Sustainability Impact: What you need to know - February/March 2026
The latest edition of Sustainability Impact explores early findings from Group 1 AASB S2 reporters, recommendations from the Australian Government’s Carbon Leakage Review, the new clean energy partnership between Australia and Canada, a potential breakthrough for green hydrogen, and a project that brings together renewable energy uplift, housing affordability and regional prosperity, plus more.
POLICY
Early findings from Group 1 climate reporting
Mandatory climate-related disclosures represent a learning curve for all organisations required to report under AASB S2. KPMG has published its early findings on the disclosures of the first wave of 30 Australian Group 1 entities, for the year ending 31 December 2025.
The report shows there is a strong focus on governance and the integration of climate risk management. Almost all entities (97%) assigned oversight of climate-related risks and opportunities to an audit or risk committee, and more than half linked executive pay to climate considerations.
Reporting on climate-related risks varies widely, with those in the energy, metals & mining sectors covering a broader range of risks. While more than half of the reports included some quantification for at least one of the disclosed climate-related risks, this remains an area for further maturity.
Scope 1 and 2 emissions reporting is relatively consistent, reflecting established reporting frameworks and existing National Greenhouse and Energy Reporting Scheme obligations. By contrast, only 33% disclosed Scope 3 emissions, highlighting ongoing value-chain complexity. More than 65% of entities – mostly from metals, mining and energy - disclosed emissions-related targets, and just over half of these targets are net-zero commitments.
When it comes to assurance, 27% have gone beyond minimum requirements, mostly in the energy sector.
Why does it matter?
Mandatory AASB S2 reporting requirements are top of mind for many Australian corporates. KPMG’s early findings provide a useful insight on emerging disclosure practices as well as the areas where progress is required.
The report highlights the importance of governance in strengthening internal controls to support decision useful disclosures. The variation in disclosures also reinforces that climate impacts and reporting maturity differ by sector and entity, particularly in the first year of implementation.
For those entities yet to report under AASB S2, these findings offer some practical considerations that could inform and support their preparation.
Curbing carbon leakage
Could Australia’s carbon policies be contributing to ‘carbon leakage’? This was a key question explored in the Carbon Leakage Review released by the Department of Climate Change, Energy, the Environment and Water in February 2026.
Carbon leakage describes the process where the production of emissions-intensive trade-exposed commodities shifts to countries with less stringent emissions reduction policies. The review, based on consultation with Australian and overseas stakeholders between 2023–2024, examined the scale of this risk across emissions-intensive, trade-exposed industries and evaluated whether additional policy measures were required.
The findings note that existing policies, particularly the Safeguard Mechanism, are effective at limiting carbon leakage risks in the short-to-medium term, but that more targeted measures may be required as emissions limits are tightened and international competition intensifies.
A key recommendation of the report is the introduction of a border carbon adjustment (BCA) for high-risk imported goods, noting that any proposed mechanism should mirror the Safeguard Mechanism’s scope, avoid export rebates and remove Trade Exposed Baseline Adjustment (TEBA) provisions for affected commodities. It also recommends that the introduction of a BCA be staged, starting with cement and clinker.
Why does it matter?
By addressing carbon leakage, the report aims to strengthen the long-term effectiveness of industrial decarbonisation policies and future emissions reductions. This may also support the emergence of Australian lower carbon commodity production and exports, positioning the country as a major contributor to global industrial decarbonisation.
The report’s recommendations will be considered in the 2026–27 Safeguard Mechanism review.
Australia and Canada form clean energy partnership
Australia and Canada have teamed up on climate action, signing a new Clean Energy Partnership that aims to maximise economic opportunities of ‘clean energy’ while addressing the significant challenge of climate change.
The first clean energy partnership between the two countries, it focuses on five key areas:
- trade, investment, standards and supply chains;
- grid modernisation and resilience;
- energy and hard-to-abate sectors;
- Indigenous engagement; and
- climate change adaptation.
The partnership was formalised during Canadian Prime Minister Mark Carney's recent visit to Australia.
Why does it matter?
The two energy and resources rich Commonwealth nations have much in common. Australia and Canada are both highly exposed to extreme weather events, including extreme heat, floods and wildfires, which are expected to worsen due to shifting climate systems.
Climate adaptation will play a significant role in building resilience for both countries. Natural disasters are estimated to already cost the Australian economy AUD 38 billion a year. In Canada, extreme weather events are estimated to cost around CAD 25 billion in 2025.
Both Australia and Canada also share a commitment to the inclusion and economic participation of Indigenous peoples in the clean energy transition. The partnership aims to support the efforts and outcomes of Australia's First Nations Clean Energy Strategy and Natural Resources Canada’s engagement with Indigenous stakeholders in clean energy projects.
The partnership also reaffirms both nations’ commitment to the Paris Agreement, as well as ongoing work under the United Nations Framework Convention on Climate Change.
ACCU Scheme reform update
Reform of Australia’s Australian Carbon Credit Unit (ACCU) Scheme is well underway with a new report outlining progress made between 2023 to 2025. Reforms follow the Independent Review of Australian Carbon Credit Units (known as the Chubb Review), which was commissioned in 2022 by the Federal Government to assess the scheme’s transparency and credibility.
Key reforms implemented to date include appointing the first full-time Chair of the Emissions Reduction Assurance Committee (ERAC) to improve oversight; implementing a proponent-led approach to method development that enables innovation while maintaining integrity; amending the Carbon Farming Initiative (CFI) Act to increase public disclosure and transparency; and taking action to ensure the integrity of existing methods and strengthening assurance processes.
The government has planned further legislative amendments to embed reforms, as well as improvements to Clean Energy Regulator data services and usability.
Why does it matter?
The Federal Government has allocated AUD 66.1 million over five years to progress reforms recommended by the Chubb Review.
Strengthening the integrity of the ACCU Scheme may build confidence in the legitimacy of credited abatement, enabling ACCUs to play a larger role in Australia’s emissions reduction and net-zero strategies. Improving its methods and participation may also support emissions reductions in sectors where direct decarbonisation is more challenging, such as agriculture and industrial processes.
Greater transparency and governance may also reduce reputational and integrity risks, encouraging capital to flow into emissions reduction and carbon sequestration projects. The report also highlights a commitment to supporting innovation in emissions reduction methods, as well as embedding cultural and economic benefits for First Nations peoples and promoting non‑carbon benefits of ACCU projects, alongside the Nature Repair Market.
INNOVATION
Green hydrogen sees the light
Researchers at the University of Sydney have developed a method to harvest hydrogen from water using liquid metal and sunlight, circumventing the high energy input of traditional electrolysis.
The process uses microparticles of the metal gallium suspended in sea or fresh water. When exposed to light, the gallium reacts with water to produce hydrogen gas and gallium oxyhydroxide. While many current electrolysers require purified water, this technique can generate hydrogen from both freshwater and seawater, and the gallium can be fully recovered and reused to create a circular, minimal waste process.
Initial trials recorded a solar-to-hydrogen efficiency of 12.9 per cent, which the researchers describe as an impressive starting point. Their proof-of-concept has been published in the journal Nature Communications and they are seeking to scale up to a mid-sized hydrogen reactor.
Why does it matter?
Green hydrogen has an important role to play in the transition to renewable energy - especially for industries that are difficult to electrify, such as steel, chemicals and shipping. However, its high cost of production, including high renewable electricity input and the capital expenditure associated with electrolysers, has been an obstacle to widespread adoption.
Accordingly, exploring different technological pathways is key to identifying scalable solutions. If commercialised, this novel technology could provide a sustainable way to produce green hydrogen using abundant seawater and solar energy, and without grid electricity, conventional electrolysers or purified water.
A potential barrier, however, is a shortage of gallium, a valuable metal also used in advanced semiconductors in radar systems and telecommunications. Gallium is part of Australia’s AUD 1.2 billion Critical Minerals Strategic Reserve, announced in January this year, which seeks to secure the supply of key minerals vital for the economy, national security and the Future Made in Australia agenda.
INDUSTRY
Renewable investment addresses housing affordability
A major renewable investment is seeking to deliver long-term social infrastructure with the announcement of The Pines Wind Farm Affordable Housing Project in Oberon in the Central Tablelands of NSW.
TagEnergy, developer of the region’s proposed 2GW ‘The Pines’ wind farm, has partnered with BlueCHP, a tier‑one community housing provider, to deliver a minimum of 100 permanent affordable housing beds in the town as part of the project’s community benefits.
The housing will initially accommodate around 20 per cent of the wind farm’s construction workforce, reducing pressure on the local rental market during construction, before transitioning into permanent affordable housing owned and managed by BlueCHP under a build‑to‑rent model. TagEnergy will provide capital and ongoing funding to subsidise the delivery and long‑term affordability of the homes.
The proposed wind farm project represents a major clean energy and firming asset for NSW. Located across state‑owned softwood pine plantations, it includes plans for a large four‑hour battery.
Why does it matter?
This partnership signals a shift in how renewable energy projects share benefits with host communities, tackling a key social and planning barrier to large‑scale renewable deployment while helping NSW meet its clean energy and emissions reduction targets faster.
By linking wind farm development to new‑build affordable housing in regional Australia, the project also shows how private capital can help alleviate regional housing shortages without relying solely on government funding. It also seeks to reduce pressure on the local rental market during project construction while boosting supply after completion.
The partnership has been described as Australia’s first renewable‑led, new‑build affordable housing development and it demonstrates how embedding long‑term social infrastructure alongside renewable assets improves social licence, reducing opposition and delays that can otherwise slow Australia’s transition to net-zero.
WESTPAC IN ACTION
Westpac’s inaugural Clothing Swap
Westpac’s Employee Advocacy Groups (EAGs) support and encourage Westpac’s diverse and inclusive workplace in taking action now to create a better future. The Women of Westpac’s Employee Action Group (EAG) recently brought sustainability to life with a clothing swap - a fun, practical way to engage employees in circular solutions while strengthening connection.
The event also spotlighted fashion’s significant environmental footprint. Australians buy an average of 56 new clothing items per person each year, with more than 300,000 tonnes discarded annually. Around 222,000 tonnes end up in landfill - almost four times the weight of the Sydney Harbour Bridge. The swap offered a simple alternative: refreshing wardrobes in a way that was affordable, social and lighter on the planet.
In addition, items were donated to event partner Fitted for Work, an Australian not-for-profit supporting women and nonbinary people experiencing disadvantage through professional clothing, career support and mentoring. In total, clothing donated will avoid over 9,000 kg of CO₂e1 by reusing rather than buying new. That’s equivalent to more than 90,000 hours of Netflix streaming - showing how small, collective actions can deliver a meaningful sustainability impact.
NBN Co Limited
NBN Co Limited successfully issued its inaugural Australian dollar sustainability bond in March 2026, raising A$850m and marking a key milestone in the evolution of its domestic funding programme. Westpac was proud to act as Joint Lead Manager on the transaction, supporting NBN’s continued access to the labelled bond market and its broader sustainability objectives.
Meridian Energy
Meridian Energy issued a A$400m 7-year Green Bond on 31 March under its recently updated Green Finance Framework. Meridian is understood to be the first NZ issuer, and second issuer to date, to verify alignment of its eligibility criteria to the technical screening criteria of the Australian Sustainable Finance Taxonomy. Westpac was JLM and Sustainability Coordinator.
Mercury NZ
Mercury NZ issued a NZ$250m 7-year Green Bond on 1 April. The Green Bond is certified under the Climate Bonds Standard and issued under Mercury NZ’s recently updated Green Financing Framework. Westpac was Arranger, JLM and Green Bond Co-ordinator.
1 Avoided emissions from clothing reuse are estimated at ~20–25 kg CO2e per kg, consistent with WRAP and peer reviewed studies.
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