Page 9 - Luce 2024

P oint of View

Business contributes to the impacts of climate change emissions in building materials. Goods and services companies
Before diving into what greenwashing actually means, it like grocery and retail stores also have large carbon footprints
is helpful to take a step back and set out the relationship in their supply chains.
between companies, the financial sector and climate change.
In addition, it is not only companies that are involved in
As a starting point, perhaps it is so obvious it goes without contributing to the impacts of climate change. Financial
saying, but all companies and financial institutions can and institutions have a significant role to play in decarbonising their
do contribute to the impacts of climate change. This includes activities.
through their direct and indirect greenhouse gas emissions
(also called their scope 1, 2 and 3 emissions) and through their To elaborate, banks have large ‘financed emissions’ footprints
financing activities. through their loan books. For example, they provide loans to
fossil fuel companies and for fossil fuel projects. They also
To illustrate, electricity companies have large direct provide loans for homes and small businesses that produce
greenhouse gas emission footprints as they provide electricity greenhouse gas emissions and also stand to be significantly
for households and businesses in Australia by burning fossil impacted by the physical impacts of climate change like
fuels. These entities will also play a crucial role in ensuring bushfires, floods and droughts. Moreover, banks can provide
for workers and communities involved in fossil fuel power the finance to projects necessary for a clean energy and
generation that there is a ‘just transition’ towards future resilient future.
employment in other sectors, potentially like the renewable
energy generation. Superannuation funds (asset owners) are also a sector that
can play a significant role in contributing to climate change.
Equally straightforward is the fact that coal, oil and gas They have access to trillions of dollars that can be invested in
companies are directly related to the impacts of climate either ‘brown’ or ‘green’ activities. In addition, asset managers
change. While they do not directly burn coal and other similarly can actually invest and provide investment advice that
products themselves, these companies supply fossil fuels to is aligned or non-aligned with the goals of the Paris Agreement.
countries and entities around the world. They are like the
‘drug dealers’ in the supply chain. Moreover, effectively The insurance sector is sometimes referred to as the ‘canary
transitioning these companies away from fossil fuels will be in the coalmine’ in relation to climate change. This is not least
crucial to Australia’s economic future given that fossil fuels are because climate change is increasing insurance premiums,
currently our largest export item. meaning that many people are either under-insuring their
property or have no insurance cover whatsoever.
Beyond energy and fossil fuel companies (the usual climate
change contributor suspects) other companies are also deeply Business itself will also be impacted by climate change
embedded in the climate crisis. For example, the transport So businesses contribute to the impacts of climate change.
sector contributes to greenhouse gas emissions through However, companies and financial institutions also stand to be
cars and other road vehicles, shipping and aviation. The significantly impacted by climate change risks and opportunities
built environment, i.e. homes, offices and other structures, themselves.
contributes to greenhouse gas emissions, not only through
power supply but also through the embodied carbon

J anet Clarke Hall 9