ESG Impact: What you need to know – May 2025
This month’s ESG Impact delves into Air New Zealand’s emissions target, the acceleration of electric vehicles across the globe, an innovation in solar thermal energy, new guidance for company directors on what to ask about nature-related risks, and more.
INDUSTRY
Air New Zealand publishes new emissions guidance
In an update to its carbon emissions reduction approach, Air New Zealand has published new 2030 Emissions Guidance, which provides an assessment of the airline’s progress towards its 2050 net-zero carbon emissions target.
The publication comes almost a year after the company announced that it would remove its 2030 science-based ‘well-to-wake’ carbon intensity reduction target and withdraw from the Science Based Targets initiative, citing that many of the levers required to meet the target were outside of its control.
The airline’s Emissions Guidance statement includes an expectation for its net ‘well-to-wake’ greenhouse gas emissions from jet fuel to fall by 20-25 per cent by 2030 (from a 2019 baseline). Well-to-wake emissions cover jet fuel production, distribution and combustion in flight, which comprise 92 per cent of the airline’s annual emissions.
Why does it matter?
Data from the International Energy Agency (IEA) shows that the aviation industry accounts for 2.5 per cent of global energy-related CO2 emissions. However, decarbonisation of this hard-to-abate sector is largely dependent on levers that are emerging or evolving.
In the case of Air New Zealand, these include the cost and availability of sustainable aviation fuels, access to new aircraft for fleet renewal initiatives, and regulatory and policy support.
Air New Zealand’s Emissions Guidance will be updated annually and will reflect the airline’s expected net emissions by 2030, based on factors such as external market conditions, as well as global and domestic policy developments. This signals the airline’s commitment to transparency around its decarbonisation progress, with its Chief Sustainability and Corporate Affairs Officer Kiri Hannifin describing it as a “critical stepping stone” to achieving its net-zero carbon emissions by 2050.
EV sales powering up
It’s full speed ahead for battery electric and plug-in hybrid electric vehicles. A new report from the IEA indicating they’re on track to exceed 40 per cent of global market share by 2030. With EV sales continuing to grow, more than one in four cars sold globally this year is set to be electric.
In 2024, EVs’ share of the global car market exceeded 20 per cent for the first time and, in the first three months of this year, their sales were up 35 per cent year-on-year. EVs are becoming increasingly affordable, thanks in part to increased competition and declining battery costs. China continues to lead the market, with EVs making up almost half of all car sales in China for 2024.
The IEA’s report also notes an 80 per cent increase in global sales for electric trucks in 2024. They now account for close to two per cent of all truck sales worldwide. This growth is supported by new research from the Economics of Energy Innovation and System Transition project (EEIST), which shows that parity for the total cost-of-ownership between diesel and battery electric commercial vehicles is on the horizon.
The report notes that in some regions and vehicle categories, such as heavy- and medium-duty trucks in China, EVs are already cheaper over their lifetimes than their diesel counterparts. It estimates that cost parity in other regions should be reached before 2033.
Why does it matter?
While the switch to electric is well underway for cars, the transition for heavier vehicles like trucks has proved more challenging. Approximately two-thirds of land freight globally is carried by road, and road freight accounts for close to six per cent of global CO2 emissions.
In Australia, the transport sector is the third largest source of greenhouse gas emissions, representing 21 per cent of national emissions in 2023. The sector is also projected to be the country’s biggest emitter by 2030, with its greenhouse gas emissions increasing by 19 per cent since 2005.
Market share for EVs in Australia is growing, with data from the Electric Vehicle Council showing almost one in 10 new car sales in 2024 were EVs. Meanwhile, truck manufacturers across the globe are investing in the development of electric vehicle technology, with the EEIST report noting that 750 electric truck models are now available in China, Europe and North America.
INNOVATION
Solar thermal energy goes lightweight
Industry and academia have teamed up to develop and trial clean-energy technology for the nation’s industrial heat sector.
Drawing on Federal Government funding from Australia’s Economic Accelerator (AEA) Ignite program, the University of South Australia (UniSA), Charles Sturt University and Impacts Renewable Energy Pty Ltd have announced plans to deploy a concentrated solar thermal project that uses proprietary plastic mirror technology to generate enough heat for several heavy and agricultural industries.
Created through patented UniSA technology, the lightweight mirror panels, which can be flat-packed and transported, may present an affordable alternative to traditional glass-based solar thermal systems. Researchers say the technology can generate heat used for industrial processes. It may also be used to heat water to create the steam required to power a turbine and produce electricity.
Why does it matter?
Industrial-process heat accounts for 25 per cent of global energy use and 20 per cent of CO2 emissions. While renewable energy technologies such as photovoltaics have been unable to meet the high temperature demands of the industrial and agricultural sectors, this new technology may present an alternative to fossil fuels.
It aims to generate solar thermal energy at temperatures between 100°C and 400°C, which is ideal for processes such as food production, grain and pulse drying, mining sites, polluted groundwater remediation and wastewater treatment. Project lead Dr Llusca Jane says the technology has potential to reduce the cost of renewable process heat for agribusiness and industry by 40 per cent.
The second stage of the project will see a commercial-scale pilot tested with agribusiness and industrial partners. If successful, it may unlock new export opportunities for Australian renewable thermal energy technology and manufacturing.
POLICY
Board directors nature guidance
What questions should board directors be asking about nature-related risks? The Taskforce on Nature-related Financial Disclosures (TNFD) offers some advice in its first Asking Better Questions on Nature guide.
Created in collaboration with Chapter Zero, Competent Boards, Commonwealth Climate and Law Initiative and Green Finance Institute, the guide aims to assist board directors in gaining insights into nature-related issues that may help to inform decision making and be integrated with companies' governance, strategy, risk management and capital allocation practices.
The guide features 12 key questions to consider in meetings, including:
- What is the interplay between our nature- and climate-related dependencies, impacts, risks, and opportunities?
- How are we engaging with our value chain and Indigenous Peoples, Local Communities, affected and other stakeholders to understand their views with respect to our nature-related issues?
- How do we expect our understanding of nature-related issues to change over time in our sector and in the markets and locations in which we operate?
- Are we up to date with shifting regulatory developments, both voluntary and mandatory, industry standards and investor expectations across the jurisdictions in which we operate?
Why does it matter?
The WWF’s Living Planet Report 2024 estimates that globally over half of GDP (55%) or USD58 trillion is moderately or highly dependent on nature and its services. And while climate risks have captured the attention of boardrooms, nature-related risks and opportunities are now emerging as strategic business concerns.
Many businesses’ operations are heavily dependent on nature for raw materials and ecosystem services, such as clean water and healthy soil. The TNFD guide aims to help board directors to identify the nature-related issues, including dependencies and impacts.
Other questions in the TNFD guide include whether a board has the requisite skills and experience to manage nature-related issues, and whether it is confident that it can fulfill its nature-related legal duties across the jurisdictions in which it operates.
WESTPAC IN ACTION
Sustainable finance market update
The early months of 2025 were shaped by global economic volatility – find out what it meant for the sustainable finance market in Westpac IQ’s latest market update. It includes details on recent transactions, updates on the principles that govern sustainable finance loan markets, as well as a spotlight on the Sustainable Blue Economy. You can read the Sustainable Finance Market Update - Q1 25 here.
Many happy social returns? Tackling ESG’s latest challenge
Leading organisations are forging ahead with the complex task of evaluating their social impact. At a recent Westpac Institutional Bank roundtable event, some of Australia's sustainability frontrunners explained how.
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