What every Australian printing business needs to know about the new Mandatory Climate Reporting requirements

Olivia Tyler, Chief People & Sustainability Officer at IVE Group

From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual sustainability reports containing mandatory climate-related financial disclosures following the passage of a major bill through the Australian Parliament in September 2024.

In this exclusive interview, Janet Maitland, Digital Image Magazine speaks with Olivia Tyler, Chief People & Sustainability Officer at IVE Group, Australia’s largest diversified marketing company, to understand more about the Mandatory Climate Reporting (MCR) requirements and what IVE Group are doing to fulfill their commitments both as a Group 1 company and a supplier to Group 1, 2 and 3 companies.

When it comes to MCR, what needs to be reported?

According to ASIC, Section 296D of the Corporations Act requires that the climate statements and notes for a financial year must together disclose: The entity’s material climate-related financial risks and opportunities. The entity’s metrics and targets for the financial year relating to climate that are required to be disclosed by the sustainability standards, including detail on the entities greenhouse gas emissions (scopes 1, 2 and 3) and any associated targets; and any information about the entity’s governance, strategy, or risk management in relation to these risks, opportunities, metrics and targets.

An entity must also disclose information about its climate resilience, as assessed under at least two possible future states (called ‘scenario analysis’). The two mandated scenarios are currently:  increase in global average temperature of 1.5°C above pre-industrial levels; and increase in global average temperature well exceeding 2°C above pre-industrial levels (meaning an increase of 2.5°C or higher).

Which companies need to report?

Companies subject to mandatory climate-related financial disclosure will be phased in three groups, over a four-year period as set out in the table below.

Most companies in our industry are too small to meet these criteria, does that mean they are not impacted?

No, they may still be required to take action. Whilst most companies in the printing and graphics industry are too small to qualify for mandatory climate reporting directly, if you are a supplier to a Group 1, 2, or 3 company, you may be asked to provide data about your emissions as part of your customers’ Scope 3 emissions reporting.

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What is IVE Group doing to prepare for these reporting requirements?

As a starting point, we developed a Sustainability Strategy, which was released in 2023. Our first wave of activity really focuses on establishing baselines and normalising sustainability and environmental, social and governance (ESG) practices as an integral part of the business.

As part of our strategy, we calculated our carbon footprint across scopes 1, 2 and 3. We also report under the National Greenhouse and Energy Reporting Act, so have already been collecting much the required data. A focus for us has been to drill down and go site by site to enable like-for-like comparisons. Our footprint changes as IVE Group grows through acquisitions, so like-for-like comparisons are critical moving forward.

Data collection is a big focus. We need to know what, where and how much energy is being consumed as it contributes to our emissions calculations and feeds into our strategic risks and opportunities; for example, increased energy prices are a risk, just as bringing renewables into the mix could be an opportunity.

We are working on better understanding our suppliers, specifically who we are buying from and how advanced and risky they are. While we are specifically talking about Mandatory Climate Reporting, it’s essential to remember that it’s not just the environmental lens that you need to apply to your business. There are critical social factors too. For example, are there potential human rights issues? Does the company demonstrate diversity and inclusion practices? There are many factors to consider in addition to climate. The goal is to really take that holistic approach across key environmental and social factors.

We have also commissioned an external company to run the two mandated climate scenario analyses, modelling the impact of an increase in the global average temperature of 1.5°C and 2.5C, respectively, across our value chain. This will give us insights on material risks and opportunities and how we respond to these, within our existing business and commercial practices.

The benefit of Mandatory Climate Reporting is the integration of climate considerations throughout your business processes – that’s really crucial here. It’s not about having climate on one side and business strategy on the other – they’ve got to go hand in hand. That’s sustainability.

What programs have you/are you putting in place to reduce emissions?

Our immediate focus has been on energy usage, that is, using less energy than we used to and, where possible, changing the source of the energy we use. We’ve progressed our commitment for renewable electricity with our power purchasing agreement with Iberdrola coming online in Jan 2024. This agreement equates to around 98% of our electricity use across our 15 production sites through the generation of Large-scale Generation Certificate (LGCs). We’re quite gas-intensive in some production processes, which is a challenge as we are somewhat limited with the technology available to replace gas.

We’ve also implemented a program to understand how we can improve efficiency for any new capital expenditure, including equipment, as equipment performance contributes to our overall emissions and energy efficiency.

It’s also important to focus on what you are NOT going to do. When it comes to sustainability, you cannot get everybody to do everything right off the bat. So, we are identifying the larger sites we will focus on that have the most material contribution to our energy load first, and then progressively expand from there.

What happens at the site level?

We’re now looking to work more closely with our production teams. Energy consumption - be it electricity, gas, LPG - is measured but carbon emissions are calculated. Getting the data baselines and collection processes set, enables us to make these calculations, visualise the information and make it available to better support decisions and drive actions.

We have a consolidated data collection template that measures the different types of energy, waste, and water. Where does it come from? Knowing what information you need, where it is and who has it is often the biggest challenge.

We are investing in technology that will enable us to determine specific emissions of key product lines supporting our customers in their sustainability objectives and their reporting requirements.

We are also investing in how to report the data back in a visual way so that people can see the impact over time. It helps people understand that this is just another piece of information used to manage the business like any other KPIs, financial or otherwise. This drives sustainability literacy and capability throughout the organisation. Building this muscle is critical – it can’t sit with just a few, it needs to sit with many.

How do you drive change throughout the business?

We work closely our commercial and sales teams as we think there is a real opportunity to support our customers who are having the same challenges. We need to amplify the message that sustainable operations and performance holds commercial value, as it may come at a cost, but the benefit is you’re derisking your supply chain and working with partners that can evidence and advance sustainable practice and performance over time.

We have created a knowledge centre where we publish information for our sales teams to share with their customers. We incorporate it into sales training and marketing communications. We have online training sessions, webinars, drop-ins, and many different formats to help build our teams’ understanding and capability.

What advice would you give to companies who supply group 1,2 and 3 companies?

• Engage your team. There are always people in any organisation who are passionate about sustainability and want to be involved. Appoint such people as project leads.

• Start collecting the data for what, where and how much energy is being consumed.

• Prioritise what you are going to focus on and, as importantly, what you are not.

• Package the data so that it can be communicated internally your teams and externally to your customers.

• Have a conversation with your customers. Ask them where they see you in their world – as a supplier, how critical are you to them. It will create a whole new level of conversation and may create new opportunities or a competitive advantage.

• Include capabilities and experience in sustainability as part of your hiring criteria.

The best mindset you can have on this one is being open to change and really asking yourself if there are new ways to tackle, what might be considered, old problems. Change starts with tiny steps you just need to pick a focus and start – it’s that kind of action and the uncovering of these opportunities, where for me, it gets really exciting.

This article was first published in the December/January Issue of Digital Image Magazine read more here