Business must continue to lead on addressing climate change
By Lisa Zembrodt, Principal and Senior Director, Schneider Electric Sustainability Business
Wednesday, 05 February, 2025
Australian businesses must continue to act locally on reducing emissions rather than be spooked by global uncertainty around action on climate change and the energy transition.
With the United States pulling out of the Paris Agreement while signalling policy changes supporting the fossil fuel industry, some major corporations are reviewing commitments to renewable energy investments and decarbonisation.
For the sake of the planet and profit, businesses must continue to lead the way towards net zero. Business leaders must remember that they usually outlast governments and can take a longer-term outlook than three- or four-year electoral cycles.
Improving energy efficiency and sustainability not only aligns with long-term business viability but also offers cost savings and stakeholder appeal.
It’s critical that leaders understand how climate change can negatively impact the viability of their business and how to mitigate and manage those risks. It’s not just that an assessment of these risks, and plans to address them, are required under new climate-related financial disclosure legislation; we are seeing tangible impacts of the consequences of climate change daily worldwide.
Look to the latest consequences of extreme weather: the devastating Los Angeles fires, with a cost bill estimated at more than $250 billion. At that scale, it’s not just the physical damage; medical and social costs follow, and the impact on the insurance industry will be closely watched — more costly insurance will hinder economic activity.
In the Australian environment, similar devastation remains a real prospect around our major cities.
It is another demonstration that companies must recognise and quantify the risks associated with climate change impacts and plan to address them.
It’s critical that companies in Australia don’t backtrack on their energy transition and emissions reduction goals: not just because of the urgency of addressing climate change but because improving energy efficiency and sustainability makes good business sense.
Improving energy and resource efficiency creates cost savings. Investing in renewable generation, storage, microgrids and demand response ensures the security and resilience of power supplies and reduces energy costs in the long term.
There is also increasing pressure from stakeholders and investors to progress sustainability, with a real impact on capacity to raise capital. Businesses that understand how climate change affects them and adapt will outperform those that don’t, irrespective of current legislation and targets.
Like many jurisdictions around the world, Australia has just introduced the mandatory disclosure of climate-related financial risks and these disclosures will provide insights to stakeholders and customers so that they can make informed decisions about where to invest or who to buy from.
The legislation, in force from 1 January for major corporations, involves more than just putting data into a report. It’s about understanding the impact that climate has on an organisation, its markets and its supply chain. It’s understanding the financial impact of all elements and putting in place plans to mitigate risks, adapt and take advantage of the opportunities.
Adaptation is achievable. With the technologies we already have available today, 70% of emissions can be eliminated.
Business leaders must have the courage to make decisions that are best for the long-term viability of their businesses and the world in which they operate.
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