Sustainability Impact October – What you need to know
The latest edition of Sustainability Impact explores proposed reforms to Australia’s modern slavery laws and potential changes to climate disclosure requirements. We also examine the rising economic risks facing Australia’s coastal communities, progress towards lower-emissions ironmaking in the Pilbara, innovative approaches to turning waste into fuel and more.
POLICY
Strengthening corporate accountability for modern slavery
The Federal Government is seeking to strengthen Australia’s modern slavery laws with the potential introduction of a new ‘failure to prevent’ criminal offence. A recent consultation paper invited feedback on the design of the new law, which would apply to companies with more than AUD 100 million in annual consolidated revenue.
Along with enhancing corporate accountability for preventing modern slavery in supply chains, proposed reforms seek to improve protections for workers vulnerable to exploitation and create a level playing field for businesses that take meaningful action to identify, manage and address modern slavery risks.
The consultation, which closed on 25 September, also sought views on alternative enforcement options, such as a deferred prosecution agreement (DPA) scheme and remedies for victims. It follows the government’s announcement in July this year of its intention to strengthen Australia’s response to modern slavery in supply chains by enhancing accountability and promoting effective risk management.
Why does it matter?
When undetected, modern slavery can become embedded in company supply chains, which continues the violation of human rights. Walk Free’s Global Slavery Index shows an estimated 50 million people were living in modern slavery in 2021, which is 10 million more than in 2016. If implemented, the proposed reforms may enhance corporate accountability and set the standard for modern slavery frameworks across value chains.
The proposed reforms will be complemented by practical guidance and education to help companies better identify, manage and remediate modern slavery risks in their supply chains, while demonstrating reasonable steps to address them.
Changes ahead for climate disclosure
The Federal Government is consulting on proposals toimprove the efficiency of climate-related financial disclosures, after identifying opportunities to refine existing processes and requirements following the first year of reporting for Group 1 entities.
The consultation, which closed on 2 October 2026, focuses on a more flexible assurance framework, clearer guidance and definitions for existing requirements and making value-chain information requests more consistent and predictable.
The consultation follows recent federal budget measuresto double large proprietary company thresholds to AUD 100 million of consolidated revenue and AUD 50 million of consolidated gross assets. This change aims to relieve reporting burdens for some smaller companies that were previously captured under Group 3 reporting definitions.
Why does it matter?
Standardised climate-related reporting requirements improve transparency and data quality while aligning Australia with global standards. However, new reporting processes and standards often come with teething problems, and observations following the first year of reporting have highlighted a need for refinement and simplification.
For example, early reporting experience and broader market feedback indicate that Scope 3 data collection remains a significant implementation challenge. The consultation proposes that the Government develop or collect reputable domestic emissions factors to provide the market with more accurate secondary data, which may reduce the need for reporting entities to collect primary data for metrics such as Scope 3 emissions.
The climate disclosure consultation also comes as the Government reviews other key climate policy settings, including the Safeguard Mechanism, where consultation closed on 18 September, signalling that Australia's climate and reporting frameworks continue to evolve.
INDUSTRY
The rising cost of coastal risk
New research from the University of Melbourne and Australian National University provides the first national-scale assessment of the impact on land use and assets from sea level rise and storm surges across Australia’s coastal sub-regions.
Using the Intergovernmental Panel on Climate Change (IPCC)’s climate scenario RCP4.5, which is considered to be an intermediate stabilisation scenario, the research projects that 267,500 properties and 2 million hectares will be affected by the end of the century, with total economic losses across the country reaching just over AUD 855 billion.
The findings also highlight the potential for coastal impacts to extend beyond individual properties and communities, with average annual damages under this scenario estimated to reduce national GDP by 1.05–1.39 per cent.
Why does it matter?
The latest State of the Environment report shows approximately 87 per cent of Australians – more than 22 million people – live within 50 km of the coast, and 56 per cent of species listed as nationally threatened under the Environment Protection and Biodiversity Conservation Act are found within coastal zones.
The research, led by University of Melbourne Professor Tom Kompas, highlights an urgent need for preparation and risk mitigation. Professor Kompas notes that because carbon emissions “have remained too high”, we have already “locked in a certain level of sea level rise”.
“Our least costly option is to avoid building in places where we know the risks are highest, and there’s a lot we can do to restore our coastlines and build in ways that reduce future risks,” he states. “These are hard, but necessary decisions that communities are already facing.”
The research does not account for the possibility of rapid ice-sheet collapse in Greenland or West Antarctica, which could substantially increase sea-level rise and associated economic losses.
INNOVATION
Testing the future of green iron
Mining giant Fortescue has reached a milestone in its push to develop lower-emissions iron, producing its first hot metal at its Christmas Creek green iron demonstration plant in Western Australia’s Pilbara in August.
The achievement marks progress for the company’s Green Metal Project, which aims to develop a pathway to produce iron from Pilbara ore with lower emissions than conventional blast-furnace production.
The pilot-scale facility combines hydrogen-based direct reduction technology with electric smelting as a potential alternative to the coal-intensive processes traditionally used to produce iron. The first hot metal was produced using a blended feedstock, demonstrating the successful operation of the plant’s electric smelting furnace. Further testing will be required to optimise the process and assess its suitability for producing green metal using Pilbara iron ore feedstocks.
Why does it matter?
Iron and steel production accounts for approximately 7–8 per cent of global anthropogenic greenhouse gas emissions, with most coming from carbon dioxide. Conventional blast furnace-basic oxygen furnace (BF-BOF) steelmaking remains the most emissions-intensive mainstream production route and is the primary approach for processing Pilbara hematite ore into steel.
For Australia, the shift also presents an opportunity to capture more value from its resources domestically. Pilbara hematite is Australia’s largest iron ore export, and Fortescue’s Green Metal Project is exploring whether it can instead be processed into lower-emissions iron in Australia.
The project reflects growing industry investment in alternative production technologies and the potential for Australia to use its abundant renewable energy resources to develop higher-value, lower-emissions metal products for export.
Turning waste into fuel
Could an Australian-based biotech company help bolster fuel security and close the loop on soft plastics? Licella’s work on addressing some of the most hard-to-abate challenges led to it winning the resources and energy category of the 2026 Financial Review Sustainability Leaders.
Licella’s hydrothermal liquefaction (HTL) platform uses hot, highly compressed water to convert solid feedstocks into oil. Biomass from forestry or agricultural residues can be refined into renewable diesel, marine fuel or sustainable aviation fuel (SAF), while end-of-life plastic becomes oil that can be recycled back into food-grade packaging.
The company and its partners received AUD 8 million funding from ARENA for ‘Project Swift’ – a feasibility study for a biorefinery in Bundaberg that would convert sugarcane residues into up to 60 megalitres (ML) of low-carbon liquid fuels a year, with 65 per cent targeted for SAF. Licella estimates it could supply around 7 per cent of the Australian domestic airline industry’s 2030 SAF commitment, while producing fuel with around 80 per cent lower carbon intensity than conventional alternatives.
On the plastics side, Licella also partnered with Amcor to progress construction of Advanced Recycling Victoria, one of Australia’s first advanced recycling facilities. Once constructed, it will initially process about 20,000 tonnes per year of waste plastic, diverting it from landfill or incineration.
Why does it matter?
Aviation is a hard-to-abate sector and current SAF solutions rely on feedstocks such as used cooking oil and tallow, which are limited in supply. Licella’s technology uses agricultural and forestry residues, which Australia has in abundance. This has the potential to turn bio-waste from a disposal cost into a potential revenue stream for sugar, forestry and agricultural businesses, while supporting domestic fuel security.
Based on data from Australian Packaging Covenant Organisation’s (APCO), flexible plastics have the lowest recovery rate of any packaging material in Australia at just 6 per cent, with only 1 per cent post-consumer recycled content going into new packaging. Advanced recycling facilities are the kind of domestic reprocessing capacity needed to close that gap.
WESTPAC IN ACTION
Weighing up renewable energy options for business
How can businesses navigate the range of options for securing renewable electricity?
Different procurement models bring different levels of cost certainty, risk, flexibility and complexity, and a recent Westpac webcast brought together ERM sustainability experts to explore five approaches. From power purchase agreements and on-site generation to GreenPower and renewable certificates, the discussion looked at the practical trade-offs involved and what businesses should consider when developing an electricity sourcing strategy.
With Australia’s energy market continuing to evolve, understanding the options can help businesses make more informed decisions. Read the wrap of the event here.
The critical minerals race from supply to resilience
As countries compete to secure critical minerals for the energy transition, advanced manufacturing and defence, Australia is strengthening domestic supply chains and processing capability. The article explores how government support, strategic partnerships and long-term offtake agreements are helping unlock investment in the sector. It also highlights how Westpac can support eligible projects through financing, transaction banking and risk management solutions to help build resilient supply chains. Read the article here.
Global sustainable finance market looks past volatility
Geopolitical uncertainty and a backlash against ESG in the US haven’t dampened investor appetite for sustainable finance.
At a recent Sustainable Finance Breakfast hosted by Westpac Institutional Bank, Sean Kidney, the Co-Founder and Chief Executive of the Climate Bond Initiative, said global sustainable bonds outstanding are about to hit USD 8 trillion.
The development of taxonomies of sustainable finance – which define eligible investments and actions – in countries including Australia is driving investor confidence and lowering transaction costs, Kidney reports. Read the wrap of the event here.
El Niño: Risk and Impact Outlook
A strong El Niño has been declared and is expected to last into mid-2027, raising the risk of hotter, drier conditions that could affect supply, input costs and prices across the food and agriculture supply chain. In Australia, our Quarterly Agriculture Report finds winter crops and livestock most exposed. In New Zealand, our El Niño analysis puts the biggest risk on dairy, sheep and beef, although is best viewed as a risk to monitor.
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