The arrival of the Anthony Albanese Labor government heralds a push towards renewables with a target of net-zero emissions by 2050.
According to Ledge Finance, crane hire businesses need to position themselves to scale-up with a mix of fleet assets to ensure they can service the expected unprecedented demand from the renewables sector. They also need to understand how to onboard debt to support their growth aspirations and not miss out on these significant opportunities.
The direction in which Australia’s energy providers are heading is apparent. New wind farms are being constructed across the country and the construction process is only made possible by the crane industry.
Ledge Finance has recognised that crane companies need to consider positioning themselves to scale-up with the move towards the renewable sector. This includes a transition plan across the fleet to ensure they are future proofed and renewable.
Ledge Finance is encouraging crane hire operations to consider utilising the Environmental, Social and Governance (ESG) framework when planning for the future, with ESG being positioned at the core of a crane organisation’s planning, strategy, and approach to operations.
Environmental factors relate to a business’ commitment to the natural world both in current projects but also how they evaluate environmental risks for future projects. These include deforestation, carbon emissions, energy efficiency, waste management, and air and water pollution.
This looks at the business’ relationships with customers, suppliers, local community, employees and other stakeholders. Social factors can include data protection and privacy, gender and diversity, community engagement, employee health, and safety and human rights.
Governance in ESG is the internal systems of practices, controls, and procedures. These can include tax strategy, stockholder involvement, accurate accounting and reporting, corruption and bribery, board diversity, and structure.
According to a study by PWC on family businesses, sustainability is a low priority for many Australian businesses, with only a third putting sustainability at the centre of what they do compared to 49 per cent globally. However, consumer expectations around ESG factors are rising, with 43 per cent expecting businesses to be accountable for their environmental impact. Consumers, investors, and lenders are prioritising investment in businesses with ESG credentials.
Many businesses view a focus on ESG as a cost, however Ledge Finance says this should not be the case. Having a strong ESG proposition can save your business money and lead to value creation.
As an example, if a business becomes more conscious about reducing its carbon emissions, it is not only more energy efficient and saving money, which it can reinvest, it is also more appealing to a large company looking for a supplier with a commitment to net-zero emissions.
Businesses that adopt a robust ESG strategy may not only save money and secure contracts but may also experience several other benefits.
A focus on the environment is going to be a pivotal cornerstone for the crane industry. Ledge Finance says there is significant opportunity from a project pipeline, skills, and resourcing perspective.
In the last 20 years approximately 2,725 wind turbines have been built. But there are plans for 1,083 new turbines offshore and 4,355 onshore.
At circa $4 million per turbine, this equates to a $17.5 billion project pipeline in just onshore wind farms alone. Many of these projects will be seeking to lower emissions during the construction phase, thus demonstrating the importance of the ESG framework. Energy efficient fleets with lower emissions will be pivotal for the awarding of contracts in the near future in Australia.
Under its plan to modernise transmission networks, the Albanese government’s $20 billion Rewiring the Nation election policy will consider priority investments in projects including expanding the NSW-Victoria interconnector, the Hume Link in NSW and Marinus Link, which will pump renewable power from Tasmania into the national electricity market.
For crane companies to remain competitive they need to look towards the ESG framework and understand what is involved to help them future-proof their fleets and organisation more broadly, to comply with the requirements that are unavoidable and just around the corner.
Ledge Finance recommends businesses plan for a mix of fleet assets, ensuring they are fit for purpose to onboard debt to support their growth aspiration with these opportunities on the horizon.
Ledge Finance is happy to discuss any of the issues raised in this article. Visit Ledge.com.au today