2020 | Climate Strategy and Action Plan Delivering for a sustainable future MD & CEO MESSAGE OUR BUSINESS AND CLIMATE CHANGE MANAGING RISK AND BUILDING CLIMATE RESILIENCE Contents Managing Director & CEO message 1 Our business and climate change 3 Aurizon’s Climate Strategy and Action Plan 4 Managing climate risk and building resilience 6 Our pathway towards decarbonisation 9 Renewable energy and carbon offsets 13 i AURIZON 2020 | Climate Strategy and Action Plan OUR PATHWAY TOWARDS DECARBONISATION RENEWABLE ENERGY AND CARBON OFFSETS Managing Director & CEO message I am pleased to present Aurizon’s first It is recognised that innovation and new I look forward to providing updates on Climate Strategy and Action Plan. technologies will play a key role in delivering our progress towards the initiatives detailed a lower carbon future, and certainly rail is in this report, on our pathway to reaching Since 2014, through our Sustainability Report, no different. More than 90% of our emissions net-zero emissions in our operations we have described how we have addressed are associated with the consumption of by 2050. climate-related risks as part of our reporting energy (fuel and electricity) in the operation on Environmental, Social and Governance I would also welcome feedback on our of our locomotive fleet. (ESG) responsibilities. Our Climate Strategy inaugural Climate Strategy and Action and Action Plan builds upon that work, That’s why we plan to invest $50 million in Plan, by sending your comments to bringing a sharper focus within our Company the Future Fleet Fund, targeting adoption [email protected]. to this global challenge with specific targets, of low-carbon technologies for our initiatives and investments to further reduce locomotive fleet. Battery and hydrogen our carbon footprint. power are exciting medium- to long-term opportunities in this space. However, we are We accept the scientific consensus on already well positioned to capture the climate change, and support the objective of near-term benefits of an increasing finding a pathway to limit global warming to proportion of renewables feeding into less than 2°C, aligned to the Paris Agreement. the national energy grid. Aurizon operates We also recognise that we all have a role the only electrified heavy-haul rail network and responsibility – government, business in Australia – the Central Queensland and the general community – in achieving an Coal Network – with a large proportion of effective transition to a lower carbon future. locomotives tapping into the electric power. As Australia’s largest rail freight operator, As we implement initiatives in this Climate we will contribute in two broad areas: Strategy and Action Plan, our commitment Continued emissions reduction in the to customers, the communities in which supply chains in which we operate in we operate, and our shareholders remains transporting more than 250 million unchanged. We understand the important tonnes of freight annually for the role we play as an essential transport Australian economy. Our target of provider in Australia’s national economy. Andrew Harding net-zero operational emissions by 2050 We believe we can achieve the twin objectives Managing Director & CEO is ambitious yet, we believe, achievable. of contributing to a low-carbon economy, Working across the national freight while continuing to support sustainable industry to decarbonise Australian development, income generation and transport supply chains that deliver for employment in the regional communities consumers, communities and industry. where more than 80% of our employees This recognises that rail is currently the live and work. safest and lowest impact mode of freight transportation. Delivering for a sustainable future 1 MD & CEO MESSAGE OUR BUSINESS AND CLIMATE CHANGE MANAGING RISK AND BUILDING CLIMATE RESILIENCE 2 AURIZON 2020 | Climate Strategy and Action Plan OUR PATHWAY TOWARDS DECARBONISATION RENEWABLE ENERGY AND CARBON OFFSETS Our business and climate change Aurizon is Australia’s largest rail freight operator and an ASX-listed company. Our purpose is to grow regional Australia by delivering bulk commodities to the world. Each year, we transport more than 250 million tonnes of Australian commodities, connecting miners, primary producers, and industry with international and domestic markets. Our position Strategy in action Aurizon accepts the scientific consensus on climate change Rail freight is a key enabler in decarbonising transport supply chains and supports the objective of finding a pathway to limit global because it is currently the safest and lowest-impact mode, with road warming to less than 2°C, aligned to the Paris Agreement1. freight producing 16 times as much carbon pollution as rail freight We also acknowledge the Intergovernmental Panel on Climate per tonne kilometre3. Change’s (IPCC) Special Report on the impacts of global warming We have already made progress towards reducing our operational of 1.5°C above pre-industrial levels2. GHG emissions. Since 2010, we have achieved a 20% reduction in We recognise that the use and transformation of commodities our locomotive carbon footprint (GHG emissions intensity) through hauled by Aurizon on behalf of customers, are contributing to investment in new rollingstock, introduction of new technology, greenhouse gas (GHG) emissions. Australia is the largest supplier of and improved rollingstock management and work practices. export metallurgical coal and the second largest supplier of thermal Our strategy to further reduce our Scope 1 and 2 emissions will coal. Coal exported from Australia is almost entirely destined for help the Australian rail freight sector to maintain its position as Asia for use in steel production and energy generation. a key enabler of transport decarbonisation over the long-term. We recognise our role and responsibility in helping to reduce global Our position in the supply chain enables us to lead a step change GHG emissions, and directly contribute to the decarbonisation of the towards decarbonising Australia’s freight sector, by leveraging transport supply chains in which we participate. We also recognise our substantial investment in electric traction infrastructure and that Asian economies neighbouring Australia are seeking to deliver stimulating progress in the development of low-carbon technologies. sustainable development outcomes, including improving living In turn, we hope to see these activities contribute to reducing the standards for their people. In this context, we support a measured Scope 3 emissions of our customers. global transition to more renewable energy sources, recognising that We are committed to a long-term reduction target of net-zero the Asian region is projected to draw upon coal-fired generation for operational emissions by 2050. Our plan to achieve this target is a prolonged period. outlined in the following sections. We continue to advocate for policy actions to increase the use of The following pages provide an overview of our climate change rail freight on key national freight corridors, recognising the broader strategy, commitments and key actions. environmental, social and safety benefits. This also acknowledges our key role in supply chains for Australia’s resources sector which, in turn, supplies inputs for low-emissions technology, such as batteries, solar, electric cars, wind turbines and telecommunications. 1 United Nations Framework Convention on Climate Change (2015) Adoption of the Paris change, sustainable development, and efforts to eradicate poverty [V. Masson-Delmotte, Agreement, 21st Conference of the Parties, Paris: United Nations. P. Zhai, H. O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, 2 IPCC, 2018: Global warming of 1.5°C. An IPCC Special Report on the impacts of global R. Pidcock, S. Connors, J. B. R. Matthews, Y. Chen, X. Zhou, M. I. Gomis, E. Lonnoy, warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission T. Maycock, M. Tignor, T. Waterfield (eds.)]. In Press. pathways, in the context of strengthening the global response to the threat of climate 3 Deloitte Access Economics 2017, Value of Rail: The Contribution of Rail in Australia. Delivering for a sustainable future 3 MD & CEO MESSAGE OUR BUSINESS AND CLIMATE CHANGE MANAGING RISK AND BUILDING CLIMATE RESILIENCE Aurizon’s Climate Strategy and Action Plan Our Climate Strategy and Action Plan is built on the following three key pillars: C C0 2 C Three key Manage Risk and Deliver Create Carbon pillars Build Resilience Decarbonisation Abatement Opportunities C Objectives Understand and respond Position Aurizon to lead the Explore carbon abatement to climate-related risks Australian freight sector in opportunities to complement and opportunities. achieving net-zero operational direct abatement initiatives and emissions by 2050. offset hard-to-abate emissions. Commitments We will continually assess We are committed to We are committed to and enhance climate change achieving net-zero operational increasing the proportion considerations in the way greenhouse gas emissions of carbon-neutral energy we manage our business by 2050 into our energy mix and key assets. We will take a leading role in We will investigate accelerating decarbonisation opportunities to invest in of Australia’s freight sector and/or generate carbon We will contribute to offsets with environmental decarbonising the supply and social co-benefits. chains in which we participate. Actions Continue