Two years ago, we were in the middle of an acrimonious debate on climate. But more recently, a panel discussion between Climateworks’ CEO and leaders from business observed that climate transition planning and action are the new normal.

This is part two of a two-part series detailing a CEDA event titled ‘Australia’s climate choices’, moderated by Dr Pradeep Philip, Lead Partner, loitte Access Economics. Panel members were Anna Skarbek, Climateworks Centre, Julie Shuttleworth, Fortescue Future Industries, Sally Reid, Commonwealth Bank of Australia and Dr Kate Wilson, NSW Department of Planning, Industry and Environment. Read part one

So what of the risks around transition?

While the answers lie partly in planning for both long and short term and strategies like seizing the first move advantage, Anna was quick to reframe the fundamental question: ‘What are the risks of prolonging the risks in transition?’

She suggests these risks can be mitigated by applying the tool of back casting.

‘That is, to stand in the future state and to broadcast from there, rather than view forecasts from today, (as) the natural human psyche when we forecast from today is to extrapolate past trends.’

As a point from which to cast our view, Anna says net zero is incredibly powerful in allowing us to ‘stand in the future state, without having to imagine the challenge of the transition for a moment’.

‘Around markets and integrity and offsets, we know in a much more digitised world, we will have real time transparency on the emissions content of all supply chains; (on) the definition of scope three emissions,’ she says.

‘Suppliers and customers will be incorporated into accounting frameworks and reporting for net zero plans. And digital tools will be linked to geospatial satellite data and there will be real time visibility on the emissions content.

‘Already there are trading certificates in Australia. The guarantees of origin certificates for hydrogen, for example, will show whether it was green. What was the input source of energy? Was it brown, hydrogen, blue? Was it green hydrogen?

‘They will be measured to the molecule and digitisation will allow the provenance of that to flow through the supply chain so the buyer and the consumers can see it. Same for food, same for natural capital, same for all supply chains.’

Back casting, Anna says, helps provide some strategic clarity in addressing the issues and may help us avoid spending too long in the transition space.

Another tool, key to expediting the transition, will be collaboration. While businesses must remain individually competitive, they’re discovering they must also collaborate to solve shared challenges. Anna explained the two goals were not mutually exclusive.

‘When we align on that goal and embed the net zero expectation in the way procurement contracts are let in, in the way a request for quote is submitted, in the way auction rounds are provided from government, for example, or in the way consumer expectations are managed, (we can still) unleash all the private innovation and the competitiveness for the best way to achieve that net zero outcome, for example, in the consumer from the consumer end point.’

Collaboration across jurisdictions too, will allow technology leapfrogging that helps get us all there, faster.

Our South-East Asian neighbours provide an excellent example.

These nations’ ability to access their own natural endowments – for example their young workforces, electronics manufacturing capability and their access to the rest of Asia for trading partners – will be held back if other jurisdictions don’t support them to upgrade their ageing infrastructure, which is currently coal fired dependent.

Then, it becomes about collaborating and goal solving for a decarbonised world.

This pivot to problem-solving, to collaboration for shared benefit, to an inclusive, win-win transition, is now being seen at all levels of business and government. It is creating our new normal.

For the 17,000 people that Fortescue employs, there’s a palpable excitement in chasing their decarbonisation targets.

‘A lot of us haven’t had (much) renewable energy experience,’ Julie says.

‘We haven’t had green hydrogen experience. This is actually an emerging economy that we’re all starting to establish. So it’s on everybody to go and do their own research, to network, get involved and learn quickly on the job (to) lead and show you’re leading by example.’

The finance sector is rapidly building capability, investing in problem solving and asking how they’ll work alongside clients through the transition.

Sally says this has already been happening for a couple of years.

‘We’ve done an awful lot of training both on the risks and the opportunities,’ she says.

‘It started with understanding where the science is, and … making sure that people really understood why (net zero) is a requirement. We’ve had to find ways to let people with their existing skill set enter the conversation and build on their existing capability.’

Within the public sector, she says, there are many levels where change is taking place.

‘At the senior level…there’s huge interest and huge support.’

As Kate explains, however, bigger challenges are being felt at the middle level.

For example, with procurement officers in transport, major infrastructure projects are experiencing the challenge of rolling out big shifts like prioritising and purchasing low carbon materials.

‘It’s still quite difficult to find tradies who are really across how to build energy efficient, low embodied carbon buildings,’ she says.

‘So we’ve got a lot of work to do for the people who are actually implementing those decisions on the ground and to not just say “you must do it in a low carbon way”, but rather, to explain the benefits for them and to give them that authority.’

Anna concluded that boards, too, need to be proactive and vocal in their commitment to net zero goals and in empowering their staff.

‘It’s about flipping expectations so we ask,”If not, why not?”

‘This means creating exploratory spaces to bring forward ideas even before they’re perfect, strategically asking that, while an idea or new approach may seem high risk at first, is there advantage in going first?

‘Be proactive in creating the space and inviting forward the solutions.’

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