Net Zero: What does it mean for Australia’s not-for-profit sector?

Net Zero: What does it mean for Australia’s not-for-profit sector?
Written by
Little Phil
Image by Thomas Millot
Image by Thomas Millot

For many Australian charities, it is an expensive and tricky path to reducing their carbon footprint. Barriers of time, knowledge and the costs involved to be certified carbon neutral act as impediments to achieve this goal. Now referred to as going ‘Net Zero’ the main aim is to reduce the impact of climate change by reducing greenhouse gas emissions.

With one in 10 Australians employed by the charity sector it is critical that the industry collaborates so that they can play a big role in the country’s transition to a zero-carbon world.

A net-zero approach is a strategy that begins with a baseline assessment of current activities and policies. It involves understanding the factors influencing your sector, identifying opportunities for change, and developing new practices to meet business objectives while achieving social or environmental goals or targets. This article will explain how this strategy works as well as give some examples from Australia's Not For Profit (NFP) sector. 

Not-for-profits can use this strategy to save money on energy bills by implementing more efficient processes within their organisations, reducing waste production, or focusing on achieving their environmental targets. 

What does “net-zero” mean?

Net-zero is a term used to describe the environmental goal of not adding any greenhouse gases to the atmosphere. It means that we’ll be able to balance out any remaining emissions by removing them in equal measure. Net-zero must be achieved by 2050 according to experts, and it has been suggested as a way to combat climate change. To achieve this from an organisational perspective the entity must become carbon neutral.

To become carbon neutral, businesses and organisations must calculate the greenhouse gas emissions generated by their activities, such as fuel or electricity use and travel. They reduce these emissions as much as possible by investing in new technology or changing the way they operate. 

Any remaining emissions can be “cancelled out” by purchasing carbon offsets. Carbon offset units are generated from activities that prevent, reduce or remove greenhouse gas emissions from being released into the atmosphere. When the offsets purchased by an organisation equal the emissions produced they are carbon neutral. 

The NFP sector is growing and increasing sustainability efforts over the last few years. But what does it mean for Australia's not-for-profits?

In Australia, The Business Council of Australia has called for transitioning to net zero emissions by 2050. The National Farmers Federation is also aligned with this goal.

Internationally, the Net-Zero Asset Owner Alliance represents nearly USD5 trillion in assets under management that is aligning with a Net Zero 2050 scenario, while the UN-accredited Net Zero Asset Managers initiative has 73 signatories representing USD32 trillion in assets under management, 36 per cent of the global total. With Net-Zero 2050 a target also backed by business groups, investors and individual companies, it is clear that net-zero developments are now part of global market developments.

Essentially this will impact Australia’s NFP sector by creating policy requirements for organisations to reduce their carbon footprint to adhere to the new legislation. For some NFP’s this could be a costly exercise due to the reporting and other infrastructure requirements to reduce their impact.

What is critical now is for Australia’s NFP sector to collaborate with each other to identify how they can assist with these goals in a cost-effective and efficient manner that doesn’t detract from their main goals. 

How would the not-for-profit sector move to net-zero?

This is where the discussions around costs and other externalities become relevant. At this stage, organisations can only be certified as carbon neutral via the government-backed Climate Active certification. Only businesses and organisations that have met the requirements to achieve net-zero carbon emissions are awarded this certification. At the moment this costs between $20,000 and $30,000.

Given that, for some NFP’s these are prohibitive costs that take away from their core functions it is critical that the sector collaborates with the federal and state governments to create a sustainable, tailored plan for NFP’s. This would focus on a policy mechanism to reduce the costs burden on NFP’s and an infrastructure plan to look at how the sector can pool its resources to reduce its emissions output.

Part of this strategy would also require NFP’s to focus on what they do best – share knowledge and resources across the sector around net-zero energy (NZE) utilisation systems. This would allow NFP’s to create an industry knowledge base around  NZE systems to reduce greenhouse emissions.

Non-Fungible Tokens as a force for good

Non-Fungible Tokens (NFTs) are a relatively new type of digital asset. Non-fungible more or less means that it’s unique and can’t be replaced with something else. A one-of-a-kind trading card,for example, is non-fungible. If you traded it for a different card, you’d have something completely different. Digital art or other types of assets issued in the name of charities are being touted as driving a more sustainable digital economy. The reason it is being seen as having benefits for the environment and for NFP’s trying to reduce emissions is that when issued on a low-energy blockchain is that it still allows charities to raise funds, while lessening their carbon footprint.

They also allow artists to pool their resources to raise funds for environmental causes. A recent example saw Social Alpha Foundation (SAF), a blockchain-focused charity, auctioning off work donated by the collective of NFT artists. The proceeds went to the Open Earth Foundation, a registered nonprofit focused on cutting edge research and deployment on the use of open digital infrastructure, including blockchains, for climate accounting under the Paris Agreement. The auction included 500 tonnes of carbon offsets represented as unique NFTs registered as a result of the initiative and put towards preserving the Amazon rainforest and preventing deforestation. 

This highlights how technology can be utilised to assist the NFP sector in reaching its goals while at the same time maintaining its efficacy in delivering services to the causes they represent.

In summary, the NFP sector must start planning now

Moving to a decarbonised world means NFP’s need to consider all of the costs involved and actions required to achieve Net Zero. To achieve Net Zero by 2050, NFP’s can’t sit idle until 2049. They must start planning from next year about the steps required to reach this goal in a manner that won’t impact their operations.

If the sector collaborates and shares knowledge as a collective it means that it can start putting in place targets for 2025, 2030 and so on, so it can play its part in moving to a carbon neutral world.

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