ESG Impact: What you need to know – March 2025
Here’s the latest round-up of the standout ESG developments making the headlines, from industry highlights to policy updates and innovation. Why does it matter? What does it mean for you?
POLICY
Acceleration for low carbon liquid fuels
The low carbon liquid fuels (LCLF) industry will be a key beneficiary of the AUD 1.7 billion Future Made in Australia Innovation Fund, with the Federal Government allocating AUD 250 million to accelerate its domestic growth.
LCLFs, which can be produced sustainably from waste materials, biomass such as agricultural feedstocks, or renewable hydrogen, were identified as a priority in the Government’s Future Made in Australia agenda last year. The funding will be provided as grants to support pre-commercial innovation, demonstration and deployment, and administered by the Australian Renewable Energy Agency (ARENA).
Last year, IFM Venture, Ampol and GrainCorp signed a Memorandum of Understanding (MoU) to explore the establishment of a domestic integrated renewable fuels supply chain (read more on the MoU in the October 2024 edition of ESG Impact). Under the MoU, the partners are progressing a feasibility assessment for a renewable fuel facility at Ampol’s Lytton Refinery in Brisbane and exploring the use of homegrown feedstocks like canola oil.
Why does it matter?
The funding announcement supports efforts to establish an Australian LCLF industry and provides a further policy signal to drive investment in local production capacity and feedstock supply chains.
LCLFs may help to decarbonise hard-to-abate sectors of the economy, including transport, mining, agriculture and construction. Electrification may not be a viable decarbonisation pathway for these industries, and those that remain reliant on liquid fuels are projected to account for close to 20 per cent of Australia’s emissions to 2030, according to the Federal Government’s Low Carbon Liquid Fuels Consultation Paper released in June last year. They are also projected to remain reliant on liquid fuels, in particular aviation fuel and diesel, to 2050.
The development of low carbon fuels has the potential to drive economic growth and jobs in regional areas. It may support diversification in agriculture by making good use of excess feedstock from crops, sugarcane and waste products such as tallow.
The investment in a wider domestic LCLF industry also builds on the momentum of the Sustainable Aviation Fuel Funding Initiative, which has seen the Federal Government invest AUD 33.5 million across five projects to date. These include LCLF production facilities in Bundaberg and Townsville, as well as enabling the supply of sustainable aviation fuel at Brisbane Airport.
Accounting for ecosystems
How do you put a value on nature and the benefits it brings to people? Australia’s first National Ecosystem Accounts help to answer this question for both business and governments.
Released by the Australian Bureau of Statistics, the National Ecosystem Accounts track how the environment has changed over time, and what this means for the economy and the wellbeing of citizens. Five ecosystem services were assessed and key questions were considered, such as the condition of ecosystems, which services they provide and the value of the benefits they provide.
The accounts show that for 2020–21, services provided by Australia’s ecosystems included:
- Water supply: 10.4 million megalitres of surface water was provided for drinking and use as a material at a value of AUD 1.4 billion. A further 48.4 million megalitres of surface water was used as an energy source.
- Climate regulation: 34.5 million kilotonnes of carbon was stored by selected ecosystems, with a value of AUD 43.2 billion.
- Grazed biomass: 111.2 million tonnes of forage was provided, worth AUD 40.4 billion.
The accounts will be updated each year, and will be improved over time to meet various needs.
Why does it matter?
Natural capital accounting aims to quantify nature’s contribution to organisations and society, to inform decision-making, and environmental policies.
Australia’s National Ecosystem Accounts follow international guidelines from the United Nations System of Environmental-Economic Accounting and help the Federal Government to report against the country’s global commitments, such as the National Biodiversity Strategy and Action Plan. They also inform the community about the extent and quality of their environment and assist with natural resource management by helping to understand the optimal balance between productivity and environmental outcomes.
Another benefit is the provision of measurement frameworks for private sector investment. And, with nature and biodiversity reporting on the horizon, they can also help businesses to understand their dependencies on natural resources and to mitigate risks in their supply chains.
Green hydrogen charges ahead
The Australian Renewable Energy Agency (ARENA) has pledged AUD 800 million in production credits to a project in remote Western Australia as part of its Hydrogen Headstart fund.
The first project to secure backing from the multi-billion dollar fund, Copenhagen Infrastructure Partners’ (CIP) Murchison project aims to use solar and wind-powered hydrogen to produce and export up to 900,000 tonnes of green ammonia each year in its first stage. The Federal Government has stated that this volume is equivalent to almost half of Australia’s current ammonia production from fossil fuels.
Starting by early 2030, it will target hard-to-abate sectors such as oil refining and chemicals, fertilisers, green steel and iron production, and the project’s renewable ammonia could be exported to Japan, the Republic of Korea, Singapore or Europe.
Water for the project will come from a new desalination plant. Stage one is planned to be powered by 1,200MW of solar Photovoltaic, 1,700MW of onshore wind and 600MW/2-hour battery energy storage system.
Why does it matter?
Green hydrogen is produced using renewable energy sources like wind or solar power and may be a lever in the decarbonisation of many hard-to-abate sectors.
For example, it may be used in the production of green iron and green ammonia by replacing fossil fuels. It may also be used in transport via hydrogen fuel cell vehicles. CIP forecasts that the Murchison project could create approximately 3,600 construction jobs at its peak and 600 ongoing jobs.
Analysis by the Department of Climate Change, Energy, the Environment and Water (DCCEEW) shows Australia’s hydrogen industry could unlock more than AUD 50 billion in private sector investment and create up to 16,000 new jobs by 2030. To date, ARENA has provided more than AUD 370 million to 65 renewable hydrogen projects from early-stage research to deployment projects.
INDUSTRY
Mining giant seals solar and battery hybrid services deal
Mining giant Rio Tinto has signed a significant solar and battery storage deal with Australian company Edify Energy to increase the supply of renewable energy and storage to its Gladstone aluminium operations. These operations include the Boyne smelter and the Yarwun and Queensland alumina refineries, which are among Australia’s biggest consumers of energy.
The battery storage of 600 MW and 2,400 MWh is a standout feature of the deal, with Rio Tinto Chief Executive, Australia, Kellie Parker stating in a media release: “For the first time, we have integrated crucial battery storage in our efforts to make the Boyne aluminium smelter globally cost-competitive, as traditional energy sources become more expensive.”
Why does it matter?
The International Energy Agency (IEA) estimates that aluminium accounts for 3 per cent of the world’s direct industrial CO2 emissions. The deal between Rio Tino and Edify Energy secures more renewable energy for aluminium production, and reflects the downward trend in battery costs.
A recent IEA report shows global battery demand is rising sharply and prices continue to decline. In Australia, data from CSIRO’s GenCost 2024-25 report reveals costs have plunged more than 20 per cent in the last 12 months.
The hybrid solar-battery arrangement can provide renewable energy for Rio Tinto’s aluminium operations well into the evening, lessening its dependency on traditional energy sources. And, when combined with the power purchase agreements for its Gladstone operations announced in 2024, Rio Tinto has stated that the projects will reduce its Boyne smelter’s annual scope 1 and 2 emissions by 70 per cent, or 5.6Mt of carbon dioxide equivalent per year. It notes that this is the equivalent of removing about 2 million internal combustion engine cars from the road.
The aluminium industry’s green energy transition is also being supported for the Federal Government’s AUD 2 billion Green Aluminium Production Credit, which offers targeted support to aluminium smelters moving to renewable energy by 2036.
INNOVATION
Planned cable project signals strong new link for Australia and NZ
Could Australia and New Zealand be set to forge a deeper connection? Far North Solar Farm, a New Zealand renewables developer, has announced an ambitious plan to build a 2-3 GW capacity high-voltage cable linking the two nations to facilitate the day-to-day trading of electricity.
The Taslink venture’s submarine cable would extend 2,600km across the Tasman Sea and help to boost generation and transmission capacity in both markets. With an expected cost of more than AUD 10 billion, the subsea cable would be the deepest and longest of its kind in the world.
Why does it matter?
The Taslink project aims to increase generation and transmission capacity in the Australian and New Zealand markets. By taking advantage of the time difference between the two countries, it may allow for the two-way trade of electricity to match peak and off-peak periods.
Speaking to Radio New Zealand this month, Farm North Solar Farm director Richard Homewood explained that Taslink's goal was to buy power from one country at a cheaper rate and then sell it to the other, taking advantage of the differing time zones and climates.
“The thing about New Zealand and Australia is that we have a two-hour time difference, so we have a morning peak followed [two hours later] by Australia’s morning peak. We also have our peak demand in winter [for heating], when we have cold and dry winters, whereas Australia has the highest demand on hot days in summer [for cooling].”
If the project goes ahead, it may support the increase of wholesale supply and retail competition and accelerate the development of renewable energy in both Australia and New Zealand.
WESTPAC IN ACTION
Australia’s first Social Tailored Deposit
Westpac has announced the launch of Australia’s first Social Tailored Deposit, a medium to long term investment product (1-5 years) with a minimum transaction amount of AUD $1 million, designed for customers seeking investments that are focussed on delivering improved social outcomes.
Westpac’s Social Tailored Deposit is aligned to the bank’s Sustainable Finance Framework and has been designed to link with assets that meet the International Capital Market Association (ICMA) social bond principles.
Finance from the deposits will be directed to initiatives that promote access to essential services, affordable housing or accelerate socioeconomic advancement and empowerment.
South Australia Power Networks' (SAPN) Green Bond
Westpac acted as a Joint Lead Manager on SA Power Networks’ $535m green bond issuance. Proceeds will go towards financing distribution assets that support South Australia’s transition to a distributed and decarbonised energy system, in line with SAPN’s Sustainable Financing Framework.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
ESG Impact: What you need to know - April 2025
ESG Impact: What you need to know January 2025
Browse topics
Disclaimer
©2025 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view our privacy statement at Westpac.com.au. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by the Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz .
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM andobligations of WCM do not represent liabilities of Westpac. This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK and EU: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
Westpac Europe GmbH (“WEG”) is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.