Orica, one of the world’s leading mining and infrastructure solutions providers, has made significant progress on its climate ambition and performance in the past year.
Orica has been engaging constructively with investors on climate change through Climate Action 100 since 2018. Over time, investors have identified opportunities for Orica to enhance its climate ambition, actions and climate-related disclosures to more effectively tell its climate story and to align with Climate Action 100’s Net Zero Company Benchmark. Investors have also looked at barriers in the industry and limitations of existing decarbonisation technology and then encouraged the company to set commitments where it is viable to do so.
Future engagement efforts will focus on monitoring progress against existing commitments as well as examining value chain decarbonisation in more detail.
Key engagement milestones from 2023 include:
- Orica presented shareholders with a Say on Climate at its 2023 AGM in November and received 92% support from investors.
- The company expanded the boundary of its existing net zero emissions by 2050 ambition, to include all material Scope 3 emissions (cat 1 and cat 11).
- Announced an accelerated target to reduce net operational Scope 1 and 2 emissions by at least 45 per cent by 2030, from 2019 levels – which is an uplift from 40 per cent.
- A new short-term target was set to reduce net operational Scope 1 and 2 emissions by 30 per cent by 2026, from 2019 levels.
- A new ambition was set to reduce Scope 3 emissions (all relevant categories) by 25 per cent by 2035, from 2022 baseline levels.
- Scope 3 target includes categories defined by TPI as material or Orica: category 1 (purchased goods and services) and category 11 (use of sold products)
- The company published a 2023 Industry Association Review which included:
- A commitment to advocate in a manner aligned with its positions on climate change, whilst undertaking a strategic review and concluding membership with the World Coal Association
- An intention to address misalignment of industry associations with Orica’s climate position; by engaging/influencing and then further assessing whether membership should be terminated in cases where engagement is not successful.
- The enhancement of existing and introduction of new remuneration incentives:
- In addition to GHG emissions reduction metrics, STI incentives now include delivery of key Net Zero Program initiatives viewed as critical to meeting Orica’s stated targets.
- A new LTI metric specifically focused on Portfolio Resilience and Diversification, rewarding outcomes that strengthen the resilience and sustainability of Orica’s portfolio.
Andrew Stewart, Chief Development and Sustainability Officer at Orica said:
“For investors, managing the potential financial impacts, risks and opportunities associated with climate change is essential. We believe Orica is a good example of a global organisation in a hard to abate sector leading action on and driving the implementation of an impactful climate action plan.”
“We are materially reducing greenhouse gas emissions today and supporting our customers in achieving their sustainability goals, while enabling the critical resources required for the global energy transition. I am confident Orica’s ongoing engagement with CA100+ will continue to be constructive and effective as we advance towards a lower carbon future, together.”
Rebecca Mikula-Wright, Chief Executive Officer at IGCC said:
“We welcome Orica’s new climate disclosures and commitments and are pleased to see the ongoing dialogue between the investor group and Orica resulting in public, tangible results. It is an encouraging example of how corporates and investors can work together towards a fair and efficient decarbonisation of the Australian economy, to provide long-term, risk-adjusted returns to investors’ beneficiaries.”