Pressure is mounting on Australian companies in the resource sector to not only set targets on climate action but to start implementing strategies and invest in change, according to a forum panel at a breakfast in Kalgoorlie this morning.
The annual Deloitte-Gold Industry Group breakfast kicked off bright and early this morning prior to the first session at day 2 of the Diggers & Dealers conference, with the conversation heavily focused on ESG, climate change and what needs to happen next in our resources industry.
Guest panellist and Deloitte partner Michael Wood said preliminary concerns about how the world would push environmental, social and governance (ESG) regulations and climate change to the side in the face of the Covid-19 pandemic were met with highly encouraging outcomes.
“Questions around if the pandemic would deflect these actions were raised and looking back over the past 18 months the response has been nothing short of staggering,” Mr Wood said.
“From a GDP perspective, 50 per cent of the world’s GDP is now covered by a net zero target, and 70 per cent of the world’s economy now has got its own net zero target.
“But to give you an idea of how far Australia is lagging on this – which is a big competitive issue for the mining sector and for us in WA – the US has set a new target of between 50-52 per cent versus Australia at 26-28 per cent.”
Mr Wood said for ESG and decarbonisation strategies, he believes we’re heading towards the stage of customers-of-customers wanting to have a traceable product.
“They will want to see the embodied ESG factors being provided through the whole value chain,” he said.
“On the reducing emissions side, the market has moved on from targets. It was a rush to get net zero commitments out, but the market has now matured and it wants to see capital being spent and progress being delivered.
“So, for those who haven’t set targets yet, the expectation has already shifted in 12 months and the market already wants to see implementation.”
Gold Industry Group director Andrea Maxey said discussions around ESG were fast becoming front of mind for investors and therefore companies.
“It’s the first thing they (investors) ask about, and it’s not just asking about metrics; they want to know how you’re approaching ESG and what you’re practically doing in your operations, to the extent that some funds want to see these operations in person to have a good look and see that commitment in action,” she said.
“From a company perspective, you now certainly need ESG expertise on the board and you need to bring expertise in to help you.”
That sentiment was shared by fellow panellist and Perth Mint non-executive director Sally Langer, who said ESG is now a huge topic and a considerable amount of time is being spent on how to approach it.
“The challenge comes in trying to think about it in a way that’s meaningful and how you can deliver results from it; that it’s measurable and more than just a knee-jerk,” she said.
“One thing I have noticed which has been pleasing to see is that it is not just the boards driving this change, it’s management as well. Added to that, our surveys are showing that commitment to ESG is a shared trait amongst the wider workforce.”