One utility’s approach to upcoming mandatory climate-related reporting

Last month, the Australian Accounting Standards Board released the Draft Australian Climate Standards outlining the proposed mandatory climate-related financial disclosures for Australian businesses, with initial reporting for some companies set to commence as soon as July 2024.

Covering both public and private companies, the disclosures will require fast action on climate governance, risk assessment, metrics and reporting on greenhouse gas emissions from many businesses, including those in the water sector.

Yarra Valley Water Sustainability Manager Alice Greenhill said the Draft Australian Climate Standards have been in the works for a while now, and have come to the utility as no surprise.

“There have been opportunities for voluntary reporting with the Task Force on Climate-Related Financial Disclosures. While we have done voluntary sustainability reporting before, we decided to invest in actions, like climate resilience planning and mitigation, rather than voluntary reporting,” she said.

“We’ve known mandatory reporting would be coming. And we welcome it because its intention is to drive better net zero strategies and approaches across different businesses, and that's a standard we’ve already set for Yarra Valley Water, having been on the sustainability path for a long time.”

While Yarra Valley Water’s heavy investment in sustainability practices has given the utility a head start, Greenhill said it’s also a great opportunity to push ahead to achieve goals faster.

“Globally, around 7% of businesses are on track to meet their net zero targets, and those net zero targets are usually out to and beyond 2030. We’re on track to reach net zero target in 2025, and we can proudly state we're going to go beyond zero emissions following 2025,” she said.

“We don't really talk outside the water sector that much in terms of our net zero strategy and sustainability. There’s more of a spotlight on this type of work now globally, and hopefully through this reporting people outside the water sector will be inspired by our efforts.

“Businesses and communities across Australia must share the responsibility of helping mitigate and adapt to climate change.”

Fine-tuning focus

Although Yarra Valley Water already reports to the Victorian Government on many of the areas of focus under the proposed climate standards, Greenhill said there’s still work the utility will need to do to prepare for the initial mandatory reporting period.

“We are in the process of uplifting some of the details now, like focusing on our transition planning to make sure our work is constantly aligned with climate science,” she said.

“And then there’s our scope 3 emissions, which is a challenge for everyone. We do have a baseline and we have been asked to report on it in our latest annual report. But we're working with industry because scope 3 emissions are really tricky.

“There's a lot of assumptions, there's a lot of estimations. This makes it hard to show that your efforts have resulted in a decrease, as well.

“Our approach is to work with scope 3 emissions working groups on the steps we need to take. Using consistent boundary setting methodology and consistent data collection tools will be important across the sector.”

Greenhill said a consistent approach to scope 3 emissions measurement is important to ensure that reporting is comparable.

“There's been a lot of focus on scope 3 emissions in the last year in particular. We’re working with the water industry to ensure that we can gather the best quality data available and that we have consistent approaches to calculating scope 3 emissions,” she said.

“We've already done a baseline and set a target, but we can definitely improve our data and calculations. There's always room for improvement.”

Tackling scope 3

Greenhill said most of Yarra Valley Water’s efforts to reduce scope 3 emissions in the supply chain will be best directed at asset construction: “we've recently modelled the emissions from all of our construction projects”.

“It’s really going to come down to working with our design partners and our construction panel to prioritise emissions reduction,” she said.

“We know that lowering emissions and the circular economy go hand in hand. A more nature-positive approach is also going to be important in terms of how we construct and maintain our assets. That's where we know we can have the biggest bang for buck.”

Greenhill said Yarra Valley Water is currently considering how to help its water supplier lower its emissions, too.

“A lot of our scope 3 emissions sit with our suppliers. We’re thinking now about how we can best support them. It is our responsibility to work on that problem with them,” she said.

Greenhill said other areas of focus for YVW in the coming months include taking a closer look at how to tackle employee emissions, and potentially even water-related customer emissions.

“Employee emissions are something we can have a direct impact on. It's not a big part of our scope 3 emissions footprint, but it's something that we have some influence over. We've got a target for our fleet to be fully electric by 2030,” she said.

“We're going to start buying zero emission vehicles from 2026 and we have lots of electric vehicle chargers at our office so people can charge for free from our solar car park.”

While unusual, Greenhill said the utility is also considering what role it can play in helping to reduce water-related emissions from its customer base, as well.

“We’re looking at our role in customer emissions related to water use. By reducing water usage, we reduce the energy consumed to transport it to customers, and energy used to heat water.

We’ve already had an impact on this through our showerhead exchange program, which provide for water efficient showerheads,” she said.

“But what more could we be doing? We're just starting a new showerhead exchange trial, so we'll be looking closely at the impacts of that alongside digital metering. But there is also the potential to have an impact in regards to water heating.

“We don't have a role in that at the moment because the Victorian Government has a subsidy for exchanging hot water systems for more efficient models. But we could potentially do more in that space or in rainwater tanks, as well. These are areas we may explore soon.”