Environment

Unfortunately, Downer incurred two penalty infringement notices totalling $13,617 AUD in FY22.

On 15 July 2021, Downer received a Penalty Infringement Notice (PIN) for the amount of $13,345 AUD from Moreton Bay Council. The PIN was issued for the contravention of a condition of the Environmental Authority under the Environmental Protection Act 1994 involving the uncontrolled release of a contaminant into a stormwater drain.

In December 2021, Downer received a PIN for NZD$300 ($272 AUD) from Christchurch City Council. The PIN was issued for an environmental breach of the Resource Management Act 1991 involving the discharge of sediment and muddy water into a stormwater drain. Downer will learn from these incidents and continue to educate its workforce on the implementation of effective controls to prevent the discharge of contaminants into waterways.

In June 2022, Utilita, a joint venture between Downer and Ventia, received a Compliance Notice from Brisbane City Council for the alleged contravention of the Natural Assets Local Law 2003. The Compliance Notice included an amount of $16,199.40 (AUD) to offset the canopy loss due to the interference of native trees on Council land, where a Brisbane Utilities water asset is being managed by Utilita. Utilita has formally requested a review of the decision, and, at the time of publishing this report, the outcome was pending.

1. A Level 5 environmental incident is defined as any incident that causes significant impact or serious harm on the environment, where material harm has occurred and if costs in aggregate exceed $50,000.
2. A Level 6 environmental incident is defined as an incident that results in catastrophic widespread impact on the environment, resulting in irreversible damage.
3. A significant environmental incident or significant environmental spill (≥ Level 4) is any environmental incident or spill where there is significant impact on or material harm to the environment; or an incident or spill that results in a significant impact or material harm; or there is long-term community irritation leading to disruptive actions and requiring continual management attention.

In FY23, Downer will enhance our position as thought leaders in this space by developing and publishing a standalone Climate Change Report, which will complement this Sustainability Report and Downer’s FY22 Annual Report.

The Climate Change Report has been prepared to provide shareholders and potential shareholders with information on Downer’s climate-related plans. This includes our strategies to thrive through the energy transition by summarising our climate-related plans, activities and disclosures in accordance with the TCFD.

Detailed information on Downer’s approach to climate risk, as well as our decarbonisation plans and growth strategies including our contribution to renewable energy, now appears in Downer’s Climate Change Report. As such, cross references to the Climate Change Report will appear throughout this section.

The demand from our customers, communities, industry and government for circular economy thinking to reduce waste continues to be an important issue. This year, Downer has demonstrated its commitment to the circular economy in the following ways:

• Increased investment in our Reconomy business by establishing two new state-of-the-art resource recovery plants. These facilities produce sand and aggregate for Downer’s asphalt plants from waste such as street sweeping, non-destructive digging and contaminated soils that would otherwise be sent to landfill
• Expansion of Victorian recycling business, Repurpose It, of which Downer owns 50 per cent. This site recovers waste resources and gives them new life for construction and landscaping
• Commissioned two new asphalt production facilities in Rosehill, New South Wales, and Brendale, Queensland, which are capable of producing Downer’s ReconophaltTM product, made from up to 100 per cent recycled materials. ReconophaltTM is a sustainable asphalt product containing a combination of waste derived materials that would otherwise be bound for landfill or stockpiled, such as plastics, glass, toner, rubber, reclaimed aggregates and sand, as well as Recycled Asphalt Pavement (RAP), which is asphalt reclaimed from roads that have reached their end of life. The chart below shows the percentage increase of RAP use over time. These plants are now capable of utilising greater volumes and a variety of waste derived materials
• Greater ability to provide our customers with the environmental footprint of our products through the completion of multiple Lifecycle Assessments (LCAs). A LCA is a methodology for assessing the environmental impacts associated with all stages of a product’s life. In FY22, Downer completed these assessments for its asphalt products, as well as a number of its liquid products (e.g. spray seals) which are applied in road pavement works. In addition to this, Downer has committed to delivering another independently verified Environmental Product Declaration (EPD) for all major asphalt products, with a view to offering Carbon Neutral Asphalt in FY23.

In FY22, 15.32 per cent of total asphalt production in Downer was made up of recycled materials. This is a decrease from 15.7 per cent in FY21, due to the makeup of contracts and lower availability of RAP. The consequent GHG emissions reductions are outlined in the chart and table below.

In addition to the waste derived material use outlined below, this year Downer’s Reconomy business received 14,019.69 tonnes of material, of which 86 per cent was repurposed and successfully diverted from landfill.

Downer also actively looks for opportunities to improve waste management for our customers.

At the Loganholme Wastewater Treatment Plant in South East Queensland, Downer has partnered with our customer, Logan City Council, to pioneer an Australian-first – a facility which transforms sewage sludge, or biosolids, into renewable energy and a sustainable product called biochar.

Operational cost savings and carbon credits will return almost $1 million per year to the Logan City Council, and a new revenue stream will be created from biochar sales. Biochar is used in agriculture as a carbon-capturing product that can help soil retain water, and Logan City Council is set to sell the biochar to commercial buyers, in a solution that will not only reduce carbon emissions, but also generate money for the city.

Biosolids gasification destroys chemicals in biosolids like persistent organic pollutants, and micro and nano-plastics. Carbon emissions will be reduced by about 5,000 tonnes per year. Following the successful gasification trial at Loganholme WWTP, Logan City Council has used the results and lessons learned to design and construct a full-scale, permanent gasification facility, which officially opened in April 2022.

The project was named a finalist for the 2022 Banksia Sustainability Award, in the Circular Transition category.

The more common programs delivered include: Advanced Environmental Awareness for Project Managers; Advanced Environmental Awareness for Zero Harm professionals; and Erosion and Sediment Control training.

In FY22, a total of 742 training hours were delivered by GEMS, compared to 1,096 hours delivered in FY21. The reason for the decrease in FY22 was mainly due to COVID-19 restrictions and the reduction of online training delivery numbers.

In addition, 56 employees undertook training through the Department of Conservation in New Zealand, learning about the importance of controlling or allowing fish passage through culverts and river crossings. 

These tools differ depending on customer requirements, asset type, and the lifecycle phase being rated or certified.

The sustainability rating tool that is commonly applied across Downer’s infrastructure projects is the Infrastructure Sustainability (IS) rating tool developed by the Infrastructure Sustainability Council. This year, Downer continued delivering several IS-rated projects.

Designed and As Built ratings:

• Warrnambool Line Upgrade, Victoria
• Transport Access Program Tranche 3, New South Wales.
• Parramatta Light Rail, New South Wales
• City Rail Link, Auckland, New Zealand.

Operational rating:

• South Australia Road Maintenance Services
• North West Tasmanian Road Maintenance Contrqact
• High Capacity Metro Trainns, East Pakenham Maintenance Depot
• Adelaide Metropolitan passenger rail network

The ISC framework continues to help Downer drive improved sustainability outcomes for our customers. In New Zealand, Downer is playing a central role in delivering the country’s largest-ever transport infrastructure project, Auckland’s City Rail Link (CRL) – a 3.45 kilometre twin-tunnel underground rail link that will significantly change the way people travel around the city.

Downer has adopted the ISC framework from the early stages of the project, allowing us to implement best practice sustainability initiatives.

Among those initiatives is the opportunity to utilise the capability of Downer New Zealand’s Green Vision recycling business, which takes materials that would normally be destined for landfill and recycles them into engineering quality products.

Green Vision partnered with Allied Concrete to supply recycled crushed concrete as flowable fill in a non-structural concrete application for two parts of the CRL project build. This enabled reductions in both material and transport carbon footprint emissions, resulting in a carbon saving of approximately 55 per cent, with the cost of the product similar to finite resource aggregate.

This, along with other initiatives including water reuse and fuel switching, resulted in the CRL project being awarded an ISC Infrastructure Sustainability ‘Excellent’ rating. We will continue to follow the ISC framework on the CRL project to set the benchmark for how large-scale infrastructure projects can be delivered in a sustainable way.

Downer’s commitment to sustainability was also recognised at the 2022 ISC Gala Awards, which celebrated sustainability best practice across Australia and New Zealand. In 2019, Downer achieved an ISC rating for the North West Tasmania Road Maintenance contract – the first Tasmanian project to register for an IS Operational rating. In March 2022, our work on that contract was rewarded with the Outstanding Achievement for Infrastructure Sustainability Operations Award.

To guide its ambition, Downer has set an absolute near-term target of a 50 per cent reduction of its Scope 1 and 2 GHG emissions by 2032 and an absolute near-term target of 30 per cent reduction of its Scope 3 emissions by 2032.  Downer has set a long-term target to be net zero*  in Scope 1, 2 and 3 GHG emissions by 2050.  Both the near-term and the long-term targets have a baseline year of 2020.

Downer will track our progress towards these emissions reduction targets and review our emissions reduction approach in line with Intergovernmental Panel on Climate Change (IPCC)’s updated scientific reports, while also considering other developments in low-emissions technology to ensure an economically viable transition towards this commitment.

Downer focuses on seven key areas to ensure we meet our net zero commitments:

1. Increasing focus on urban services, which has seen a shift from high capital, carbon-intensive industries to lower-carbon activities

2. Continuing focus on energy efficiency and GHG emissions reductions

3. Decarbonising fixed assets with new technology and fuel switching

4. Decarbonising our fleet through EVs and alternate fuel vehicles

5. Increasing uptake of renewables, both on and off grid

6. Reducing our Scope 3 emissions.

7. Offsetting residual emissions. 

For more information on Downer’s decarbonisation pathway, refer to Downer’s Climate Change Report, to be released in FY23.

*Net zero is defined as the mitigation of direct emissions to as low a level as possible and offsetting the remainder through carbon removals.  Downer has utilised the Science-Based Target Initiative's threshold of a 90 per cent reduction in its emissions as being `as low a level as possible'.

For the purposes of target setting, under both the science based Target Initiative’s framework as well as Downer’s Sustainability Linked Loan, we have removed emissions and revenue from our key divestments (Mining and Laundries) in order to state a revised baseline, which was set in FY20. FY20 was chosen as it is representative of a normal year of Downer operations. Downer’s business remained resilient during the early COVID-19 period.

Downer has undergone significant shifts as we have moved towards our Urban Services focus. As a result, we have reset the baseline in our Science-Based Target, as well as our Sustainability Linked Loan KPIs (which are closely linked).

The below table represents historic and current year performance against the reset baseline. This differs to the primary tables in this report, which present data according to Downer’s previous structure. 

COP26 secured net zero commitments from 90 per cent of the world’s GDP, which now includes a commitment from Australia for the first time. There has also been a further acknowledgement of adaptation, loss and damage, with a specific financing goal agreed to for the first time.

Downer’s assets are not immune from risks relating to climate change.

Australia pledged to achieve net zero by 2050, and in June committed to a 43 per cent emissions reduction by 2030 (from a 2005 baseline). Further policy commitments include tightening of the Safeguard Mechanism where covered facilities will face decreasing baselines over time, in line with Australia’s net zero target, as well as increased investment in technologies such as renewables and associated storage, hydrogen and Electric Vehicles.

New Zealand has committed to net zero emissions by 2050, as well as a 50 per cent reduction in emissions by 2030 (from a 2005 baseline), underpinned by a detailed plan focusing on Electric Vehicles, renewable energy, agricultural emissions and support for native wildlife and forests.

Downer is in a unique position to be a leader in the journey towards net zero in Australia and New Zealand, having marketleading positions in the critical emerging technologies that will be pivotal to achieving net zero across the economy. 

Building Information Modelling (BIM) is the foundation of digital technologies in the design, engineering and construction industry. BIM integrates structured, multi-disciplinary data to produce a digital representation of an asset across its lifecycle – from planning and design to construction and operations. As a result, the technology is better connecting people, processes and ideas to create more resilient and sustainable infrastructure.

During the concept stage of a project, digital engineering can more rapidly determine options and easily assess the environmental and social impacts by marrying geospatial and design data. High quality decisions during this phase are most critical in terms of long-term environmental and financial outcomes.

Through the design and pre-construction phase, digital engineering enables closer collaboration which drives better outcomes. This provides the opportunity to quantitively assess and report on design alternatives, reducing quantities of carbon-intensive materials, such as steel and concrete, integrating alternative energy and identifying waste reuse or recycling opportunities.

A digital model issued for the construction phase provides the basis for early and easy identification of defects, reducing construction and demolition waste and readily enabling sustainability opportunities to be realised. Finally, the digital model adds to the significant long-term value for the asset owner, or the maintenance and operations provider. Having a data representation of the asset, as well as documented details of the materials, approvals, plant and equipment, provides the asset owner/operator the best available technologies for carbon emissions management.

Downer is working closely with our global digital and design partners to specify and trial solutions and share learnings across the business. For example, a major contributor to Scope 3 GHG emissions is embodied carbon stored in the materials used on infrastructure projects. To better assess, manage and reduce impacts in this space, Downer is developing digital technologies to assess these lifecycle impacts more efficiently.

The next emerging framework relating to corporate ESG disclosures, which adopts a similar approach to the Task Force on Climate-related Financial Disclosures is the Task Force on Nature-related Financial Disclosures. In March 2022, the Task Force on Nature-related Financial Disclosures released its first beta version of the framework which marks the start of a comprehensive 18-month market consultation process, with a final release date scheduled for the end of 2023.

Downer is closely monitoring the Task Force on Nature-related Financial Disclosures and assessing the implications.