The Australian and New Zealand Governments have ratified the Paris Agreement and this has Government policy consequences at both Federal and State level.
Downer provides services to the Public and Private Sector. We are aware of the important role we can play in helping meet national emission reduction targets in Australia and New Zealand through our energy savings and carbon emission reduction plans and projects.
Downer accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of the science related to climate change.
Downer takes climate change seriously as is evident in our annual Sustainability Report (available on our website). In FY18 we made our first disclosure in our Annual Report under TCFD disclosure (Taskforce on Climate-related Financial Disclosure).
Downer’s Environmental Sustainability Policy commits us to “drive innovation to address climate change mitigation and adaptation through reducing our energy and greenhouse gas emissions intensity”.
Each year we set emission reduction targets to drive production efficiency and to minimise our environmental impacts.
We have aligned to and fulfilled the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) in the context of Downer’s Governance, Strategy, Risks, Targets and Metrics. We are in the process of undertaking scenario analysis to test Downer’s resilience as well as setting Science Based Targets (SBT).
Since FY11 we have linked annual carbon emissions reduction targets to senior management remuneration and implemented business-specific energy management plans. We met our goals by the fourth year of our five-year plan by implementing emissions reduction projects equal to 30 per cent of our FY10 Scope 1,2 & 3 emissions. In FY19, we adopted a three-year plan to further this work.
Our New Zealand business is a signatory of the Climate Leaders’ Coalition which is a group of 60 New Zealand business leaders joining forces to tackle the issue of climate change by recognising the role that business can play in bringing about change.
The Financial Stability Board established the TCFD and in 2017 published a standardised international framework of recommendations to assist organisations identify and assess how climate related impacts may affect the financial performance of their organisation.
The TCFD is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings.
TCFD provides a framework to identify and assess climate-related risks and opportunities across key areas:
Metrics and targets
TCFD categorises risk as “physical” or “transitional” - we have considered the climate-related risks that directly affect our operations including:
Physical risks due to increased frequency of adverse weather events potentially causing destruction of property, disruption of our operations due to interruptions to upstream and downstream supply chains and the availability of key resources, such as energy, fuel and water; and
Transitional risks that relate to a move towards a lower carbon economy, such as policy and legal (uncertainty in government policy and regulatory change at national and international levels), technological (investment and costs associated with implementing new practices) and social adaptation (market behaviour of our customers and end-users, reputation).
Science Based Targets are emissions targets set by an organisation in line with the level of decarbonisation required to keep global temperature increase below 2°C compared to pre-industrial temperatures.
Climate change is a risk and an opportunity. Downer conducts its business in a way that is sustainable and takes into account a range of strategic factors, including climate related risks and opportunities.
Downer has a mature and robust governance framework which has been developed in order to consider and manage a range of important strategic issues including climate related risk.
Downer supports the TCFD objectives. Commencing in FY18 Downer’s climate related disclosures align with the TCFD recommendations and build on Downer’s FY17 disclosures.
In FY18 we undertook a detailed assessment against the TCFD framework, identifying climate change risks and opportunities and the associated impacts, mitigation and management response;
Impacts of increasing energy costs
Exposure to extreme weather events
Exposure to thermal coal contracts
Changing design and construction requirements
Existing renewable energy capability and market presence
Leverage existing mining capabilities to service new and adjacent markets
Response services to extreme weather events
In FY19 we aim to further explore the impacts of climate-related risks and opportunities through scenario analysis, and development of Science Based Targets.
We work closely with our customer’s through the planning and design stage of any infrastructure project to understand the risks associated with climate change. Typically, this is performed through a climate change mitigation and adaptation workshop at the start of the planning and design stage utilising AS 5334-2013 Climate change adaptation for settlements and infrastructure — A risk based approach. Downer continues to invest in Research and Development (R&D) to innovate and produce products that improve the durability of infrastructure – for instance creating asphalt mixes that are harder wearing and flexible pavements.
Achieving Infrastructure Sustainability ratings, such as ISCA, for major projects by meeting stringent sustainability criteria – including wastewater treatment plants (Whitsundays, MCG), wind farms (Ararat), rail infrastructure (Gosford Passing Loops, station upgrades in NSW) and Rail Maintenance Facility (HCMT).
Working with our supply chain and utilising the Supply Chain Sustainability School to collaborate and educate our diverse supply chain on ways to deliver services in a more sustainable way.
The world, and in particular Australia, is presently in an energy transition period and there is still a need for coal mining to maintain energy supplies and provide a reliable form of electricity to maintain current day living standards.
Coal related projects contribute approximately 10% of Downer’s total revenue (thermal coal is less than 5%)
Downer is committed to working closely with its customers to provide mining services in the most sustainable manner, which includes reducing direct emissions through energy efficiency and carbon reduction initiatives.
Downer will consider thermal coal opportunities like any other business opportunity with each project assessed on its individual merits.
Downer provides mining services to a number of mining customers, including to government owned coal mines and power stations.
Whilst renewables and alternative forms of energy are likely to increase, coal will remain part of the energy mix in Australia and globally during the energy transition period in the short and medium term.
Downer has an active diversification strategy including the recent acquisition of Spotless. Only 10% of Downer’s total revenue is from coal-related projects and less than 5% from thermal coal projects. Downer is a major supplier of public transport infrastructure and we are now one of the largest and most experienced providers of services to Australia’s renewable energy market.
Downer has business strategies in place to allow flexibility and mobility – as evidenced by ability to “move” workers and business activity to other sites following the termination of the contracts.
Downer is required to report emissions only at mine sites where it has “operational control” as defined by National Greenhouse Energy Reporting Scheme (NGERS). Downer has operational control at only two coal mines (Commodore and Meandu in Queensland, both open cut mines).
Downer reports fugitive emissions for Commodore to the Australian Clean Energy Regulator and in our Sustainability Report.
There is a Reporting Transfer Certificate in place for Meandu Mine with the owner (Stanwell Corporation) reporting energy and GHG emissions to the Clean Energy Regulator. Since Downer has operational control, it must manage the mine so that GHG emissions are less than the baseline set under the Clean Energy Regulator’s Safeguard Mechanism.
Downer reports Meandu Mine’s emissions under the Safeguard Mechanism due to operational control and emissions threshold triggers.