Report – Annual Sustainability Performance Report for an Australian Manufacturer

Executive Summary

This report presents the annual sustainability performance of a mid-size Australian manufacturer of building and construction products (referred to throughout as the Company) for the three financial years ending 30 June 2023, 2024 and 2025. The Company operates two production facilities, one in regional Victoria and one in South-East Queensland, employs approximately 480 people, and generates annual revenue of around A$210 million. The report is prepared with reference to the Global Reporting Initiative (GRI) Standards and to the climate-related disclosure architecture that Australia is now adopting through the International Sustainability Standards Board and the Australian Accounting Standards Board (AASB 2024).

Performance over the period improved on most operational indicators while exposing the structural challenge that dominates the Company’s footprint. Emissions intensity for Scope 1 and Scope 2 fell 17.8 per cent, from 0.848 to 0.697 tonnes of carbon dioxide equivalent (tCO2e) per tonne of finished product, as grid decarbonisation and an on-site solar program reduced purchased-electricity emissions by 18.8 per cent. Energy intensity fell 8.3 per cent and water intensity 12.9 per cent. The total recordable injury frequency rate (TRIFR) fell 40.8 per cent to 7.4 per million hours worked, and waste diversion from landfill rose to 83.5 per cent. Against these gains, Scope 3 emissions, which represent roughly 72 per cent of the total inventory, rose 3.4 per cent and remain the principal barrier to the Company’s commitment to net zero for Scope 1 and Scope 2 by 2045. Operational progress is therefore credible, but the value-chain and renewable-electricity gaps require accelerated action if the interim 2030 targets are to be met.

Introduction

Manufacturing accounts for a material share of Australia’s industrial energy use and greenhouse gas emissions, and the sector faces converging pressure from customers, investors, regulators and the physical effects of a warming climate (ABS 2025). From 2025 Australia has begun phasing in mandatory climate-related financial disclosure under legislation developed by the Commonwealth Treasury and administered with oversight from the Australian Securities and Investments Commission (Treasury 2024; ASIC 2024). Large emitters already report energy and emissions data to the Clean Energy Regulator under the National Greenhouse and Energy Reporting (NGER) scheme (Clean Energy Regulator 2025). Sustainability reporting is consequently shifting from a voluntary, reputation-driven exercise towards an assured, standardised disclosure comparable with financial reporting, and the quality expectations placed on the underlying data have risen accordingly.

The aim of this report is to present and critically analyse the Company’s environmental, safety and governance performance across FY2023 to FY2025, to assess that performance against the targets the Company has set, and to evaluate the credibility of its decarbonisation pathway. The scope covers the two operating sites under the Company’s operational control and addresses greenhouse gas emissions, energy, water, waste, and work health and safety. Product-level life-cycle assessment and the financial materiality of climate risk to individual assets are acknowledged but sit outside the boundary of this performance report.

Reporting Scope and Framework

Frameworks applied

The report draws on a layered framework rather than a single standard. The GRI Standards provide the structure for identifying material topics and disclosing impacts on the economy, environment and people, using the concept of impact materiality (GRI 2021). Climate disclosures follow the four-pillar architecture of the Task Force on Climate-related Financial Disclosures, namely governance, strategy, risk management, and metrics and targets (TCFD 2017), which the International Sustainability Standards Board has since consolidated into IFRS S2 (ISSB 2023). Australia has localised that standard as AASB S2, with phased mandatory application for large entities (AASB 2024). Greenhouse gas quantification follows the Greenhouse Gas Protocol, and the figures reported to the Clean Energy Regulator under the NGER scheme are reconciled to this inventory (Greenhouse Gas Protocol 2011; Clean Energy Regulator 2025). Energy performance at the Company’s head office is benchmarked separately using a NABERS Energy rating (NABERS 2024).

Organisational and emissions boundary

Emissions are consolidated using the operational-control approach. Scope 1 covers direct combustion of natural gas and diesel together with fugitive refrigerant losses; Scope 2 covers purchased electricity, reported on a location-based method using published grid emission factors; and Scope 3 covers material value-chain categories, principally purchased raw materials, upstream transport and distribution, fuel and energy-related activities, and waste. Governance of this reporting sits with the board, as summarised in Figure 1, which maps the oversight structure to the governance pillar expected under AASB S2. Board-level accountability matters here because assured climate disclosure elevates data-quality and internal-control expectations well above those of the Company’s earlier voluntary reporting.

Three-Year Performance

Table 1 sets out the Company’s core sustainability indicators for the three-year period, with absolute figures, the derived intensity ratios, and the percentage change across the period. Intensity metrics, which normalise environmental load against finished output, are emphasised because production volume grew 5.1 per cent over the period; absolute reductions alone would understate the efficiency gains achieved, as shown in Table 1.

Table 1: Sustainability performance indicators, FY2023 to FY2025, with derived intensity ratios

Worked calculations

The intensity and rate metrics reported in Table 1 are derived from the absolute figures as follows, with the formula, the substitution and the result shown for each.

Emissions intensity (Scope 1 and Scope 2) = (Scope 1 + Scope 2 emissions) / production output. For FY2025 = (38,600 + 47,800) / 124,000 = 86,400 / 124,000 = 0.697 tCO2e per tonne, compared with (41,200 + 58,900) / 118,000 = 0.848 in FY2023. The three-year change = (0.697 – 0.848) / 0.848 = -17.8 per cent.

Energy intensity = total energy consumed / production output = 762,000 / 124,000 = 6.15 GJ per tonne in FY2025, down from 792,000 / 118,000 = 6.71 GJ per tonne in FY2023, a fall of 8.3 per cent.

Water intensity = total water withdrawn / production output = 561,000 / 124,000 = 4.52 kL per tonne in FY2025, down from 5.19 kL per tonne in FY2023, a fall of 12.9 per cent.

TRIFR = (recordable injuries × 1,000,000) / hours worked = (8 × 1,000,000) / 1,085,000 = 8,000,000 / 1,085,000 = 7.4 per million hours worked, down from (13 × 1,000,000) / 1,040,000 = 12.5 in FY2023, a fall of 40.8 per cent.

Waste diversion rate = (waste diverted from landfill / total waste generated) × 100 = (7,430 / 8,900) × 100 = 83.5 per cent, up from (7,050 / 9,400) × 100 = 75.0 per cent in FY2023, a gain of 8.5 percentage points.

Interpretation

The operational emissions result is driven mainly by Scope 2. Purchased-electricity emissions fell 18.8 per cent because two effects compounded: the average emission intensity of grid electricity in the National Electricity Market continued to decline as coal generation was displaced by renewables, and a 2.4 megawatt rooftop solar installation commissioned at the Victorian site in FY2024 displaced roughly a tenth of grid draw. Scope 1 fell more modestly, 6.3 per cent, reflecting a heat-recovery retrofit on the curing line and a partial switch of the forklift fleet from diesel to electric. Because output rose 5.1 per cent at the same time, the intensity improvement of 17.8 per cent for Scope 1 and Scope 2 is materially larger than the 8.3 per cent fall in absolute Scope 1 and Scope 2 emissions, which is why intensity is the more informative lens for an expanding manufacturer.

The safety trajectory is the clearest positive. A TRIFR of 7.4 per million hours worked in FY2025, down from 12.5, followed a program of machine-guarding upgrades, a revised permit-to-work system and supervisor-led safety observations. Manufacturing remains one of the industries with above-average serious-claim rates in Australia (Safe Work Australia 2024), so a rate approaching single digits represents genuine progress rather than statistical noise, although the small absolute injury count means the metric will remain volatile year to year and should be read alongside leading indicators such as hazard-reporting rates.

The critical caveat concerns Scope 3. Although total emissions edged down 2.0 per cent, this was achieved almost entirely within the Company’s own operations. Scope 3 emissions rose 3.4 per cent, tracking higher production, and now account for roughly 72 per cent of the inventory. The Company’s operational gains, while real, address less than a third of its climate impact, a pattern typical of materials-intensive manufacturing and one that any honest reading of the data must foreground.

Materiality and Targets

Material topics were identified through a double-materiality assessment, considering both the significance of the Company’s impacts on the environment and society, consistent with GRI (2021), and the financial materiality of sustainability matters to the business, consistent with the ISSB approach (ISSB 2023). Inputs included engagement with major customers, employees, the two host communities, lenders and insurers, alongside a review of regulatory drivers such as the NGER scheme and the incoming disclosure regime. Table 2 records the resulting priority topics, the quantified target the Company has adopted for each, and its status at the close of FY2025.

Table 2: Material topics, targets and status at 30 June 2025

Of the eight material topics, one target has been achieved, four are on track, two are behind and one, the engagement of value-chain suppliers, is assessed as at risk. The pattern is coherent: targets the Company can meet through capital investment and operational control are progressing, whereas those requiring the cooperation of suppliers, electricity retailers or product markets are lagging. This is the central tension the remainder of the report addresses.

Gap Analysis and Net-Zero Pathway

Gaps against targets

Three gaps are material. First, renewable electricity stands at 34 per cent against a 60 per cent target for FY2028; on-site solar is capacity-limited by available roof area, so the balance depends on securing a corporate power purchase agreement, which has been slowed by price and contract-term negotiations in a tight market. Second, Scope 3 supplier engagement covers only 41 per cent of relevant spend, and value-chain emissions intensity has not moved, leaving the largest component of the footprint effectively unmanaged. Third, recycled content in the flagship product range is 19 per cent against a 30 per cent target, constrained by the availability and consistent quality of recovered feedstock. The water, waste, safety and operational-emissions targets, by contrast, are being met or are within reach.

A credible net-zero pathway

A defensible pathway to net zero must be grounded in an abatement hierarchy that prioritises real emission reductions and treats offsets as a last resort for residual, hard-to-abate emissions (SBTi 2021). For this Company the sequence is energy efficiency first, then electrification of thermal loads, then renewable electricity procurement, and only then high-integrity carbon removal for the remainder. The near-term commitment, a 42 per cent cut in Scope 1 and Scope 2 intensity by FY2030, is consistent with a science-based trajectory and is being delivered through measures already underway rather than through pledges deferred to the 2040s.

Guarding against greenwashing is both an ethical and a legal requirement. The Australian Competition and Consumer Commission has signalled active scrutiny of vague or unsubstantiated environmental claims, and has published guidance requiring claims to be accurate, specific and evidenced (ACCC 2023). Three disciplines follow. The Company should not describe its products or operations as carbon neutral while Scope 3 emissions remain unaddressed and while any neutrality would rest on purchased offsets. It should report emissions gross, disclosing any offsets separately rather than netting them against the inventory. And it should be explicit that the 2045 net-zero commitment currently covers Scope 1 and Scope 2 only, with a Scope 3 target still in development, so that the ambition is not overstated. Framing operational gains as though they resolved the whole footprint would be the most likely source of a misleading claim, precisely the risk the incoming disclosure regime is designed to constrain (Treasury 2024; ASIC 2024).

Recommendations

1. Prioritise a corporate power purchase agreement sufficient to reach the 60 per cent renewable-electricity target, treating it as the single highest-leverage action on operational emissions given the capacity limit on on-site solar.
2. Establish a Scope 3 program with a measurable interim target, beginning with primary emissions data from the suppliers representing the largest share of purchased-materials emissions, and extend supplier engagement past 41 per cent of spend towards the 80 per cent goal.
3. Set and publish a Scope 3 reduction target so that the net-zero commitment addresses the majority of the footprint rather than the operational minority.
4. Convert the recycled-content ambition into a procurement specification and qualify additional recovered-feedstock suppliers to close the gap to 30 per cent.
5. Complete the AASB S2 assurance-readiness program ahead of FY2026, strengthening internal controls over emissions data so that the inventory can withstand external limited assurance.
6. Retain intensity metrics as the primary internal measure of efficiency, while reporting absolute emissions prominently so that growth does not mask the trajectory required for net zero.

Conclusion

The three-year record shows a manufacturer making real and measurable operational progress. Emissions intensity for Scope 1 and Scope 2 fell 17.8 per cent, energy and water intensity fell 8.3 and 12.9 per cent, TRIFR improved 40.8 per cent, and waste diversion reached 83.5 per cent, all while output grew. These results are credible and, importantly, are being achieved through investment and control rather than accounting presentation. The unresolved challenge is structural: Scope 3 emissions represent roughly 72 per cent of the footprint, they rose over the period, and the renewable-electricity and recycled-content targets are behind schedule. A credible net-zero pathway therefore depends less on further operational efficiency, where the Company is already performing, than on securing renewable electricity, engaging the value chain, and disclosing progress in a way that neither overstates achievement nor conceals the work that remains. Managed on those terms, and reported under the assured standards Australia is adopting, the Company’s targets are achievable; managed as though operational gains alone constitute net zero, they are not.

References

Australian Accounting Standards Board (AASB) 2024, AASB S2 Climate-related Disclosures, Australian Accounting Standards Board, Melbourne.

Australian Bureau of Statistics (ABS) 2025, Energy account, Australia, cat. no. 4604.0, Australian Bureau of Statistics, Canberra.

Australian Competition and Consumer Commission (ACCC) 2023, Making environmental claims: a guide for business, Australian Competition and Consumer Commission, Canberra.

Australian Securities and Investments Commission (ASIC) 2024, Sustainability reporting, Australian Securities and Investments Commission, Sydney.

Clean Energy Regulator 2025, National Greenhouse and Energy Reporting scheme, Clean Energy Regulator, Canberra.

Global Reporting Initiative (GRI) 2021, GRI 1: Foundation 2021, Global Reporting Initiative, Amsterdam.

Greenhouse Gas Protocol 2011, Corporate value chain (Scope 3) accounting and reporting standard, World Resources Institute and World Business Council for Sustainable Development, Washington DC.

International Sustainability Standards Board (ISSB) 2023, IFRS S2 Climate-related Disclosures, IFRS Foundation, London.

NABERS 2024, NABERS Energy for offices, NSW Government, Sydney.

Safe Work Australia 2024, Australian work-related injury and disease statistics, Safe Work Australia, Canberra.

Science Based Targets initiative (SBTi) 2021, SBTi corporate net-zero standard, Science Based Targets initiative, London.

Task Force on Climate-related Financial Disclosures (TCFD) 2017, Recommendations of the Task Force on Climate-related Financial Disclosures, Task Force on Climate-related Financial Disclosures, Basel.

The Treasury 2024, Climate-related financial disclosure: exposure draft legislation, The Treasury, Canberra.