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"Sustainability: The Business Case"

Address by Senator the Hon Robert Hill
Minister for Environment and Heritage

Adelaide April 10 2001

In a fortnight's time, the prestigious Pew Centre on Global Climate Change will hold its second international conference in Washington. It will do so against a backdrop of increasing uncertainty over the future of the Kyoto Protocol on Climate Change.

Australia will, for the second year running, address the conference on our contribution to the global effort to reduce greenhouse gas emissions. This is recognition of the high standing Australia enjoys in the international community for the actions we are taking domestically to cut our annual emissions and of our on-going constructive role in the international negotiation process.

What is significant about the Pew Centre is that it is not a government driven forum.

The Centre's membership is based on more than 20 of the largest corporations in the United States with combined annual revenues of more than US$550 billion.

There is, of course, no greater sustainability challenge facing the business sector than climate change.

Pew Centre members - which include major fossil fuel producers - have made a commitment to adopt a precautionary approach to climate change.

The philosophy of these companies is summed up by the Deputy Chief Executive Officer of BP Amoco who said:

"If we accept the case for action on climate change, it's clear we can't wait for an international negotiation process to achieve consensus any more than we can wait for the scientists to reach complete and final agreement. Just as the corporate sector has been one of the driving forces behind the movement towards free trade over the last 50 years, so now I think the corporate sector can help develop the solutions to climate change. There is much that can be done."

These comments, of course, have even greater significance given recent public debate over the future of the Kyoto Protocol.

Australia has signed the Kyoto Protocol. We believe we were given a fair target at Kyoto and we are seeking to achieve that target.

We have, through the framework of the Protocol, sought to address the unresolved issues relating to flexibility mechanisms, sinks and compliance and the issue of developing country participation. In fact we were singled out at The Hague in the closing comments of the Chair of COP6 for our constructive efforts.

It remains my hope that all members of the international community will continue to engage constructively and cooperatively in this debate and deliver a final agreement that provides developed nations with access to the widest range of least-cost abatement measures, appropriately recognises the importance of carbon sinks such as native vegetation cover and reafforestation, and provides for meaningful involvement of developing nations.

Unfortunately but somewhat predictably the media coverage of recent developments has without exception been negative.

What has been completely overlooked has been the growing groundswell of support for early action among business leaders, both internationally and here in Australia.

Comments such as the one I have quoted from a BP Amoco executive should give us every confidence that leaders and visionaries within the corporate sector understand the challenge we are facing and are prepared to drive change in the way industry operates regardless of where the international negotiations stand.

Even more disappointing has been the refusal by some in the media to give Australia any credit for the efforts we have already undertaken to reduce emissions.

More than 300 Australian companies and industry associations under the banner of the Greenhouse Challenge have committed to reductions of more than 23 million tonnes of carbon equivalent off business as usual predictions.

Australia has the highest rate of local government involvement of any nation in the international Cities for Climate Protection Campaign.

We have passed legislation that should see an additional $2 billion invested in renewable energy projects.

We are helping Australian households find ways to play their part by reducing their energy consumption.

We have passed national fuel quality standards legislation, implemented mandatory fuel efficiency labelling for all new passenger and light commercial vehicles, expanded the refuelling infrastructure for alternative fuels such as compressed natural gas and are working with the building industry to introduce minimum energy performance standards in the building code.

We have established the Australian Greenhouse Office and committed almost $1 billion to programs to reduce greenhouse emissions and increase the commercialisation and uptake of renewable energy. This will continue no matter the state of the international negotiations.

Later today I will be releasing Australia's latest greenhouse gas inventory which will indicate that we are slowing the growth of greenhouse gas emissions and decoupling economic growth from carbon growth.

As I mentioned earlier, business faces no greater challenge in achieving true sustainability than effectively dealing with climate change.

But Australian industry to date has shown an increasing willingness to incorporate the concept of ecological sustainability throughout its broader business planning.

It is now widely accepted that environmental performance can no longer be seen as an optional extra - it has become central to the way we do business.

The are several reasons behind this shift in business thinking. These include consumer pressure, the increasing importance of environmental responsibility as a marketing tool, the need to reduce costs through reducing inputs and waste, and a broader understanding of the impact of industry on local communities.

Our government's approach has been to support and encourage industries to improve their environmental performance and to legislate where appropriate to deliver uniform environmental standards.

This cooperative approach has already delivered significant environmental gains. Along the way industry has learned that good environmental practice delivers better bottom line profit performance - the ultimate win-win outcome.

This concept has been at the heart of the Commonwealth's approach to waste management where we have worked with industry to develop waste streams into resource streams.

In our successful Wastewise program we worked in partnership with the construction industry to reduce the amount of construction waste going to landfill. Through the program, one construction company was able to re-use or recycle 94 per cent of the total waste from a major building project. Apart from the obvious environmental benefit this delivered, the company was able to slice 40 per cent off its waste management costs.

In other cases, we have been prepared to provide incentives to promote better environmental outcomes. For example, more than 100 million litres of waste oil is unaccounted for in Australia each year - posing a significant threat to the environment. Our government has legislated for product stewardship arrangements for waste oil which will provide volume-based incentives for waste oil recyclers to increase the quality and quantity of recycling, along with grants to improve technology and infrastructure. These measures are expected to deliver an increase of some 30 per cent in the amount of waste oil recycled in Australia.

Further product stewardship arrangements are being developed in cooperation with the manufacturers of electrical goods to deal with issues such as the amounts of hazardous metals and compounds including cadmium, PCB's, mercury and lead used in these goods. These substances can eventually find their way into the environment after the useful life of the goods expires and they inevitably are dumped into landfill.

We have also been able to work successfully with the agricultural sector to reduce waste and the threat posed by stockpiles of persistent organic pollutants and other unwanted agricultural chemicals on farms. Through the ANZECC ChemCollect program, 308 tonnes of unwanted chemicals have been collected free of charge from farms around Australia.

The Commonwealth through the Natural Heritage Trust, has also supported industry efforts to recognise waste products as a potential resource.

One locally relevant example has seen $1.8 million committed to G H Michell & Sons at Salisbury - one of the largest wool processing facilities in the world. The project will see stormwater used to replace up to 1.5 billion litres of water which the company's operation's previously drew from the Murray River. It also aims to deliver a 90 per cent reduction in both the volume and nutrient pollution loads of stormwater from the catchment entering the Barker Inlet in Gulf St Vincent. The company will obtain a cheaper source of quality water for its operations will deliver major benefits to both the marine environment and to the already stressed Murray River.

This project reflects the thinking of many companies across Australia who are pursuing means of reusing wastewater or capturing stormwater to reduce their demand on mains water services.

In line with this concept of reducing resource use and waste, the Commonwealth has been working with a number of industry sectors through a new initiative called the "Business of Sustainable Development." Through this initiative we are encouraging industry to explore and adopt production methods which allow them to produce more goods while reducing the impact of that production on the natural environment.

Agreements to improve environmental performance have been finalised with the Housing Industry, the Veterinary and Agricultural industry and the Australian Food and Grocery Council.

We have consulted with industry and the States in the development of new environment legislation. The Commonwealth's new Environment Protection and Biodiversity Conservation Act delivers increased protection to areas of national environmental significance while providing significant benefits to industry through greater certainty in the approvals processes. We have also worked through the National Environment Protection Council to implement uniform national standards on ambient air quality, contaminated sites, controlled wastes, packaging and the National Pollutant Inventory. Again, while providing the community with uniform standards of environmental protection these actions have delivered fairness and consistency to industry, particularly those that operate across State boundaries.

One of the key tools of business sustainability is public environment reporting.

Our government has been at the forefront of promoting the use of public environment reporting by Australian industry. Just over 12 months ago I released a national framework for public environment reporting and the government funded extension officers in three major industry associations to help companies develop their own public environment reports.

As a next step in that process I am pleased today to officially launch the "Australian Public Environmental Reporting Website" which has been developed by Environment Australia with the support of industry. Companies such as BHP, MIM, Sydney Water, Western Mining and more than 30 others have contributed their public environment reports to this site. It will become an important resource to small, medium and large enterprises who are looking for ways to either commence a public environment reporting process or to further develop their existing processes.

Apart from their economic benefits in terms of improved production efficiency, public environment reports will play an increasingly important role in maintaining investor, consumer and community confidence in the operations of industries and individual companies.

Public environment reporting provides industry and the community with an on-going scorecard on progress toward ecological sustainability. Importantly, it allows companies to showcase the considerable efforts being made to improve environmental performance.

The flip side is we should do more as a community to acknowledge and applaud those members within the industry sector who are showing environmental leadership.

Without this leadership, Australia will never achieve truly sustainable development. Robert Shaw, the assistant coach with the Essendon football club summed up his club's on-field and off-field dominance of Australian football by saying:

"It all comes down to a few key words like leadership, values and culture. And leadership is not just from the top - this club is full of leaders."

When its comes to improving environmental performance and achieving sustainable development, the more leaders we have within the business community, the better.

Commonwealth of Australia