Page 16 - Ausbil 2024 Annual ESG Report

A Ln o n o u k a i l n E g S a G h e R a e d p : o 2 r 0 t 2 2 5 0 2 4
The ‘E’ in ESG is not all about carbon emissions
Naturally, with the Paris Agreement as a backdrop, investors have historically engaged significantly on carbon emissions, but climate change is a multi-faceted issue which also links, directly or indirectly, with the use of plastics, waste and pollution, use of water and nature, and more. In addition, methane has a significant impact on global warming and the reduction of methane could become another decarbonisation lever for fossil fuel companies. The TNFD framework, which calls for companies to disclose the impacts and dependencies of their operations on nature, will likely drive more attention to biodiversity issues and the issues of PFAS (Per-and polyfluoroalkyl substances), which break down slowly and can build up in humans, animals and the environment, will likely attract more regulatory attention.
Technology change brings new types of ESG issues
Years ago, we highlighted cyber security as an ‘emerging’ ESG issue. Today, it is a mature but still evolving ESG challenge. A number of companies have been attacked, sometimes with significant financial impacts, across a wide spectrum of industries, and regulation keeps playing catch-up. Risk mitigation and prevention are also expensive. The banks have invested heavily into cybercrime and scam prevention. In the UK, banks are required to compensate victims of online fraud and Australian banks do well by avoiding similar regulation by investing in prevention and collaboration, both with other banks and with other sectors, such as telecom providers.
Data privacy regulation and the evolution and adoption of artificial intelligence (AI) is also bringing new types of ESG issues, including reputational and legal risks. While AI is promising in terms of driving productivity growth and efficiencies, sometimes AI can lead to unintended consequences. The growth of AI also acts as a major driver for energy demand, which is another challenge for the global decarbonisation. Ausbil is a member of the WBA’s Ethical AI engagement initiative and continues to engage with companies about risks and opportunities stemming from technology change.
Community concerns and the rights of traditional owners
In 2024, Ausbil participated in an ESG field trip to the Pilbara to seek better understand the concerns of traditional owners in relation to mining projects. In some cases, these also intersect with environmental issues, such as water scarcity. In 2025, Ausbil will continue to seek ways to better understand community concerns and how companies address these, not just in the mining sector but across a wide range of sectors.
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Annual ESG Report l March 2025