reduction 

Earlier this year, the UK’s Advertising Standards Authority, or ASA, announced that no brands could claim carbon neutrality if the entirety of their climate strategy was offsets. Their bullish approach to eliminating greenwashing from public communications can be best exemplified by an advertisement that was banned earlier this month. Picture this: two Toyota SUVs exploring off-road terrain in a still photograph. This advertisement was part of an out-of-home campaign - pictured on bus stops throughout the UK. This advertisement was promptly banned by the ASA, ruling that it “presented and condoned the use of vehicles in a manner that disregarded their impact on nature and the environment. As a result, they had not been prepared with a sense of responsibility to society.” Here in Australia, we have our very own movement by advertisers and advertising regulators to nip greenwashing in the bud. From Clean Creatives to Comms Declare, to ClearAds and the AANA… brands are going to need to evidence their sustainability missions, as well as their emissions reduction strategy. 

Reporting gross carbon emissions reduction requires two things: a credible carbon baseline or footprint measurement, as well as near- and long-term emissions reduction targets across Scope 1, 2 and 3. Climate Active members are already required to consider scope 3 (indirect) emissions in their carbon accounting but self-assess which categories of scope 3 emissions are relevant to their emissions boundary. Under the proposed changes, Climate Active would provide guidance on establishing robust emissions boundaries. This could include mandating inclusion of specific scope 3 emissions sources for particular certification types.

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No longer aspiring to carbon neutral... so what's the alternative?

Hearing from responsible lenders, funds managers and financial sector leaders, we know that "emissions under management" is never going to be the right term for a company measuring and tackling their carbon footprint. But what about the businesses who are only investing in offsets, or struggling to strategically decarbonise... shouldn't they have access to some kind of certification for action?

Replacing Carbon Neutral status 

Climate Active certification has historically been based on making a defensible claim of carbon neutrality by calculating the carbon account or footprint, reducing emissions where possible, and offsetting any residual emissions. The claim of carbon neutrality no longer holds the same credibility that it used to - and the vernacular of sustainable business has evolved. In these proposed changes, the Government proposes to replace “carbon neutral” with a new term and seeks input from stakeholders as to what term might be appropriate. What do you think? 

How can I make Scope 2 reductions without a cleaner electricity grid?

For many services-based organisations, the majority of their emissions sit in their Scope 3. The takeaway is that where we spend money matters. How we procure, renew contracts, build a tech-stack... it all contributes to our ability to set achievable climate goals. The next largest component of emissions are from the grid - from the energy that we use to keep our workplaces alive. How can we reduce our emissions if the grid won't change with us?

Mandating renewable energy consumption 

It is proposed that participating Climate Active entities seeking certification will be required to source a minimum percentage of renewable electricity. Participating entities would be required to use the market-based accounting method to set emissions liability. The consultation paper notes that participating entities could meet this requirement by matching electricity consumption with onsite and offsite renewable electricity, such as behind-the-meter generation, Large-scale Generation Certificates and GreenPower.

The consultation paper from Climate Active seeks input from stakeholders as to what the minimum percentage should be.

Until next time...

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