Net zero commitments –
moving from talk to action

There is widespread recognition that collective business ambition needs to lift for Australia to meet its national emissions reduction targets. Nonetheless, overseas experience has shown that the market leaders who strive to set the tone with ambitious targets can find themselves needing to wind them back in subsequent years. All targets are inherently forward-looking and rely upon various assumptions. These may change over time, even if they initially reflect what the business is genuinely working towards. 

Herbert Smith Freehills Partner Mark Smyth is part of the regulatory disputes team working with clients to develop forward-looking commitments, then ensuring they are accurately and consistently communicated to the market. He says that companies issuing forward-looking climate commitments out to 2050 will be grappling with dependency on variables including government policy, technological change and economic conditions. “There are inherent uncertainties in long-term climate commitments. Companies must remain conscious of changes to those external variables over time, which may require them to revisit their climate commitments or update the market.”

The potential for allegations of greenwashing, as well as equivalents in relation to social or governance performance, are risks that necessitate consistent company messaging. This encompasses everything from formal disclosures in an annual report or environmental approval document, to social media posts and website articles. Multinational companies also need to ensure that centrally developed policies apply across all sites and jurisdictions.