Need to Know: 2021 State of the Environment Report
The 2021 State of the Environment Report (SoE) released this week by the Federal Government provides a damning assessment of the threats to Australia’s environment, the impacts of which have significantly amplified over the past 5 years.
For the first time, the SoE (which is published every five years) reported on the importance of Indigenous knowledge in sustainability and connection to Country, the significant climate change impacts already evident throughout Australia and the correlation between the environmental decline and negative impacts on our health and well-being.
In acknowledging the SoE as “one of the most important documents in environment science”, Federal Minister for Environment, Ms Tanya Plibersek, made a commitment on behalf of the Government to protecting 30 per cent of land and 30 per cent of oceans by 2030.
Although detrimental and irreversible impacts are already evident from a social, environmental, and economic perspective, the Report found that “immediate action with innovative management and collaboration can turn things around”.
The Report findings paint a bleak outlook for the environment based on the increasing pressures from climate change, habitat loss, invasive species, pollution, and resource extraction. The Report covers the impacts on five key environmental areas.
Findings on Biodiversity, Inland Water, and Land
The Report finds that Australia’s biodiversity is declining. Australia now has more foreign plant species than Native species, with the number of listed threatened species rising by 8% since 2016, with further extinctions expected over the next 2 decades. This biodiversity loss has been exacerbated by extensive land clearing, especially within Queensland and New South Wales, causing habitat loss and fragmentation.
Australia has lost more mammal species than any other continent – over 200 plants and animals have been added to the threatened species list since 2016, including the koala and gang-gang cockatoo.
The Report finds that climate change is also threatening Australia’s water resources; the country has experienced its lowest 24-month rainfall period on record, negatively impacting inland water systems, such as the Murray Darling Basin.
Findings on Climate and Extreme Events
Temperatures over Australian land areas continued their long-term trend, increasing by approximately 1.4 degrees since national records began, consistent with the IPCC global temperature outlook. The Report predicts that climate will continue to warm over the next 20-30 years, largely irrespective of our emissions trajectory.
The Report also finds, consistent with the recent IPCC Working Group reports, that the frequency and intensity of extreme events is intensifying. Over the last five years, it notes that extreme events such as floods, droughts, wildfires, storms and heatwaves have impacted every part of Australia.
Findings on Coasts, Marine and Antarctica
The Report notes that Australia’s marine habitats are generally healthy, however finds that Australia’s reefs continue to deteriorate, and that oceans are continuing to warm and acidify as a result of the effects of climate change.
The Report also notes that the Antarctic region continues to show the effects of climate change, with the changes outpacing the ability of species to adapt – the implications of which are that some species will inevitably succumb to extinction.
Findings on Indigenous and Heritage
The Report reinforced that Indigenous knowledge and sustainable cultural practices are critical to effective environmental management, for example, through traditional fire management. It notes that Indigenous rangers already manage some 44% of the national protected area estate with traditional land practices. The Report notes, however, that Australia’s heritage is not adequately protected and is at risk from the impacts of urban spread and development, particularly in Indigenous heritage and geo-heritage significant areas.
Findings on Air Quality and Urban Areas
The Report finds that Australia has good air quality, but some events and industries such as bushfires and wood heaters, can negatively impact our air quality. It notes that population growth, urban density, industry and the associated consumption of resources have a significant influence on the shape, form and function of our urban areas. Alarmingly, the Report notes that Sydney has lost more than 70 per cent of native vegetation cover through urban development.
What does this mean for Australian companies?
Climate change is shifting from the peripheral to a key focus area for Boards, in particular, given the recent IPCC Working Group reports, and emerging announcements as we head towards COP27. At COP26, no less than103 countries signed up to the Global Methane pledge to limit methane emissions by 30 per cent by 2030 and 137 countries took a landmark step forward by committing to eliminating deforestation.
Physically, climate change is becoming more and more difficult to ignore. India has recently been plagued with record-setting heatwaves peaking at 50 degrees Celsius and the UK has, just this month, recorded its highest temperatures ever registered.
For those in the transactional space, it has been clear for some time that ESG and value are becoming more and more closely linked. Increasingly, ESG criteria are used by investors and financiers to screen investments, manage their portfolio risk and encourage organisations to act responsibly. Funds and investors are demanding more from organisations and carrying out extensive ESG and climate change due diligence to understand physical and transition risks that businesses are facing, building this into their valuations and decision-making. Banks and insurers are assessing the viability of organisations through an ESG lens, increasingly demanding companies demonstrate evidence of transition planning, with clear action and risk mitigation.
For companies seeking to understand how to get ahead of the emerging regulatory and stakeholder requirements, it is important to:
Start thinking now about ESG, climate change and the issues most likely to impact you and your stakeholders, and what these issues mean for your business – for some the risks are existential, for others, manageable. Having a clear view of the funding, operating and business model implications of ESG for your business is now essential;
Develop an achievable, but fit for purpose ESG and sustainability strategy that meets regulatory requirements, uses best practice frameworks and takes into account future stakeholder expectations;
Consider how to most cost effectively achieve your goals - could your organisation consider partnerships that may improve your position from an ESG and climate change perspective?
Get serious about governance – does your organisation have a strong governance mechanism in place to develop and implement climate change transition strategies, and are these embedded?
Reports like the SoE are not determinative – they are the latest drops in a stream of reminders for Boards to anticipate and plan for what are now mainstream concerns, with financiers, investors, customers, suppliers, employees and the community increasingly demanding that companies commit holistically to environmental and social outcomes within a transparent governance framework. It is becoming likely that US and European regulatory and legislative ESG and climate requirements will come into play in Australia within the next five years. Now is the time to act.
For more information, please contact Samara Madsen at sibrahim@renniepartners.com.au or Yatra Forudi at yforudi@renniepartners.com.au
The SoE is released every 5 years and explores the state of the environment, the pressures it is under and how we are managing it across 12 themes: air quality, Antarctica, biodiversity, climate, coasts, extreme events, heritage, Indigenous, inland water, land, marine and urban.
You can access the SoE report here: https://soe.dcceew.gov.au/.