This month saw major regulatory shifts and industry commitments aimed at addressing indirect emissions, securing water resources, and strengthening ESG risk management in supply chains. Key developments include:
- Tighter Scope 3 emissions regulations: Companies are now required to disclose and reduce indirect emissions across their value chains.
- Increased focus on water stewardship: Mining and construction firms are adopting strategies to mitigate water-related risks.
- Heightened supply chain ESG scrutiny: Investors and regulators are holding companies accountable for environmental and human rights violations in their supply chains.
With new regulatory frameworks and shifting investor expectations, businesses must act decisively to remain compliant and competitive.
Scope 3 Emissions: Stricter Reporting and Reduction Mandates
Scope 3 emissions—indirect emissions from suppliers, transportation, and product use—account for the majority of emissions in sectors like mining and construction. Governments are now tightening reporting requirements and setting reduction targets.
Case Study: The Australian Securities and Investments Commission (ASIC) announced it will audit ASX-listed companies for incomplete or misleading Scope 3 disclosures, particularly in resource-intensive industries (ASIC, 2023).
Industry Response
- Rio Tinto committed to reducing Scope 3 emissions from steel production by working with steelmakers on low-carbon technologies.
- Fortescue Metals is shifting to green hydrogen exports to help customers reduce fossil fuel reliance.
- Boral launched an eco-friendly cement line, lowering downstream carbon emissions from concrete production.
Water Stewardship: Managing Scarcity and Regulatory Compliance
Water scarcity is becoming a major risk for mining and construction operations, with tighter regulations on water use, discharge, and contamination. Governments are introducing higher water tariffs and stricter allocation rules.
Case Study: The Queensland Government introduced new water licensing requirements for extractive industries, limiting groundwater extraction in high-risk regions (Queensland Department of Resources, 2023).
Industry Response
- BHP Olympic Dam implemented a water recycling initiative, reducing fresh water withdrawals by 40%.
- Newmont Corporation invested in desalination technology to ensure sustainable water use in arid regions.
- Lendlease developed a stormwater harvesting system for urban construction sites, cutting potable water consumption.
Supply Chain ESG Risks: Strengthened Due Diligence Expectations
Companies are under growing pressure to identify and mitigate ESG risks in their global supply chains, particularly related to deforestation, forced labour, and carbon emissions. Investors and regulators now require greater transparency on supplier sustainability.
Case Study: The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) introduced new legal requirements for companies to prevent human rights abuses and environmental damage in their supply chains (EU Commission, 2023).
Industry Response
- South32 committed to 100% renewable energy procurement across its supply chain by 2035.
- Fortescue Metals introduced supplier ESG audits, with penalties for non-compliance.
- Worley launched a supplier decarbonisation program, helping subcontractors adopt low-carbon technologies.
Strategic Imperatives for Executives
- Enhance Scope 3 Transparency: Implement robust emissions tracking and supplier engagement strategies.
- Develop Water Resilience Plans: Adopt water recycling, efficiency improvements, and regulatory compliance frameworks.
- Strengthen Supply Chain Oversight: Conduct ESG audits and enforce sustainability compliance among suppliers.