ESG Essentials in Energy
Look beyond the acronyms – ESG is a hygiene factor to help ensure a sustainable, resilient, options-open business.
Overview
Carbon Markets & Natural Capital/Biodiversity
Key issues
Review of the Safeguard Mechanism and voluntary carbon and biodiversity credit markets: a mobilisation of private capital to achieve nature positive pledges and net zero commitments will be required.
Taskforce on Nature-related Financial Disclosures (TNFD): watch for the emerging definition of a co-benefit, how additionality is dealt with where there is a carbon project, and demand and supply side risks.
CFI methodologies: project developers and owners should review these to identify opportunities to differentiate high-quality credits.
International deals: Australia is promoting an Indo-Pacific Carbon Offset Scheme and entered into agreements with Fiji and Papua New Guinea to develop projects that could be registered under Article 6 Paris Agreement mechanisms.
Regulatory: mandatory and voluntary reporting risks, project approvals and corporate disclosures will need to be carefully considered.
Environment and Sustainable Development
Key issues
Evolving regulatory and policy landscape: grants, finance options, approval strategies, litigation risk and project delivery delays all need early consideration.
Early work: comprehensive legal risk approvals and stakeholder engagement strategy are needed to navigate the complexity of legal and rehabilitation obligations for mines, power stations and other fossil fuel infrastructure, and tenure.
Reused assets: using or repurposing existing infrastructure and reducing rehabilitation liabilities can reduce future renewable energy project costs. This means bringing regulators and community on the transition journey, creating sustainable employment , and planning for future climate change adaptation, biodiversity and water resources.
Native Title & Cultural Heritage
Key issues
Agreements: The Courts are holding projects to greater scrutiny on native title and cultural heritage issues. Consider whether agreements with Indigenous parties are in place and whether the terms are fair in a broader sense, beyond strict legal requirements.
Finance: Many financial institutions are adopting the World Bank’s “Equator Principles”. Don’t limit your financing options. Consider how you can demonstrate that your project has been developed in a way that meets community expectations as well as strict legal requirements.