Leaders across industries are calling on the government to help them accelerate the energy transition, with many still struggling to plan or act to decarbonise their businesses, new research reveals.
The 'Sustainability Index, 2024' from Schneider Electric, a leader in the digital transformation of energy management and automation, today revealed that still more than half of Australia's corporate decision-makers believe Australia's energy transition is falling behind the rest of the world.
While businesses endorse the need for Australia to meet emissions targets, the survey finds that 40% of companies are not acting to decarbonise and one in four have no intention to reach net zero by 2050, the survey found. Less than 1 in 5 companies have an overarching decarbonisation roadmap or strategy in place, according to the Index.
Four out of five corporate decision-makers said the Government should support the energy transition, and one-third said regulation is the main driver for decarbonisation. Most respondents (81%) believe that the government should provide financial incentives for sustainable transformation to be viable, up five points from last year (76%).
Schneider Electric's Principal and Senior Director, Sustainability Business, Lisa Zembrodt said the survey results demonstrate business supports the energy transition, but also that many companies risked being exposed for inaction by looming requirements to disclose decarbonisation strategies and targets.
"Most businesses see sustainability as offering a competitive advantage, but many don't grasp the urgency of climate action," she said. "With new climate-related financial disclosure regulations rolling out next year, having a roadmap to transition your business to the low-carbon economy will be essential and companies should urgently develop and implement a net zero plan."
The disclosure rules – based on standards set by the International Sustainability Standards Board – will require companies to reveal extensive information on climate-related issues, including governance, strategies, risk management and targets. The requirements for our biggest companies are expected to come into force in January 2025 and will be progressively rolled out to smaller organisations.
Overall, the goal of producing net zero greenhouse gas emissions is a long way off for most Australian companies, according to the survey. While a small number are expecting to achieve it by 2025 or 2030, by 2050, 72% of companies expect to reach their net zero targets, according to current projections.
"This year's survey results point to an ongoing divide between the most progressive companies and those yet to act – but time is running out," said Zembrodt. "We need to bridge this divide by sharing knowledge and resources across industries, being clear on expectations, and looking to governments for leadership and support.
"Companies should not wait to establish and act on a decarbonisation plan, the tools and technology exist today to improve efficiency and cut emissions, leading to lower energy costs", she said. "In an environment of greater transparency, progressive companies are optimising their sustainability and emissions performance, and with that they're improving efficiency and better able to attract capital."
The survey results suggest that, with rising energy costs, many companies are having to balance introducing sustainability measures with profitability, due to the higher cost of some renewable energy options. However, 71% of companies agreed that the benefits of sustainable technologies outweigh the costs to implement them.
Detailing their top barriers to adopting sustainable solutions, 37% nominated a lack of financial resources, 36% that it was not seen as urgent by their business, and 33% a lack of government incentives.
Respondents also cited basic methods of collecting data as a barrier to monitoring and improving efficiency and sustainability, with two-thirds saying their main source of energy data was bills and spreadsheets, and a two-thirds also citing that a lack of data impacted their decision-making.
Other findings in the report include:
- While 70% of respondents are discussing their Scope 1, 2 and 3 emissions, only 10% have a strategy in place for managing Scope 3 emissions – created up and down an organisation's value chain.
- More than half have not yet assessed climate risks and opportunities or developed a transition plan for their business.
- Opportunity for energy management actions is high with only 44% of companies actively managing energy volatility.
- Following a range of Federal Government initiatives, including the establishment of a Net Zero Authority and the introduction of climate reporting rules, just 54% of respondents believe Australia is falling behind other countries on climate change action, compared to two-thirds of respondents who reported feeling that way in last year's Index.
- While 70% of Australian business leaders agree that sustainable transformation gives them competitive edge, this is down from 76% last year, signalling a normalisation of progress on sustainability.
