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Until recently, Environmental and Social Governance (ESG) in Australia has been largely unrecognised, ignored, misunderstood, or fractured across functions. However, reporting on ESG strategy and performance is gaining momentum as stakeholders have started to look more deeply for answers to ‘why did this happen?’ and ‘how did we get here?’ when major ESG issues have threatened to derail good business.

This change in stakeholder mindset has been a key driver to Australian businesses and industry becoming more ESG aware. Externally funded projects are being asked to prove that investor money is protected, that projects have worked diligently to lower risk exposure and that cheques can be cashed with a clear conscience. Highlighting the necessity for a company’s ethical performance to be as transparent and valuable as the balance sheet.

An increase in ethical investor funded projects in Australia has also triggered a change in focus towards establishing an Australian ESG baseline of standards. These development projects naturally come with reportable, auditable ESG lending commitments; unlike the internally corporate funded projects we have been used to seeing. ESG qualified lending opens up access to a wider range of funding and brings with it brand and reputation advantages as consumers increasingly move to brand conscience products. These requirements are evident with funding sources such as Northern Australia Infrastructure Fund, Clean Energy Finance Corporation and the Australian Super ethical portfolio.

Recent ESG issues being reported in the media are adding to widespread stakeholder and community concern, the bar has been raised and people are tired of history repeating itself. Simply put, with proper ESG due diligence and auditing it is possible that many incidents could have been avoided. Incidents have included a diverse range of issues such as irreparable environmental damage, human rights violations, procuring supply chain products developed using child labour; the list goes on. Australia is just beginning its ESG journey and awakening to the serious ramifications of not addressing ESG at board level with big brands driving change by investing in green technology, renewable energy sources and looking deeper into supply chains.

Solely reporting on quantitative ESG is no longer enough, to mitigate risk companies require planning, actions, auditing, and continual improvement applied to qualitative ESG parameters and global standards of stewardship. To develop ESG readiness within corporate systems preparation is key. The planning, development, implementation, and auditing of ESG risk exposure and control systems is essential to minimise risk and to prevent critical, avoidable mistakes.

Sustainability has been helping investors, companies, lenders, and stakeholders across the globe deal with ESG issues for over 20 years. Now, Sustainability is experiencing an increasing trend in clients requesting ESG support in WA from both global and local brands. This local uptrend shows it is essential for Australia to act on developing and implementing ESG stewardship as a practice in order to stay competitive as exporters and protect our reputation.

Bringing global experience to the local context, Sustainability’s approach to mitigating ESG risk involves deep knowledge of compliance, best practices and management systems, backed by knowledge gained and consolidated by working across the resources, construction, manufacturing and financing industries.

Examples of this experience across various fronts regarding environmental, social, governance and safety components includes large-scale development projects across the world for lender funding and loan agreements including the European Bank of Reconstruction and Development, World Bank, United Nations, Asian and African Development banks, International Finance Corporation among others through to supply chain ESG for local Lithium miners.

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