Industry Sustainability Working
Committee Advisory Report
December 2012
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
1
Contents
Foreword
4
Summary
5
Sustainability matters to business
5
Business sustainability is important for Victoria
A shared journey
5
Sustainability – standard business practice
Victoria – open for cleantech business
Skills for sustainability
5
6
7
10
Victoria leading the way
10
Establishing and maintaining momentum
1. Business sustainability
11
12
Sustainability matters for business and business sustainability is important for Victoria
Business sustainability in a changing world
12
13
Business sustainability in challenging economic times
A Vision for Victoria
Objectives
14
14
Others are moving … and so must Victoria
15
2. Sustainability – standard business practice
16
Factors inhibiting the uptake of business sustainability
17
Addressing the barriers – the role of government?
18
Government support for business sustainability – the current state of play
19
Refining efforts to diffuse business sustainability 23
Improving information provision to business
25
3. Victoria – open for cleantech business
29
A global opportunity
29
Cleantech in Victoria – the current state of play 30
A strategic approach to growing cleantech businesses in Victoria
4. Skills for Sustainability
Systemic barriers
32
36
37
Addressing the barriers 38
5. Victoria leading the way
40
Protecting the environment while improving regulatory and program efficiency
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
40
2
Removing regulatory barriers to business sustainability improvements
40
Government leadership through demonstration and procurement 41
Government leadership through behaviour change and awareness
41
6. Establishing and maintaining momentum 43
Appendix 1 – Industry Sustainability Working Committee Terms of Reference and Membership
44
Appendix 2 – Industry Sustainability Working Committee Sub-Committees 47
Strategic Policy Framework Sub-Committee
Cleantech Sub-Committee
47
47
Skills for Sustainability Sub-Committee 48
Appendix 3 – Principles for government measure design and implementation
49
Research commissioned by the Industry Sustainability Working Committee
56
Bibliography
57
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
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Foreword
The Industry Sustainability Working Committee was established by the Minister for Innovation, Services and Small
Business to provide practical, business-based advice on the role government can play to encourage business
sustainability.
One of the Committee’s key messages is that sustainability needs to be a core priority for business. Sustainability is
not a fad nor a fringe issue. It’s a way for business to lower costs and be resilient against long-term challenges like
climate change and rising energy and resource costs. Consistent with CSIRO’s recently updated review of global
megatrends – Victorian businesses need to do “more from less”.
In essence, tomorrow starts today. We must act now to ensure businesses are competitive in the future.
The Committee was requested to provide advice on:

a strategic policy framework that encourages businesses to include environmental quality in their strategies
and to adopt new sustainable technologies and production practices

a navigable roadmap for sustainability information and programs

an effective strategy for developing, growing and exporting cleantech products and services

the implications for employment and skills arising from efforts to improve industry sustainability.
The approach the Committee has taken is evidence-based. In addition to drawing on the extensive knowledge and
experience of its members, the Committee commissioned research into barriers businesses face in pursuing
measures to improve resource efficiency; good practice in communicating sustainability and resource efficiency to
business; and an assessment of how well-aligned existing government measures are to recommended principles and
to addressing key barriers to sustainability. The Committee worked with the Australian Industry Group to undertake a
survey of business energy efficiency and engaged with a range of experts to test our conclusions and advice; and
consulted with Sustainability Victoria, the Department of Business and Innovation, the Environment Protection Agency
(EPA), the Department of Education and Early Childhood Development and the chair of the Green Skills Taskforce.
As larger businesses increasingly set emission and other environmental standards for their suppliers, sustainability is
essential for participating in local and global supply chains. However, businesses – particularly small and mediumsized enterprises – face numerous barriers to adopting sustainability practices. This is where government can help.
New opportunities for cleantech products and services are also emerging. Victoria’s recent successes in trade
missions to India and China show that the State can participate in the cleantech growth opportunities arising from
climate change, globalisation, urbanisation and population growth.
A recurring theme of the Committee’s work is the importance of sustainability and cleantech skills and capabilities. Our
recommendations aim to enhance these skills and capabilities, and to position Victoria as a global leader in business
sustainability by 2025.
My thanks to my fellow Committee members for their contributions over the past year.
Ross McCann
Chairman
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
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Summary
Sustainability matters to business
Sustainability makes good business sense.
A profitable business is a viable business. Environmental sustainability can increase business competitiveness and
profitability by increasing productivity, lowering costs and growing revenues. It can help business manage resource
risks. It can drive innovation and ensure business responds to customer demands with new products and services.
In short, sustainability underpins business resilience.
As CSIRO stated in its report on global megatrends, we all need to do “more from less”. That includes business. This
is true even in today’s tough economic times. And it will continue to be the case as business tackles future global
trends, like climate and demographic change, globalisation, digitalisation and the emergence of new business models.
Business sustainability is important for Victoria
Victoria must build resilient and viable businesses for the future. To this end, sustainability can help business and the
overall economy manage rising resource and energy costs.
Business sustainability can also contribute to meeting the Victorian Government’s economic reform agenda, including:

improving productivity by focusing on resource efficiency and skills

growing export markets by helping deliver cleantech and related services into an expanding global market

assisting businesses in transition by helping them respond to new customer demands, both locally and
internationally

maintaining a strong budget position by better targeting programs and support, and by working collaboratively
across government and with business
Business sustainability is also critical to the Government’s commitment to maintain a resilient, healthy environment for
a strong, productive future.
A shared journey
Achieving a vision for business sustainability requires a shared commitment by business and government.
Victoria’s competitors are not standing still. A business-as-usual attitude threatens to render us uncompetitive in the
global economy. We must pursue the following Vision and Objectives now.
Vision
By 2025, Victorian businesses are global leaders in environmental sustainability. As a result, the Victorian economy is
resilient and competitive, with much lower environmental impacts. Our thriving cleantech businesses supply products
and services to the world.
Objectives
1. Sustainability to be an integral feature of the standard operating practice of Victorian business.
2. Victoria – open for cleantech business.
3. A Victorian workforce with the skills to improve sustainability and enable the growth of globally competitive
cleantech businesses.
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Recommendation
1. The Victorian Government adopt this Vision and these Objectives to guide its business sustainability framework
and policies.
Sustainability – standard business practice
Leading Victorian businesses already understand the benefits of sustainability and are setting an example for others
to follow. Many are demanding high sustainability standards from their suppliers.
And most businesses have taken some action to improve their sustainability. Over 90 per cent of small businesses
recycle part of their waste stream and the majority of businesses have taken some steps to improve energy efficiency.
However, the actions and savings have only been modest.1 And a challenge remains: over 70 per cent of small
businesses believe they lack information and knowledge about the next steps for enhancing business sustainability
and reducing costs.2
We have identified two major barriers to improving resource efficiency: shortcomings in business capability – including
information and skills gaps, organisational factors and decision making; and access to capital.
State and Commonwealth governments can help by addressing these barriers and delivering education and training
that meets the current and future skills needs of business. Government programs must be designed primarily with the
needs of business in mind. To this end the Committee has proposed a set of policy principles that bring business
considerations to the fore.
Government programs must be effective and efficient. Regulations should minimise cost burdens on business, and
Victorian and Commonwealth programs should complement each other. Rather than seeking to cover a wide field with
modestly resourced programs, governments should pursue a small number of programs which are appropriately
scaled so that access is not constrained to only a limited number of businesses. Governments can also endeavour to
leverage off and support the efforts of leading businesses who are taking steps to up-skill their supply chains to
improve sustainability.
The Committee considered 26 programs – 14 Commonwealth, 10 Victorian and 2 local government – that seek to help
businesses become more sustainable. These programs are delivered by 13 different government agencies. Although
we haven’t reviewed these programs in detail, we believe the Victorian Government should review its programs to
better align with the key barriers to business sustainability – and, in particular, to provide a greater focus on measures
to support improvements in business capability. The Victorian Government could encourage the Australian
Government to do the same.
Government and business must also consider how to improve access to capital. The Ai Group’s survey of business
energy efficiency3 found that many businesses favour grant support. However, grants can only ever be able to assist a
very small number of businesses. With the exception of the Commonwealth Government’s Clean Technology suite of
programs, the Committee’s program alignment assessment found that the majority of grants programs lack scale or
reach to make a difference.
If sustainability is to become standard business practice, the majority of funding for investments in sustainability
improvements will come from private sources. To that end, the Victorian and Commonwealth Governments have
already taken some steps to increase the range of capital support measures that tap into private sector funding. This
includes expanding the Victorian Energy Efficiency Target (VEET) white certificate scheme to business, passing
legislation to enable the City of Melbourne’s 1200 Building program and establishing Low Carbon Australia and the
Clean Energy Finance Corporation.
1
Australian Industry Group – Energy shock: pressure mounts for efficiency action
2
VECCI/Sustainability Victoria – Carbon Down SME Market Segmentation Analysis
3
Australian Industry Group – Energy shock: pressure mounts for efficiency action
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State Government of Victoria
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The Victorian Government can help businesses access Commonwealth and other financing streams. The new
Smarter Resources Smarter Business program of Sustainability Victoria points the way by helping medium-sized
Victorian businesses apply for funding under a range of programs.
Government can also improve how it provides information to business. An overwhelming 88% of businesses consider
that providing information is an important role of government. The ISWC research considered 17 Victorian and
Commonwealth programs that provide information to business about sustainability. But these information sources are
siloed and fragmented and often fail to meet good practice characteristics. This makes it difficult for businesses –
particularly time-poor smaller businesses – to get the information they need. Understanding and tackling these
problems is critical to developing a navigable roadmap for business sustainability.
The Victorian Government should collaborate with business associations to deliver such a roadmap based on good
practice characteristics for information provision proposed by the Committee.
Recommendations
2. Focus on a small number of adequately resourced programs that help businesses integrate sustainability into their
standard operating practices. Government programs should be designed and implemented consistent with the
principles identified by the Committee.
i
The Committee has identified shortcomings in business capability (information and skills, organisational
factors and decision making) as a critical barrier to sustainability in business, and SMEs in particular. We
recommend that the Victorian Government give greater attention to addressing this barrier.
ii
Recognising that public funds are limited, we recommend that the Victorian Government:
iii

Review the balance of program funding delivering direct financial assistance (such as grants) relative to
business capability building. The Government should consider the recent emergence of mechanisms
that improve access to and leverage of private capital for resource efficiency investments. Mechanisms
such as Low Carbon Australia, the 1200 Buildings Program and the VEET scheme – which largely focus
on energy efficiency/carbon abatement – provide examples of approaches that can deliver greater reach
and impact than State Government grants alone.

Encourage and support Victorian businesses to seek funding available through Commonwealth
programs such as the Clean Technology Investment Program.

Leverage off and support the efforts of leading businesses that are up-skilling their supply chains to
improve sustainability.
The Victorian Government could encourage the Australian Government to consider the intent of these
recommendations during future reviews of Commonwealth business sustainability measures.
3. The Committee has identified a set of good practice characteristics that the Victorian Government should apply in
developing a navigable roadmap for the provision of information on business sustainability. This roadmap should
seamlessly coordinate the work of relevant government agencies and be developed in collaboration with industry
associations.
i
The Victorian Government should, within two to three years, seek to reach 75 per cent of Victorian businesses
with information on business sustainability.
Victoria – open for cleantech business
The global cleantech market is currently around two and a half times the size of the pharmaceutical industry and over
four times the size of the computer hardware industry.
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Despite the global financial crisis, the worldwide market for cleantech has grown an average of
11.8 per cent a year since 2007. The market is now worth more than A$2.44 trillion and, according to German
Government forecasts, will by 2025 more than double to A$5.36 trillion. 4
Others are moving to exploit this international market and Victoria has already identified significant export
opportunities – including in Asia. The state cannot afford to be passive – we must act now to ensure we don’t fall
behind our competitors.
Aside from its massive jobs and investment potential, cleantech will be pivotal to the liveability of our cities, the
productivity of our economy and the health of our environment. Cleantech is a critical enabler of business
sustainability by facilitating more efficient energy consumption, the removal of pollutants from our waterways and air,
energy production without emissions and the turning of waste into useful resources.
Technically speaking, cleantech is not an industrial sector; it’s an umbrella term for a group of commercial
technologies, products, services and processes that measure, reduce, prevent, eliminate and/or remediate
environmental problems.
Locally, as of 2008, about 1,850 Victorian cleantech businesses employed 18,500 people with revenues of around
$3.6 billion5 . Notably, 80 per cent of these businesses employed 25 staff or less. About half have operated for five
years or less6.6
DBI-commissioned research identified Victoria’s niche cleantech strengths:

built environment – energy efficiency and sustainable materials

green manufacturing – waste minimisation and resource recovery, advanced manufacturing and advanced
materials

water – recycling and reuse, management and monitoring, pollution reduction and control and irrigation.
Victoria has become a centre for carbon market services and has successfully exported integrated design and building
services through the Australian Urban Systems cluster. Recent super trade missions to India and China have also
included a focus on cleantech.
A cleantech strategy for Victoria is needed to help pursue the opportunities for – and to address the barriers to –
cleantech growth. The strategy should be developed in collaboration with industry and focus on Victoria’s identified
strengths. It should seek to leverage business development programs that are available to all businesses and existing
programs that encourage and support innovation – but also provide targeted support focused on the state’s identified
strengths.
Other important factors to consider in developing the strategy include:
4

Government policies and regulations affect cleantech much more than most other industries. These policies,
and government procurement, can be the major driver for cleantech markets. Consequently, cleantech
businesses need clear and stable regulations to encourage investment and growth. Clear, long-term policy
signals around energy, water, waste, building standards, climate change and other environmental measures
enables business to innovate and invest for the future. Regulatory uncertainty prevents businesses from
attracting capital and damages Victoria’s appeal as a destination for cleantech investment.

Government-to-government relationships can create opportunities for business in international markets. EPA
Victoria and Sustainability Victoria were the lead government agencies for the cleantech streams of recent
Victorian Government trade missions to China and India. Endeavours like this must continue to ensure longterm success in promoting Victorian cleantech businesses internationally.
Greentech Made in Germany 3.0
5
Includes both pure-play businesses that operate exclusively in cleantech and other businesses that include cleantech as part of a broader mix of
products and services
6
WSP Environmental and Energy and Marsden Jacob Associates – Defining Victoria’s Clean Technology Niche
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
While there are organisations representing cleantech sub-sectors, there is no unifying industry group or forum
that is representative of cleantech businesses as a whole. The Victorian Government could work with leading
cleantech businesses, financiers and industry groups to convene a forum that brings cleantech business
interests together to consider whether greater cooperation and networking could assist cleantech business
growth in the state and – depending on the outcomes of the discussion – how this could best be progressed
as an industry led, industry focused endeavour.
Cleantech’s international experience, and the development pathways of the Information and Communications
Technology (ICT) and biotechnology industries, suggests that Victorian cleantech could benefit from collaboration
between large and small players, across supply chains, and between research institutions and business. This is
particularly true where Victoria has, or could develop, a sufficient critical mass, such as in water, green
construction/built environment, clean production/manufacturing and professional services essential to environmental
markets.

Victoria’s strong research base underpins our cleantech potential. The Committee believes that the Victorian
Government should continue to strengthen the links between research capability and business along the lines
of established collaborative research partnerships such as the Centre for Water Sensitive Cities; the Victorian
Organic Solar Cell Consortium; the Australian Carbon Fibre Research Facility; the Centre for Aquatic Pollution
Identification and Management; the Victorian Centre for Sustainable Chemical Manufacturing; and IBM
Research – Australia.
One of the major challenges identified in our research is a low rate of commercialisation in Australian
cleantech relative to other countries. In part this is a reflection of the size and maturity of local cleantech
markets, which are often less mature than markets such as Europe, and the size and maturity of cleantech
businesses themselves. It also reflects the generally weaker commercialisation capability of all technology
based industries in Australia.

Demonstration, testbed and technical assessment facilities are critical. Before buying, international regulators
and procurers insist that new technologies or solutions first be proven in the home or other market. They also
often seek a government endorsement of a company or its products. Similarly, local authorities and
businesses, such as water corporations, will only purchase proven technologies.

Collaboration between the Victorian and Australian governments in the design and delivery of programs to
support the development of cleantech businesses would help ensure that limited public funds are leveraged to
achieve maximum efficiency and effectiveness.
Recommendations
4. Provide clear and long-term regulatory and policy directions for waste, energy, water and other environmental
policies to help cleantech businesses plan and invest in Victoria.
5. To capitalise on global market opportunities and Victoria’s identified strengths, develop a cleantech strategy as a
matter of priority. Such a strategy should:
i
Include general innovation, business development and export measures for all cleantech businesses, and
specifically targeted support to areas where Victoria has identified strengths.
ii
Be developed by collaborating with established sectoral groups and leading players in cleantech. As one step
in facilitating this, the Victorian Government should convene a forum bringing cleantech business interests
together to consider the merits of greater cooperation and networking and – depending on the outcomes of
the discussions – how this could best be progressed.
iii
Strengthen collaboration between Victoria and the Commonwealth in the design and delivery of programs in
order to gain maximum leverage from limited public funds.
iv
Have a major focus on international engagement, building on the momentum created by recent trade missions
to China and India.
v
Connect innovative businesses to Victoria’s research base to ensure access to technology expertise at crucial
points of product development.
vi
Assist businesses to connect with research and technical knowledge by continuing to support Victorian-based
centres of excellence.
vii Review existing demonstration and testing capabilities in Victoria with a view to developing new facilities,
where required, in collaboration with industry and the research community.
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Skills for sustainability
A skilled workforce is essential to spread sustainable business practices through the economy. It is also a key to
growing Victoria’s cleantech businesses.
In its research, the Committee identified skills gaps and shortfalls across the gamut of skills areas, particularly in
engineering, managerial and vocational skills. These shortfalls will become more acute as cleantech businesses grow
and more businesses focus on improving their sustainability.
If Victoria is to be a global leader in sustainability, the following workforce constraints must be addressed:

shortcomings in workforce capacity to meet business needs – for existing and new workers

a shortfall in demand for sustainability skills

shortcomings in workforce development.
Recommendation
6. Develop a coordinated, strategic approach to ensure that new entrants and the existing workforce – particularly
employees of SMEs – acquire the skills necessary to improve sustainability and grow cleantech businesses. This
strategic approach should consider:
i
skills that are adaptive, flexible and applicable to differing and evolving circumstances, including technical
skills and soft or cross-cutting skills
ii
incentives to encourage business sustainability skill development
iii
addressing shortages in engineering and science skills
iv
ensuring all key stakeholders are actively engaged in the process
v
an enduring commitment by industry, government and tertiary education and training institutions, with a clear
articulation of respective roles
vi
an embedded monitoring and evaluation process.
Victoria leading the way
The Victorian Government has already enhanced its approach to fostering business sustainability. Reforms to EPA
Victoria and Sustainability Victoria have clarified roles and better targeted efforts. Our state’s environmental regulatory
approach leads other Australian jurisdictions. However, more can be done to reduce red tape through a process of
continual improvement at both the state and national levels. The Committee therefore welcomes the Victorian
Government’s commitment to systematically review key areas of Victoria’s environmental regulation; reform Victoria’s
statutory framework for environmental impact assessments to reduce the regulatory burden; and to work with other
jurisdictions to maintain high environmental standards while reducing duplication and streamlining regulatory
requirements and practices.
The Government has also helped by improving the sustainability of its operations. These efforts demonstrate what is
possible and create opportunities for local business. The Greener Government Buildings program, which is projected
to reduce the Victorian Government’s greenhouse gas emissions by at least 20 per cent by 2020 and deliver over $1
billion in accumulated cost savings, is an excellent example.
Often, businesses that want to enhance sustainability encounter barriers outside their control. ISWC members have
experienced this directly as they pursued cogeneration and other distributed energy options. As a result, the
Committee adds its voice to calls for market reforms that streamline and improve connection processes for mediumscale cogeneration and trigeneration.
In particular, we support the advice of the Victorian Competition & Efficiency Commission (VCEC), made as part of its
inquiry into distributed generation, which recommends that the Victorian Government indicate to the Australian Energy
Market Commission that it supports proposed amendments to National Electricity Rules to establish connection
standards and rights for embedded generators. The VCEC also recommends that should the national rule change
process not be resolved by June 2013, the Victorian Government should add a licence condition requiring Distribution
Network Service Providers in Victoria to establish such standards and rights.
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The Committee also recognises the important role government can play in helping to raise community awareness of
sustainability and, thereby, in supporting the market for sustainable business. The Victorian Government has been
active in this area and the Committee encourages the continuation of these efforts.
Recommendations
7. Act upon VCEC recommendations about the connection of medium-scale generators such as cogeneration and
trigeneration.
8. Consider further leveraging Victorian Government procurement to: demonstrate the cost-reduction benefits of
resource efficiency improvements; and provide a demand driver for cleantech business growth and innovation.
9. Continue efforts to raise community awareness of the importance of sustainability in general and of sustainably
produced products and services.
Establishing and maintaining momentum
Business sustainability matters. It will only grow in importance as we face economic challenges and global
megatrends. To establish momentum, the Committee’s recommendations will need to be considered by and
progressed through a process that engages all relevant Victorian Government agencies in cross-portfolio cooperation.
It will also be important for the Victorian Government and Victorian business to actively keep business sustainability
on the agenda. This should include:

monitoring progress toward the Vision and Objectives recommended by the Committee

monitoring, reviewing and – as needed – revising the actions taken in response to the recommendations
made in this Report.
In addition, we believe it would be fruitful for the Victorian Government to establish an ongoing forum for dialogue with
business leaders regarding progress toward the Vision and Objectives.
Recommendations
10. Establish a cross-portfolio process to consider and progress implementation of the Committee’s
recommendations.
11. Monitor progress toward the Vision and Objectives, and the actions taken in response to the recommendations of
this report.
12. Consider establishing an ongoing forum for dialogue with business leaders regarding progress toward the Vision
and Objectives.
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Advisory Report
1. Business sustainability
Environmental pressures and resource constraints pose a serious challenge to the health and prosperity of all nations.
Addressing this challenge requires a fundamental change in how we produce and consume goods and resources.
Some progress is occurring. Internationally and locally, leading businesses and governments are improving resource
efficiency and reducing waste and pollution. But greater effort is required.
Business sustainability means minimising the use of energy and materials, and the creation of waste and pollutants,
across the product life cycle – in a way that enhances business productivity and competitiveness.
The Industry Sustainability Working Committee strongly believes that sustainability is a core issue for business. It is
increasingly a prerequisite for business competitiveness and profitability; it underpins business resilience. In short,
sustainability makes good business sense!7
“The sustainability agenda and the economic growth agenda should not be in competition with each other. If we are to
achieve a sustainable future we must have strong economic growth. In turn, if we are to have a strong economy in the
long term, we must have sustainable and resource efficient growth.”
Jennifer Westacott
Chief Executive – Business Council of Australia
Sustainability matters for business …
Sustainability matters to business for the following reasons:

It enables business to better manage resource risks – including resource scarcity and associated rising
resource prices.

It allows business to respond to customer concerns – customers are increasingly demanding more
sustainable products and services, and greater transparency in the sourcing and content of business inputs.
Business sustainability is important for managing reputational risk.

It drives innovation – particularly when new partnerships and collaborations occur along the value chain.

It underpins business resilience and helps capture opportunity – there will be winners and losers in the new
economy. Early movers will reap the greatest benefits and find a pathway to future markets and profitability.
… and business sustainability is important for Victoria
Victoria’s future prosperity requires resilient and viable businesses. Sustainability is critical to this. Sustainability helps
businesses better manage rising resource and energy costs, and it will enhance the resource and energy efficiency of
the entire economy.
Business sustainability can also help the Victorian Government achieve its economic reform agenda by:

improving productivity – by focusing on resource efficiency and skills

growing export markets – through helping to deliver cleantech and related services into a growing global
market
7
In its work, the Committee has focussed on manufacturing and service industries. However, many of the issues raised are also applicable to
agriculture, mining and other primary products sectors.
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
assisting businesses in transition – by helping them respond to new demands from local and international
customers

maintaining a strong budget position – through better targeting of programs and support, working
collaboratively across government and with business.
Business sustainability will also help the Government achieve its commitment to maintaining a resilient, healthy
environment for a strong, productive future.
Business sustainability in a changing world
Global megatrends present new challenges and opportunities for business – and underscore the importance of
business sustainability. These megatrends include:

Globalisation – Victorian businesses, whether producing for the domestic or overseas markets, are
increasingly subject to international competition and the requirements of global supply chains. This includes
requirements for suppliers to meet environmental performance standards.
Wal-Mart announced in November 2012 that it will require its suppliers to evaluate and disclose the full environmental
costs of their products. The company plans to combine data on water use, greenhouse gas emissions, solid waste
production and worker ethics into a database shared worldwide, which it says can be used to form the first index of a
product’s lifecycle impact.
Businesses in Australia are also moving to place sustainability requirements on suppliers. NAB Group is committed to
maintaining a Supplier Sustainability Program. A key component of the program is Supplier Sustainability Principles –
including a requirement that suppliers have a written environmental statement, an environmental management system
or plan, and targets for reducing material environmental impacts. Telstra’s Purchasing Ethics Guidelines include
respect for basic human rights and environmental sustainability.

Climate change – policy responses to limit climate change will inevitably result in higher prices for energy and
other business inputs. The impacts of climate change will also create significant risks for business. This will
include risks to physical assets, such as buildings, infrastructure and production facilities; potential
vulnerability across value chains, for example, the procurement of raw materials and customer demand for
particular products; and risks to transport services and utilities such as energy and water. While climate
change represents a challenge for business, it also creates substantial opportunities for businesses that
provide clean technologies and services (cleantech).

Demographic change – as world population grows and living standards continue to rise in developing
countries, demand for resources will increase, as will demand for cleantech products and services. The rapid
growth of the global middle class is projected to continue.
Interacting with demographic change are opportunities and challenges from urbanisation. Australia is already
one of the most urbanised nations in the world. Melbourne is facing new challenges as its population
continues to grow, along with changes to the types of jobs, means of travel and housing choices in the city. By
2025, China is projected to have over 200 cities with more than one million inhabitants.
More from less
“The Earth has limited supplies of natural mineral, energy, water and food resources that are essential for human
survival and maintaining lifestyles. Many of these resources are being depleted at sometimes alarming rates. Climate
change will place pressure on water and food production systems. At the same time, population growth and economic
growth are placing upward pressure on demand. For some natural resources, demand is going up and supply is going
down. Many other resources are under much pressure.”
CSIRO – Our Future World

Digitalisation and new business models – the trend towards a digital economy is growing as more products
and services are digitalised. Businesses face a need to shift to a service model where service provision is
increasingly a means of value adding and product differentiation.
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
Increasing resource scarcity – the Earth has limited resources and we are depleting many of them. This
includes not only resources such as fossil fuels, but also natural capital – the land, air, water, living organisms
and all formations of the Earth’s biosphere that provide us with ecosystem goods and services imperative for
survival and well-being8.8 In the face of increasing resource scarcity, we need to be far more productive in our
resource use and conscious of avoiding the depletion of natural environments and the loss of valuable
ecosystem services.
“The true cost of waste is actually between 10 to 30 times the cost of disposal … for example, if our annual waste
disposal cost is approximately $10,000, it is more likely costing us between $100,000 and $300,000 in wasted
resources.”
Australian Industry Group
Reducing business costs: saving money through resource efficiency
Business sustainability in challenging economic times
We live in challenging economic times. Global economic conditions are uncertain and volatile. The Reserve Bank and
Australian Treasury forecast only a moderate fall in Australia’s terms of trade in the short to medium term, implying
that the Australian dollar will remain above historical averages. Victorian Treasury forecasts for Gross State Product
anticipate a return to modest growth, below the average for the decade 2000-2009, and below the Australian average.
Beyond these macroeconomic indicators, Victorian businesses face pressure from structural changes.
It is understandable that many businesses may look at business sustainability as ‘nice to have’ but low priority. They
may only focus on the minimum requirements of environmental regulations and sustainability demands from their
customers. But this approach fails to recognise how business sustainability can enhance competitiveness by reducing
costs and boosting productivity.
“As prices have risen, more businesses have slipped into the category of higher energy spending, where carbon price
impacts are also more keenly felt. Challenging conditions for many non-resource businesses are likely squeezing
revenue and profit margins, further intensifying the significance of energy costs …. In the face of rising energy prices,
many businesses can contain the resulting costs through greater efficiency in the use of energy.”
Australian Industry Group
Energy shock: pressure mounts for efficiency action
Analysis by ClimateWorks highlights opportunities for businesses to save costs through resource efficiency
improvements. In particular, the research illustrates the potential for net negative cost (i.e. net benefit) improvements
in energy efficiency.
A Vision for Victoria
The Industry Sustainability Working Committee believes we need a Vision for business sustainability in Victoria:
By 2025, Victorian businesses are global leaders in environmental sustainability. As a result, the Victorian economy is
resilient and competitive, with much lower environmental impacts. Our thriving cleantech businesses supply products
and services to the world.
Achieving this Vision will require a shared commitment between business and government – a commitment that will
help the State’s 520,000 businesses respond to the challenges of sustainability and build ongoing competiveness.
Objectives
Three Objectives are central to achieving the Vision:
8
International Institute for Sustainable Development – Natural Capital
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
14
1. Sustainability to be an integral feature of the standard operating practice of Victorian business.
2. Victoria – open for cleantech business.
3. A Victorian workforce with the skills to improve sustainability and enable the growth of globally competitive
cleantech businesses.
Recommendation
1. The Victorian Government adopt this Vision and these Objectives to guide its business sustainability framework
and policies.
Others are moving … and so must Victoria
Victoria’s competitors are not standing still. A number of jurisdictions are pursuing strategies to improve business
sustainability and to exploit cleantech opportunities.
The European Union is implementing a Sustainable Consumption and Production and Sustainable Industry Policy
Action Plan. South Korea is pursuing a National Strategy for Green Growth and implementing a Five-Year Plan for
Green Growth. China’s 12th 5-year Plan includes a green development theme with ambitious targets to reduce energy
and water consumption and carbon dioxide emissions.
If we proceed on a business-as-usual basis, we run the risk that Victorian businesses and the state economy will be
uncompetitive in the global economy of the future. Action to pursue the Vision and Objectives is needed now.
“The European Commission is putting resource efficiency at the heart of policy making in relation to environment, job
creation and competitiveness. More efficient use of resources can improve productivity, boost the competitiveness of
our businesses and improve our public finances while having a positive effect on our environment and well being.
Investment in the technologies and services that can generate resource efficiency can provide an important stimulus
to sustainable growth and jobs, even in the short term.”
Terms of Reference of the European
Resource Efficiency Transition Platform
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
15
2. Sustainability – standard business practice
Goal: Business sustainability to become an integral part of the
standard operating practices of Victorian businesses
Strategy: Business and government to work in partnership to diffuse
business sustainability throughout the Victorian economy
Business sustainability enhances productivity, competitiveness and profitability. Many leading businesses recognise
this. Over 90 per cent of small businesses recycle part of their waste stream. But recent research shows that much
remains to be done to diffuse sustainability throughout the economy.
Research by VECCI indicates that although many businesses have taken some initial steps, over 70 per cent of small
businesses did not know what else they could do to improve sustainability and reduce their costs.9 And research by
the Australian Industry Group10 concluded that businesses are reticent to invest in sustainability without a certainty of
return. The research also found businesses have a lack of trust in information and are often unable to identify
sustainability actions suited to their business.
The Australian Industry Group, on behalf of the Committee, surveyed business efforts to improve energy efficiency.
The report, Energy shock: pressure mounts for efficiency action, indicates that although the majority of businesses
have improved energy efficiency, most improvements have been modest. The report found that 35 per cent of those
taking action achieved negligible savings and 32 per cent improved energy efficiency by only 1 to 5 per cent. While
focussing on energy efficiency, the report suggests that there is considerable scope for businesses to improve
resource efficiency, and for government to pursue well-designed and tailored policies and programs to help
businesses do so.
Examples of resource efficiency improvement
Suleman Property Group – 15-storey office block at 470 Collins Street, Melbourne – 30 per cent saving in energy
costs following energy efficient retrofit.
Advanced Polymerik – Victorian chemical technology company – cut the volume of waste generated by 91 per cent,
completely removed chlorinated waste while doubling its yield by moving from traditional batch to ‘new flow chemistry’.
Andpak – polystyrene manufacturing located in the Sunraysia region – aims to reduce energy use by around 60 per
cent, while increasing production capacity by 40 per cent, through a major investment in highly efficient new moulding
machines.
Australian Vinyls – PVC manufacturer in Melbourne – aims to reduce its water use by 50 per cent by improving
production efficiency.
Dulux – powder and industrial coatings – is introducing a new waste elimination process involving the recovery and
reuse of powder coating fines and waste.
Plantic – manufacturer of bioplastics – has cut waste to landfill by 40 tonnes, saving the business $10,000 p.a.,
reducing time lost to production due to purging by 85 per cent, and cutting demand for virgin materials through
materials reuse.
Ferguson Plarre – bakehouses – the company’s new sustainable bakery saves the business over $250,000 each year
in electricity costs – a one-year payback on its initial investment.
9
VECCI/Sustainability Victoria – Carbon Down SME Market Segmentation Analysis
10
Australian Industry Group – Reducing business costs: saving money through resource efficiency
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
16
To help meet the company’s target to reduce greenhouse gas emissions by 25 per cent, Toyota installed a
microturbine powered Trigeneration Plant in 2010. This investment has reduced greenhouse gas emissions by an
estimated 760 tonnes per year and electricity consumption by 14 per cent.
PACIA sustainability case studies The Climate Group – Cashing in on Carbon Toyota Motor Corporation Australia
Factors inhibiting the uptake of business sustainability
The Committee commissioned NetBalance to research the barriers preventing businesses from improving their
sustainability. Table 1 summarises these barriers.
Table 1. Barriers to business sustainability improvement
Barrier
Description
Business capability – comprising:
Information and skills gaps
Companies have difficulties accessing the right skills or information with
available funding and/or they lack models to evaluate solutions.
Organisational factors
The organisational structure (e.g. efficiency initiatives are part of maintenance
rather than strategic budgets) and organisational inertia impede the uptake of
resource efficiency measures.
Decision making
Companies lack the capacity or incentive to consider resource efficiency in their
governance. Well-established norms, cultural factors and perceptions of
materiality hamper the investigation and uptake of resource efficiency initiatives.
Access to capital
Companies have difficulties securing funds to invest in resource efficiency
projects.
Regulatory and policy
Unintended consequences of regulations and policies on the uptake of resource
efficiency.
Planning
Government, including local government, is engaged in the planning of certain
activities, including waste and energy infrastructure. Barriers can arise from
sub-optimal provision and/or management of infrastructure.
Technical and technological
Site and industry specific implementation challenges (e.g. lack of space for
implementing co-generation in the building industry, or immature technology).
Structural
Companies have limited options due to operating environments (e.g. limited
options for commercial waste recycling or legally binding contracts) and/or due
to the way markets are set up and operated (e.g. volatility of markets for
recovered materials).
Split incentives
Resource efficiency measures are not adopted due to differing incentives for
parties involved (e.g. building owners pay the cost of implementing efficiency
measures while the benefits accrue to tenants).
Externalities
Externalities are non-priced benefits or costs to society that are not embedded
in the market and therefore create distortions.
Source: Based on NetBalance – Barriers Facing Victorian Businesses in Pursuing Measures to Improve Resource
Efficiency
Shortcomings in business capability and difficulties in accessing capital
A key message from the NetBalance research is that business capability – including information and skills gaps,
organisational factors and decision making – and access to capital (both internal and external to a business) are the
major barriers to improving business sustainability. These barriers occur across all sectors and sizes of business,
although access to capital appears to be more significant for small to medium-sized businesses (SMEs).
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
17
This business capability finding is consistent with research into the quality of Australian management practices in
general. The report, Management Matters in Australia, commissioned in 2009 by the Commonwealth Department of
Innovation, Industry, Science and Research, stated:
“Australian management practices rate marginally above average when benchmarked internationally … however, we
lag significantly behind the best performing country – the US – and our management score does not match the other
four top tier countries – Japan, Germany, Canada and Sweden … The research findings indicate that national debate
about the productivity performance of our economy should include thinking about how effectively Australian firms and
organisations are managed”.1111
The availability of management and workforce skills is critical to the wider take up of business sustainability practices.
The Committee’s perspective on sustainability related skills, and the means of addressing shortcomings, is discussed
in Section 4 of this report.
Other barriers
Other barriers impact businesses differently depending on the size of the business and the nature of the business
activity. For example:

larger businesses are more frequently concerned about regulatory barriers, reflecting the fact that they are
more likely than SMEs to meet thresholds for the application of regulatory requirements

while the most frequently cited barrier for the manufacturing sector relates to shortcomings in information and
skills, the retail sector identified split incentives as a significant barrier.
Addressing the barriers – the role of government?
Business and government must collaborate to tackle barriers to the diffusion of business sustainability throughout the
Victorian economy.
Business should not rely on government to address all barriers. As noted, shortcomings in business management
practices are significant – and businesses must work to address this.
However, government has a role to encourage and support businesses to improve sustainability where doing so
delivers a net benefit to the economy and wider community. Examples of such wider benefits include:

development of resilient and viable businesses – characteristics that are central to economic growth and
employment security

deferral of expansion of energy, water or waste management infrastructure – which in turn reduces cost
pressures that would otherwise drive up prices charged by utilities

reduction of greenhouse gas emissions at a lower cost than alternative emissions abatement activities

greater availability of recovered resources and less waste to landfill

stimulation of demand for cleantech products and services – which in turn generates economic and
employment growth in cleantech businesses and provides those businesses with a foundation for developing
export capacity.
Government measures can help to:
11

address barriers that are beyond the influence of business – for example, government can address split
incentives by implementing commercial building sustainability ratings and minimum standards for appliances
and equipment; it can address externalities through appropriate market instruments

reduce barriers to resource recovery and support the development of recycling infrastructure and robust
markets for recycled products
Department of Innovation, Industry, Science and Research – Management Matters in Australia: Just how productive are we?
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
18

ensure that regulatory and planning barriers do not constrain sustainability improvements – regulations must
be applied efficiently, without creating unnecessary compliance burdens and costs for business

provide appropriate support to accelerate the take up of sustainable business practices.
To ensure government measures are appropriately designed and targeted, the Committee has developed a set of
principles for the design and implementation of policies and programs. These are outlined in Table 2 and presented in
detail in Appendix 3.
Table 2. Principles for the design and implementation of government business
sustainability policies and programs
Principle
Policies and programs should:
Understand business needs and
drivers

be co-developed through interactive dialogue with business

be outcome focused

provide certainty – to the extent practicable – to underpin sound business
decision making and investment

recognise the need to provide business with sufficient lead time to respond

avoid imposing unnecessary regulatory and compliance costs

on business

strengthen the capabilities and capacity of business to respond to today’s
and future opportunities and challenges – recognising that sustainability
will increasingly be a factor that underpins business competitiveness

be cognisant of national and international standards and the evolving
business environment

be designed to achieve enduring outcomes

be easy to learn about and access, and be clear and simple to understand

involve low administrative burden for recipients and government

be appropriately designed and scaled to the relevant problem

be effective and efficient

seek to leverage – and not duplicate – existing measures at the state or
national level

operate as a connected/integrated package that is internally consistent

be appropriate to the role of government

be supported by transparent decision making

be adaptable/flexible but based on clear, timetabled and transparent
review processes

be effectively coordinated across delivery agencies.
Enhance business resilience and
viability
Easy to understand and access
Make a difference
Underpinned by good governance
and decision making
Government support for business sustainability – the current state
of play
The Committee welcomes the Victorian Government’s actions to transform policies and programs related to business
sustainability.
EPA’s new approach to compliance and enforcement should result in EPA actions that are more consistent and
predictable to business and the wider community. Sustainability Victoria, following a strategic review, is now focusing
on integrated waste programs and resource efficiency programs. These will help develop practical and tangible
solutions that help minimise impacts on the environment and contribute to a liveable and prosperous Victoria.
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
19
At the national level, the price on carbon is a major development, along with measures under the Clean Energy Future
program to help businesses deal with impacts on business costs and transition to a lower carbon future.
The Committee also recognises that a review is underway of state and Commonwealth programs related to climate
change mitigation. The goal is to ensure that these programs are complementary to a carbon price.
Victoria’s efforts to promote recycling are acknowledged by the Committee. These efforts are essential for addressing
emerging resource scarcity and for lowering business raw material and waste management costs. The Committee
supports continued actions to transition Victoria to a low waste community, and sees the innovation needed to achieve
this as a driver for cleantech growth and for achieving the Vision set out in Section 1 of this Report.
Alignment of government measures to encourage business sustainability
improvement
The Committee engaged Nous Group12 to conduct an analysis of 10 Victorian, 14 Commonwealth measures and 2
local government measures that seek to encourage business sustainability improvements beyond compliance with
minimum regulatory standards – Table 3 lists these measures. The analysis provided insights into: how well aligned
these measures are to the policy principles developed by the Committee; and whether various barriers to business
sustainability are adequately addressed by the measures.
Key findings13 include:

Collectively, the measures target the range of barriers that inhibit business from making sustainability
improvements.

However, there may be too many measures and these may be spread too thinly – only 14 of the 26 measures
appear to align with the scaled to the problem policy principle. This appears to a particular issue regarding
Victorian Government measures, with only 4 of 10 measures appearing to be scaled to the problem being
addressed.

There are multiple delivery agencies across government – 13 agencies deliver the 26 measures.

In order to institute change, businesses need information about risks and opportunities, the skills and
organisational capability to make an assessment and decide if change is worthwhile, and access to capital to
finance the change. This process forms an ‘action chain’ as illustrated in Figure 6. The NetBalance research
(discussed earlier in this report) identified shortcomings across this action chain as the major barriers to
improving business sustainability.
Figure 6. Action chain for businesses taking steps to improve sustainability
Barriers to action
Sustainability
action chain

Skills gaps
Skills gaps
Organisational
factors
Decision making
Assess
Decide
Become informed
Access to Capital
Invest
Government measures appear to have a greater emphasis on addressing barriers relating to the first step of
the action chain (addressing information gaps) and the last step (providing access to capital) than on
addressing barriers relating to the middle of the chain (addressing shortcomings in skills, organisational
capability and decision making):
o
12
Organisational
factors
Information gaps
17 measures address information gaps and 13 access to capital
Nous Group – Victorian Industry Sustainability: Alignment of Measures
The discussion of key findings is based on Nous Group’s analysis. However, due to factors including a change in status of some measures
subsequent to Nous Group being provided with information and undertaking its analysis, the program numbers cited here differ from those
presented in the Nous Group report – Victorian Industry Sustainability: Alignment of Measures
13
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
20
o

16 measures in total address one or more of the barriers relating to the middle of the action chain –
12 address skills gaps, 9 organisational factors and 7 the decision making barrier. Significantly
however, of these 16 measures, less than half (7) appear to satisfy the scaled to the problem policy
principle.
The measures appear to be primarily directed to manufacturing businesses – of the grants and loans available
to businesses for example, over 80 per cent target manufacturing businesses. Regarding resource types,
energy appears to be the predominant focus of the measures. Further research would be needed to consider
whether the focus on manufacturing and energy is appropriate.
Table 3 illustrates a number of these findings. It presents an overview of government measures in terms of the
barriers they address – with a particular focus on barriers relating to the sustainability action chain; and whether or not
the measures appear to be adequately scaled to the problem being addressed.
Table 3. Alignment of measures
Barriers relating to the ‘action chain’
Size of
business
targeted by
Measure
Resource
targeted
Access
to
capital
Other
Barriers
Scaled
to the
problem
Clean
Technology
Investment
Program
Large
carbon/
energy
x
x
x
Clean
Technology –
Food and
Foundries
Program
Large
carbon/
energy
x
x
x
Clean
Technology
Innovation
Program
Large
carbon/
energy
x
x
Energy
Efficiency
Opportunities
Large
energy
Reduced
withholding
tax for
Managed
Investment
Trust
investments in
commercial
buildings that
achieve 5 star
Green Star or
5.5 star
NABERS
energy rating
Large
energy
x
x
Clean Energy
Finance
Corporation
Large
carbon/
energy
x
x
Energy
Efficiency
SME
energy
Measures
Information
gaps
Skills
gaps
Organisational
factors
Decision
making
Commonwealth
x
x
x
x
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
x
x
x
x
x
x
x
21
Barriers relating to the ‘action chain’
Size of
business
targeted by
Measure
Resource
targeted
Information
gaps
Living
Greener
SME
all
x
Small
Business
Advisory
Services
Program
SME
all
x
x
Low Carbon
Australia
All
carbon/
energy
x
Manufacturing
Technology
Innovation
Centre
All
all
x
National
Greenhouse
and Energy
Reporting
All
carbon/
energy
Water
Efficiency
Labelling and
Standards
All
water
Carbon
Farming
Initiative
All
carbon
Environment
and Resource
Efficiency
Plan
Large
energy
& water
x
5 Star
Sustainability
SME
all
x
Driving
Investment for
New
Recycling
Program
SME
waste
Grow me the
Money
SME
all
x
x
x
Smarter
Resources
Smarter
Business
SME
all
x
x
x
Measures
Skills
gaps
Organisational
factors
Decision
making
Access
to
capital
Other
Barriers
Scaled
to the
problem
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Information
Grants
program
x
x
x
Victoria
x
x
x
x
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
x
x
x
x
x
22
Barriers relating to the ‘action chain’
Size of
business
targeted by
Measure
Resource
targeted
Smart meters
– Time-of-use
tariffs
SME
energy
Sustainability:
It’s Just good
Business
SME
all
x
YourChoice
SME
energy
x
Victorian
Energy
Efficiency
Target
All
energy
x
Water
Management
Action Plan
All
water
x
x
1200
Buildings
All
all
x
x
CitySwitch
All
energy
x
x
Measures
Information
gaps
Skills
gaps
Organisational
factors
Decision
making
Access
to
capital
Other
Barriers
Scaled
to the
problem
x
x
Program
x
x
x
x
x
x
x
x
x
Local
x
x
Refining efforts to diffuse business sustainability
Public funding is finite. To encourage business sustainability it is important to make the most effective and efficient
use of limited public funds. To that end, the Committee believes a review is needed of Victorian Government business
sustainability measures, considering the following factors:

Consistency of government measures with the principles for the design and implementation of government
business sustainability policies and programs identified by the Committee (see Table 2).

The benefit of refocusing efforts on a small number of measures:

o
with more substantial resourcing
o
with an increased focus on business capability
o
delivered by fewer agencies.
The best use of limited public funds. In particular, consideration of appropriate funding levels for grants and
rebates relative to funding for programs that seek to enhance business, reflecting upon:
o
Shortcomings in business capability being a critical barrier to the diffusion of business sustainability.
Businesses that cannot understand and make decisions regarding business sustainability will not
seek capital for sustainability improvements.
o
The recent emergence of alternative ways to finance business sustainability improvements,
particularly relating to energy efficiency improvement/carbon abatement. For example, Low Carbon
Australia, the Clean Energy Finance Corporation, the City of Melbourne’s 1200 Buildings Program
and the Victorian Energy Efficiency Target scheme are addressing access-to-capital barriers.
Importantly, these mechanisms have substantially greater potential reach and impact than State
Government grants.
o
The findings of Grattan Institute research into the effectiveness and efficiency of federal and state
government policies and programs that seek to reduce greenhouse gas emissions. This report found
23
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
that a range of grant-tendering programs have not reduced emissions at the necessary scale or
speed. It also found that rebate programs produce relatively little emissions abatement and are
“simply too costly for taxpayers per unit of abatement”. 14

o
The importance of encouraging and helping Victorian businesses to access Commonwealth-funded
programs, including the Clean Technology Investment Program. Particularly relevant in this context
are the findings of the report of non-government members on the Prime Minister’s Manufacturing
Taskforce:
o
“enhancing our competitiveness in a carbon-constrained economy will require strong support and
clear pathways for manufacturing firms to become more energy efficient and sustainable. The nongovernment members of the Taskforce support funding for the Clean Technology Investment program
… and ensuring that SMEs have the support and information required for accessing the program”. 15
The growing trend of leading businesses (usually large businesses) influencing and supporting businesses in
their supply chain (mostly SMEs) to improve sustainability. Where practicable, government measures should
try to leverage the influence and expertise within larger firms by supporting in-house programs that up-skill
supply chains.
The Committee recognises that this report has been prepared for the Victorian Government. However, many existing
programs are Australian Government programs. The Victorian Government could encourage the Australian
Government to consider the Committee’s recommendations during future reviews of Commonwealth business
sustainability measures.
The Victorian Government can also help businesses to access Commonwealth funding and other sources of capital
provided by private sector financial institutions. The new Smarter Resources Smarter Business program of
Sustainability Victoria points the way by helping medium-sized Victorian businesses apply for funding under a range of
programs. However, while this program is well designed, it as yet does not have sufficient resources to enable it to be
regarded as being ‘scaled to the problem’.
Sustainability Victoria’s Smarter Resources, Smarter Business Program will help businesses identify areas where
materials and energy efficient cost savings can be made and provides guidance, funding assistance, expert advice
and support to help businesses reduce costs through improving resource efficiency. The Program aims to address this
need by providing Victoria’s medium sized businesses with:

access to targeted information, tools and resources to help businesses better understand and improve their
resource efficiency

a business support program to facilitate leadership and networking opportunities

investment support for businesses to identify and implement resource efficiency measures

a recognition program to acknowledge those businesses that have implemented resource efficient practices and to
help communicate those achievements to their customers.
Recommendation
2. Focus on a small number of adequately resourced programs that help businesses integrate sustainability into their
standard operating practices. Government programs should be designed and implemented consistent with the
principles identified by the Committee.
i
The Committee has identified shortcomings in business capability (information and skills, organisational
factors and decision making) as a critical barrier to sustainability in business, and SMEs in particular. We
recommend that the Victorian Government give greater attention to addressing this barrier.
ii
Recognising that public funds are limited, we recommend that the Victorian Government:
14
Daley, J & Edis, T – Learning the hard way: Australia’s policies to reduce emissions, Grattan Institute
15
Commonwealth of Australia – Prime Minister’s Manufacturing Taskforce – Report of the Non-Government Members
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
24
iii

Review the balance of program funding delivering direct financial assistance (such as grants) relative to
business capability building. The Government should consider the recent emergence of mechanisms
that improve access to and leverage of private capital for resource efficiency investments. Mechanisms
such as Low Carbon Australia, the 1200 Buildings Program and the VEET scheme – which largely focus
on energy efficiency/carbon abatement – provide examples of approaches that can deliver greater reach
and impact than State Government grants alone.

Encourage and support Victorian businesses to seek funding available through Commonwealth
programs such as the Clean Technology Investment Program.

Leverage off and support the efforts of leading businesses that are up-skilling their supply chains to
improve sustainability.
The Victorian Government could encourage the Australian Government to consider the intent of these
recommendations during future reviews of Commonwealth business sustainability measures.
Improving information provision to business
The Committee engaged Helen Millicer and Associates to research good practice characteristics for providing
information on business sustainability. 16 The research considered:

the type of information businesses seek about sustainability

when businesses need information

how businesses prefer to access information

whether and how information needs vary by business type (size and sector).
The key findings include:

Victorian businesses experience problems accessing and using information on sustainability/resource
efficiency.

These problems appear to be widely experienced and are more acute in some areas than others. For
example, businesses find it more difficult to obtain relevant information on materials, resource efficiency and
waste than on water, energy and carbon.

Small businesses tend to have more difficulty finding and using information than larger businesses, or
businesses that are regulated and familiar with the subject. It also seems that businesses in manufacturing
and logistics are better informed than their counterparts in retail and transport.

Few government agencies or information providers define or distinguish their audiences, whether business or
the general public. This lack of definition applies to the process of producing material and its content. Also,
few websites enable self-selection of information according to sector, size or subject/purpose. Information in
print/electronic materials varies widely in quality, ranging from vague in purpose and language with no
capacity to establish relationships through to material that is clear in purpose with good internal navigation
and case studies.

There is room for improvement in the information prepared for and provided to business. Businesses want
clearly presented information that meets their needs. This information should explain how they can improve
and what it will involve in terms of time, money, payback, etc. They want this expressed in plain English, with
words familiar to them, with clear structure and visuals, such as diagrams, charts and photos. Because they
want to seek and find information quickly, businesses appreciate good links, cross references and someone to
talk to who can answer questions and help.
Reflecting on these findings, the Committee has outlined at Table 4 a suite of good practice characteristics for
business sustainability information.
Helen Millicer & Associates – Establishing the characteristics of good practice in the provision of information for business regarding resource
efficiency and sustainability
16
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
25
Committee research has identified 17 government programs that provide information to business about sustainability.
These information sources are siloed and fragmented and often fail to meet good practice characteristics. This makes
it difficult for businesses – particularly time-poor smaller businesses – to get the information they need.
The Victorian Government should aim to align its provision of information on business sustainability with the good
practice characteristics. This would provide a basis for developing a clear and easy to navigate roadmap for
businesses about how to improve sustainability, and about government programs that help businesses overcome the
barriers to improving sustainability. This should include an effort to seamlessly coordinate the work of the Department
of Business and Innovation, the Department of Sustainability and the Environment, Sustainability Victoria, the
Environmental Protection Authority and the Department of Primary Industries. It should also include an effort to build
collaboration with industry associations such as Ai Group, VECCI and PACIA. The Government should apply the good
practice characteristics in the design and implementation of business sustainability information in the future.
It is also critical that business be aware of available information. The best structured information with the best possible
content is of little value if business doesn’t know it exists. The Victorian Government, in collaboration with industry
associations, should explore approaches to significantly increase the reach of information to businesses in Victoria.
Recommendation
3. The Committee has identified a set of good practice characteristics that the Victorian Government should apply in
developing a navigable roadmap for the provision of information on business sustainability. This roadmap should
seamlessly coordinate the work of relevant government agencies and be developed in collaboration with industry
associations.
i
The Victorian Government should, within two to three years, seek to reach 75 per cent of Victorian businesses
with information on business sustainability.
Table 4. Provision of business sustainability information – characteristics of
good practice
Understand the audience
The target audience for the information should be clearly identified and its needs understood. It is important to
understand and engage the audience in terms of its needs, how the audience will use the information, and the
audience’s existing knowledge, familiarity and specialisation with the issue and subject. Some businesses, especially
small businesses, are new to sustainability/resource efficiency whereas others are well advanced and want specific
solutions to complex efficiency issues. An understanding of audience will influence the choice of subject, content,
language and level of detail in, for example, technical information and diagrams.
Tools and reach
Tools and avenues should be selected based on audience preferences. Contact numbers and names should be
provided to enable dialogue on questions. For information, businesses often first turn to other businesses such as
suppliers or customers, or advisors like accountants. Businesses also use the internet, consultants, industry
associations and government. This should be kept in mind when seeking to extend the reach of information.
Subject and purpose
The subject – energy, water, waste or materials – and how a business can use the information should be
described clearly from the outset. Business motivations generally include cost reduction, customer needs,
regulations or environmental concerns. Subjects of interest might include ‘using recycled water in manufacturing
equipment’ or ‘cutting costs in waste collection for commercial premises’ or ‘training staff on how to comply with
regulations’. It is also important to use key words in headings, key word search, indexes and tabs to improve
information navigation.
Language and content
Practical content should be presented with meaningful and specific terms. Industry jargon, acronyms and
generic terms, such as sustainability, should be defined. Visuals, such as photos, trend graphs and diagrams should
help the reader understand how to apply the information. Businesses are looking for facts on requirements, impacts
and risks. Information should include real life stories about potential gains and challenges. Summaries of, and links to,
expert reports can also be useful.
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Structure and detail
A good structure and visual template organises different types of information. This can include introductory
prose, bullet point lists, boxed up key facts, and targets and captions, all with cascading levels of detail. This helps
businesses navigate past irrelevant information. Plain English should be used in headings to describe the content, and
in index and navigation panels.
Links, context and scope
Links and referrals to shared information should be provided to enable businesses to quickly and seamlessly
navigate between agencies. Statements on context and scope help businesses understand information and what
government is doing to help. Many businesses have little understanding of the inter-relationships in responsibilities
across government and don’t have time to deal with this.
Credibility and collaboration
Collaboration should occur in the development and dissemination of information to ensure alignment of
materials and effort among government agencies and groups such as industry associations, business advisors and
education/research institutions. The authority for the content, such as an Act or policy, should be referenced to
demonstrate the credibility of information for businesses.
In summary …
The Committee’s work suggests that if business sustainability is to become an integral part of the standard operating
practice of Victorian businesses, the following is critical:
1. It is necessary to understand the major barriers that prevent sustainability from being integral to standard
operating practice. The Committee’s research indicates that the critical barriers relate to shortcomings in
business capability and access to capital; these barriers are particularly acute for SMEs.
2. Government measures to help overcome these barriers must operate efficiently and effectively and be
appropriately scaled to the problem. The Committee believes that for this to occur it is necessary to pursue a
small number of adequately resourced measures that particularly focus on building business capability. The
Committee also recognises that the recent emergence of alternative financing mechanisms offers greater
potential reach and impact than State Government grants.
3. Government measures should be designed and implemented in line with the principles identified by the
Committee. In this section of the report, the Committee has largely focused on measures that encourage
beyond-compliance improvements in business sustainability, rather than on legislation and regulations that
impose minimum standards of environmental performance. However, the principles recognise that where
regulations are applied, they should avoid duplication and unnecessary regulatory and compliance costs.
Regulation is discussed further in Section 5.
4. Businesses need clear and easily accessible information that is relevant to their needs. This includes
information about actions businesses can take to improve their sustainability and lower operating costs, about
government policies and programs that can assist them in this regard and, as applicable, about compliance
requirements. A number of government agencies (State and Commonwealth) and private sector organisations
(including business associations) provide information through websites and other means. These current
approaches are often fragmented and sub-standard in terms of their content and structure. This situation
could be improved by applying good practice characteristics developed by the Committee to develop a
navigable roadmap for the provision of information on business sustainability.
Figure 7, below, builds on the action chain in Figure 6. It illustrates the interaction between the barriers to business
sustainability across the action chain, the range of government measures that are or could be applied to the barriers
across the action chain and the role of a navigable roadmap, where the roadmap provides information to help
business sustainability become part of standard business practice.
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Figure 7. The action chain revisited – government measures to address
barriers across the action chain and the role of a navigable roadmap in
conveying information to business
Barriers to action
Organisational
factors
Information gaps
Skills gaps
Skills gaps
Organisational
factors
Decision making
Access to Capital
Sustainability
action chain
Become informed
Assess
Decide
Invest
Government
measures
Information
Support and
specialist advice
Support and
specialist advice
Grant or subsidy
Support and
specialist advice
Ratings and
Standards
Alternative financing
mechanisms
Regulation
Navigable roadmap
– an information
delivery platform

Authorative source of Information on what business can do

Access and connections to specialist advice

Information on ratings and standards

Connections to regulators. Tools to assess regulatory requirements

Information on grant programs & online application

Information on financing options – tools to assess best option
Navigable Roadmap: Victorian Government led and linked to Commonwealth Government,
Industry Associations and other service providers
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3. Victoria – open for cleantech business
Goal: Victoria to be recognised internationally as being ‘open for
cleantech business’
Strategy: Business and government to work together to foster an
enabling environment for cleantech
Cleantech is not a fad. It’s a strong and accelerating trend. Cleantech businesses are already making a substantial
contribution to the Victorian economy and enhancing the business environment for cleantech would help this
contribution grow rapidly.
Cleantech is not an industrial sector, per se. Instead, it is an umbrella term for a group of commercial technologies,
products, services and processes that measure, reduce, prevent, eliminate and/or remediate environmental problems.
Cleantech is an enabler and a beneficiary of business sustainability. As an enabler, cleantech products and services
are central to achieving resource efficiency and sustainable production. They help us reduce our energy use, remove
pollutants from our waterways and air, produce energy without emissions and turn waste into useful resources.
Cleantech can play a pivotal role in the liveability of our cities, the productivity of our economy and the health of our
environment. In turn, efforts by business to improve sustainability create a demand for cleantech products and
services, stimulating growth and employment in cleantech businesses.
Clean technology (cleantech) includes businesses whose products and services aim to reduce or eliminate negative
environmental impacts and/or improve the productive use of natural resources, relative to conventional technologies.
A global opportunity
There is no single, authoritative source for information on the size of the global cleantech market. In 2008, the US
Department of Commerce estimated the market was valued at US$780 billion.17 In September 2012, the German
Government released research indicating that the worldwide market for green technology has grown by an average of
11.8 per cent per year since 2007 to be now worth over EUR 2 trillion (A$2.44 trillion). The German Government
research predicted the market will more than double to EUR 4.4 trillion (A$5.36) by 2025.18 Table 5 compares these
estimates of cleantech market size with other global industries.
“Clean technology is not about saving the world … it is using technology to make processes and industries more
efficient and thus saving them money by offering more sensible options.”
John O’Brien, Managing Director
Australian CleanTech
Table 5. Cleantech – already a significant market
Sector
Revenues A$ billion*
Cleantech
2,440
Automotive and Light Duty Vehicle Manufacturing
1,975
Motor Vehicle Parts and Accessories Manufacturing
1,340
17
US Department of Commerce, Office of Energy and Environmental Industries Industry Facts
18
Greentech Made in Germany 3.0
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Pharmaceutical Products
950
Computer Hardware Manufacturing
550
Biotechnology
200
* Sources: Estimates for 2011 in IBISWorld, except for Cleantech – Greentech Made in Germany 3.0
A vibrant venture capital market backs the growth of cleantech firms. Global venture capital investment in cleantech
grew steadily from 2002 to 2008, peaking in that year at over US$9.5 billion. Although the global financial crisis
reduced investment in 2009, the upward trend resumed in 2010.
Principal markets for cleantech include Europe, North and South America, China, India, Southeast Asia, the Middle
East and North Africa, as depicted in Figure 9.
China offers significant opportunities for cleantech growth. The China GreenTech initiative has estimated that the
potential market in China for cleantech solutions in 2013 could be between US$500 billion and US$1 trillion – as much
as 15 per cent of China’s forecasted GDP.
China GreenTech Report
Cleantech in Victoria – the current state of play
The Victorian Industry Capability Network estimated that in 2008 there were 1,850 Victorian cleantech businesses
employing 18,500 people, with revenues of around $3.6 billion. 19 Research for the Department of Business and
Innovation by WSP Environmental (WSP) and Marsden Jacob Associates (MJA) 20 found that the majority of these
businesses were small, with 80 per cent employing 25 staff or less. It also found an approximate 50/50 split between
emerging cleantech companies (operating for less than five years) and established companies (operating for more
than five years).
In Victoria there are many small and micro cleantech businesses, few mid-sized businesses and a small number of
large, primarily foreign owned companies. Emerging companies are more likely to be small operations with less than
10 employees, earning less than $200,000 annually. Also, they are more likely to operate at a loss or a very narrow
profit margin, may be reliant on external cash flow and may face major challenges accessing finance and
demonstrating their business case. As a rule of thumb a company needs annual revenue of about $20 million to have
an effective international strategy.
Figure 9. Major cleantech markets
North America

Pioneer cleantech market

Ranked 5th on the 2012 Global Cleantech Innovation Index

Experienced strong growth in 2011

Large investments in transport

Long history of supplying cleantech services and products and strong VC role cleantech

Victorian opportunities – transport and water
Europe

Pioneer cleantech market
19
This includes pure-play businesses that operate exclusively in cleantech and other businesses that include cleantech as part of a broader mix of
products and services.
20
WSP Environmental and Marsden Jacob Associates – Defining Victoria’s Clean Technology Niche
Industry Sustainability Working Committee Advisory Report
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
3 of the top 5 countries on the 2012 Global Cleantech Innovation Index (Denmark, Sweden & Finland)

Poor growth in 2011

Key sectors – energy, transport, water, waste and built environment

Long history of deploying renewables and high energy efficiency

Victorian opportunities – waste and carbon services
China

High growth country

Ranked 13th on the 2012 Global Cleantech Innovation Index

Key sectors – energy, transport, water, waste and built environment

Will be a major manufacturer of equipment – especially renewables

Victorian opportunities – energy, water, waste, built environment and carbon services
SE Asia

Victorian opportunities – transport, built environment, waste management and energy efficiency, water and air
monitoring and remediation and carbon services
Middle East/North Africa

Low growth but some major projects

Saudi Arabia ranked 37th out of 38 on the 2012 Global Cleantech Innovation Index

Key sectors – energy, transport, water, waste and built environment

Establishing cleantech hubs in Masdar UAE), Saudi Arabia and Desertec

Victorian opportunities – energy, water and built environment
South America

Victorian opportunities – energy efficiency, smart grid, waste management and carbon services
India

Rapid growth in renewable energy installed capacity but cleantech overall lags China and US

Ranked 12th on the 2012 Global Cleantech Innovation Index

Key sectors – energy, transport, water, waste and built environment

Key supply side challenges

Victorian opportunities – energy, water, waste and built environment
Australia

Decarbonisation and renewable energy are major cleantech drivers

Ranked 15th on the Global Cleantech Innovation Index

Key sectors – energy, water, waste, built environment and land management

Competition from imports

Victorian opportunities – water, waste, built environment and carbon services
Source: Modified from Defining Victoria’s Clean Technology Niche, WSP Environmental and Marsden Jacob
Associates
Water – cleantech
South East Water established a commercial arm – iota. – to test and prove ideas and concepts, and commercialise
successful innovation and technology. iota. is successfully exporting its products, services and information systems,
relating to water and wastewater, to countries including the US, UK, Singapore and New Zealand.
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Green Buildings
Improving the energy efficiency and sustainability of buildings can play an important part in delivering environmental
improvements and cost savings. Importantly, Victoria’s strengths in green building design and construction offer great
potential for cleantech exports. The Green Building Council of Australia and Austrade recently developed a publication
to internationally showcase Australian companies with green building expertise. A number of these companies are
Victorian based.
The WSP/MJA report found that Victoria has niche strengths in a range of cleantech areas, including:

built environment – energy efficiency and sustainable materials

green manufacturing – waste minimisation and resource recovery, advanced manufacturing and advanced
materials

water – recycling and reuse, management and monitoring, pollution reduction and control, and irrigation.
Victoria has established itself as a centre for carbon market services and has succeeded internationally in exporting
integrated design and building services through the Australian Urban Systems cluster. Recent super trade missions to
India and China have also included a focus on cleantech.
A strategic approach to growing cleantech businesses in Victoria
Victoria cannot afford to be passive – we must act to ensure we don’t fall behind our competitors who are moving to
exploit opportunities in the global market. Given that cleantech is such a large and diverse field, a strategic approach –
targeting our cleantech strengths – is needed for Victoria to capitalise on its potential for cleantech growth and to
demonstrate that it is, in fact, ‘open for cleantech business’.
A Victorian cleantech strategy will need to address the barriers to the growth of cleantech businesses as outlined in
Table 6.
Table 6. Barriers to cleantech growth
Market development – domestic
and export
Strategies and actions to establish or
expand the potential market for a
product or service. This can be
through new users or new uses of a
product or service.

Inadequate market access

Not export ready

Poor market intelligence

New/unproven technologies

Stringent regulatory environment
for new technologies

Difficulty in demonstrating
business case, for example, first
mover ‘disadvantage’

Lack of demonstration facilities
for new technologies
Business capability
Innovation
The combination of people, skills,
systems, processes, policies,
knowledge, experience, technology
and relationships that enables a
business to achieve its objectives.
Change that adds or creates value.
This entails the conversion of
knowledge and ideas into a benefit,
and includes all facets and stages of
the research, development and
diffusion/commercialisation process.


High level of research and
development but poor
commercialisation outcomes and
skills
Large number of start-ups and
SMEs, with many:
o
not investment ready
o
not export ready

Technology push, not market pull
o
having poor
management skills

Poor market intelligence
o
experiencing a low
return-on-investment

Underdeveloped networks and
poor collaboration

Few mid-sized companies

Problems with access to
capital/finance

Problems with access to
information/business intelligence
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Victorian cleantech strategy – factors to consider
Recognising the role of government policies and programs in driving cleantech demand …
and the importance of a clear and stable regulatory and policy environment.
Government policies, regulations and programs affect cleantech more than many other industries, to the point of being
major drivers for cleantech markets. Therefore, stability around government measures is critical to encourage
cleantech investment and growth. Clear, long-term policy signals around energy, water, waste, building standards,
climate change and other environmental measures enables business to innovate and invest for the future. Regulatory
and policy uncertainty prevents businesses from attracting capital and can damage Victoria’s appeal as a destination
for cleantech investment.
Collaboration between government and business …
To succeed in growing cleantech businesses and promoting the message that Victoria is open for cleantech business,
a Victorian cleantech strategy must be developed with business needs in mind. Collaboration with business is
essential.
… and between cleantech businesses
Although cleantech businesses are diverse in size, market orientation and fields of endeavour, common interests may
offer opportunities for mutually beneficial collaboration.
Because cleantech is not a single sector, there are currently a number of groups that represent the interests of
specific areas of cleantech. There is, however, no unifying industry group or forum that is representative of cleantech
businesses.
The Colorado Cleantech Industry Association (CCIA) provides an example of an industry led, industry focused
organisation established to foster development of cleantech businesses. The CCIA’s mission is to provide advocacy,
public policy leadership, development and education in the cleantech sector. The Association represents the industry’s
point of view to all levels of government; it convenes forums for capacity building, education, training and creating
public policy initiatives consistent with industry needs; it provides reliable and sophisticated information about
cleantech industry trends; and it maintains a comprehensive database of cleantech companies in Colorado.
India Super Trade Mission – cleantech
The Victorian Super Trade Mission to India in February 2012 identified an opportunity for Victorian cleantech
companies, Earth Systems Pty Ltd and OTEK Australia Pty Ltd, to partner with the Victorian Department of
Sustainability and Environment on The Ganga River Basin Project (World Bank and Government of India).
This project, which is a Public Sector Linkages Program initiative of AusAid, involves both a technical solution concept
and an implementation roadmap for the Tannery Industry in Kanpur, India. The tannery industry has been identified as
the most significant source of industrial pollution in the Ganga River, particularly in the vicinity of Kanpur.
The roadmap, to be developed by Earth Systems and OTEK Australia, will consider the social and environmental and
technical solutions available to this industry in Kanpur to provide a sustainable basis for the industry.
It is envisaged that successes from this work will be replicated in other parts of the Ganga Basin, and potentially
nationally.
This project may open the door to future opportunities for Victorian cleantech companies to secure contracts to assist
with the clean up of pollution along the Ganga River.
A Victorian cleantech strategy should consider how cooperation between cleantech businesses could be encouraged
through an industry led, industry focused approach. The Victorian Government could catalyse established sectoral
groups and leading players in cleantech to convene a forum that brings cleantech business interests together to
consider the benefits of, and options for, greater cooperation and networking. The Government played a similar role in
the establishment of the BioMelbourne Network and the Australian Urban Systems Cluster. What emerges from such
a discussion, including any model for ongoing cross-business dialogue and collaboration, would ultimately be
determined by the views of the attending cleantech business interests.
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A focus on international engagement
International purchasers of clean technologies – including government agencies – will typically seek technologies and
solutions that are proven to be effective and reliable. They will also often seek government endorsement of a company
supplying the technology. Government therefore has an important role to play in laying the foundations for cleantech
exports – for example, through meeting such expectations by fostering and maintaining strong government-togovernment relationships.
Export opportunities for cleantech products and services can arise when a country decides to address an
environmental problem. Victoria’s reputation for environmental management, its water and energy market reforms,
and the reputation of its environmental institutions, such as the EPA, provide a platform for successful government-togovernment links. The success of Victorian cleantech businesses during recent trade missions to India and China
demonstrates this potential.
Long-term success requires ongoing engagement from cleantech businesses with international markets, and the
Victorian Government can help facilitate this through industry and environment departments.
Leveraging business development programs that are available to all businesses …
The Victorian Government should work with industry associations to ensure Victorian cleantech businesses are aware
of existing Victorian and Commonwealth business development programs. These general business support programs
include: Victoria’s Global Acceleration program, the Small Business Mentoring program, the Manufacturing
Productivity Networks grants program, the Investing in Manufacturing Technology grants program, the Technology
Trade and International Partnering program, the Australian Government’s Small Business Advisory Services,
Enterprise Connect, and Commercialisation Australia.
… and programs that encourage innovation …
The Victorian Government should also work with industry associations to ensure Victorian cleantech businesses are
aware of and have the opportunity to leverage existing Victorian and Commonwealth programs that support
innovation.
Cleantech and the SME Market Validation Program
Under the program to date, sustainability related projects that have proceeded to proof of concept stage include a
portable biochar maker (with North East Catchment Management Authority as the host entity) to dispose of woody
weeds while reducing carbon emissions and assisting farm productivity and sustainability, a biodigester/dairy
effluence management system (with the Department of Primary Industries as the host entity) and a smart sensor
platform to enhance the benefits from smart meters to help energy customers better understand and manage their
energy consumption.
… but with a focus on Victoria’s identified strengths
It is also important to consider measures that help connect innovative businesses to Victoria’s research base to
ensure these businesses can access technology expertise at crucial points of the product development process.
Related to this, Victoria could leverage its world class research capabilities by continuing to support centres of
excellence that facilitate linkages between researchers and Victorian companies to diffuse knowledge and technology.
Examples of such Victorian-based centres include: the Centre for Water Sensitive Cities (Monash University); the
Victorian Organic Solar Cell Consortium (led by the University of Melbourne); the Australian Carbon Fibre Research
Facility (Deakin University); the Centre for Aquatic Pollution Identification and Management (University of Melbourne &
RMIT); the Victorian Centre for Sustainable Chemical Manufacturing (Monash University); and IBM Research –
Australia (located in the University of Melbourne precinct).
The water and built environment sectors are high value but conservative in their approach to business models and
practices (particularly in construction) and regulatory considerations (particularly in relation to water). This
conservatism can be a barrier to innovation. A predisposition exists towards incumbent technologies and proven
processes that can make it difficult for providers of alternative and/or locally developed technology solutions to
establish the commercial and technical viability of their products.
Given the importance of the demonstration stage in the development and commercialisation of new technologies –
and that potential domestic and international customers require a demonstration that a technology actually works in
practice – it will be important to consider the adequacy of existing testing facilities. This is particularly true for
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34
technologies where Victoria has competitive strengths such as water, the built environment and green manufacturing.
New facilities may be required.
The Singapore Water Hub is a water storage facility and treatment plant that can be taken offline as required to install
and test new water treatment technologies and processes without compromising safety and regulatory requirements.
This is a notable regional example of a test bed facility.
A constructive dialogue between the Victorian and Australian governments
By collaborating in the design and delivery of cleantech business support programs, the Victorian and Australian
governments would help ensure that limited public funds achieve maximum efficiency and effectiveness.
Dialogue between the Victorian and Australian governments should also consider expanding the reach of programs
that successfully address barriers to cleantech business growth. For example, the Victorian Government could, with
the Australian Government, explore ways to increase the scope of the Commonwealth’s Cleantech Business
Accelerator Program, with the goal of making the program available to a larger number of businesses. This program
provides entrants to the Australian Clean Technologies Competition with an intensive mentoring package tailored to a
diversity of needs, including access to venture capitalists, patent support, legal advice, research support and
corporate assurance. Of the 103 entrants in this year’s competition, 22 were from Victoria.
Recommendations
4. Provide clear and long-term regulatory and policy directions for waste, energy, water and other environmental
policies to help cleantech businesses plan and invest in Victoria.
5. To capitalise on global market opportunities and Victoria’s identified strengths, develop a cleantech strategy as a
matter of priority. Such a strategy should:
i
Include general innovation, business development and export measures for all cleantech businesses, and
specifically targeted support to areas where Victoria has identified strengths.
ii
Be developed by collaborating with established sectoral groups and leading players in cleantech. As one step
in facilitating this, the Victorian Government should convene a forum bringing cleantech business interests
together to consider the merits of greater cooperation and networking and – depending on the outcomes of
the discussions – how this could best be progressed.
iii
Strengthen collaboration between Victoria and the Commonwealth in the design and delivery of programs in
order to gain maximum leverage from limited public funds.
iv
Have a major focus on international engagement, building on the momentum created by recent trade missions
to China and India.
v
Connect innovative businesses to Victoria’s research base to ensure access to technology expertise at crucial
points of product development.
vi
Assist businesses to connect with research and technical knowledge by continuing to support Victorian-based
centres of excellence.
vii Review existing demonstration and testing capabilities in Victoria with a view to developing new facilities,
where required, in collaboration with industry and the research community.
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4. Skills for Sustainability
Goal: Victorian businesses to have access to the workforce skills
needed to improve business sustainability and develop globally
competitive cleantech businesses
Strategy: Government and stakeholders to collaborate in developing
a strategic approach to delivering a workforce with the skills
required for business sustainability and cleantech growth
A skilled workforce is a critical enabler of productivity and economic growth. As more businesses focus on improving
their sustainability, and as growth of cleantech businesses accelerates, skills shortfalls will become more acute.
A 2012 discussion paper by the Australian Workforce and Productivity Agency suggests that there will be “continued
strong demand for high level skills and the need for continued investment by enterprises and government to build the
future workforce necessary to sustain Australia’s economy”.21
Business sustainability related skills are defined by the Council of Australian Governments (COAG, 2009) as “the
technical skills, knowledge, values and attitudes needed in the workforce to develop and support sustainable social,
economic and environmental outcomes in business, industry and the community”. The literature also refers to green
skills, and this term is generally interchangeable with sustainability skills. Such skills tend not to be new skills per se,
but a topping up of existing skills. They are obtained by additional training to familiarise workers with new concepts
and practices required by businesses and the wider economy as the transition to enhanced environmental
sustainability occurs.
Swinburne University of Technology –
National Centre for Sustainability: Systemic issues that inhibit the uptake of skills development
The availability of an appropriately skilled workforce to support business sustainability is critical for achieving the first
two objectives identified in this advisory report, namely: Sustainability – standard business practice and Victoria –
open for cleantech business. This is underlined by the discussion earlier in this report where shortcomings in business
capability – including decision-making capacity and information and skills – were recognised as key barriers inhibiting
business sustainability.
Concerns regarding skills shortages and shortcomings have been a recurring theme in the Australian context. These
concerns relate to the full gamut of skills, including:

Professional – particularly with respect to engineering and science-based skills and knowledge. A recent
report from Engineers Australia22 indicates that the increases in the number of Australian-trained engineers
graduating each year are still not enough to solve Australia’s engineering skills shortages. Over 50 per cent of
Australia’s engineering labour force is born overseas; the latest data shows visas for engineering occupations
have tripled since 2003/04. A 2012 Senate Standing Committee on Education, Employment and Workplace
Relations report indicated that:
“ … currently migration provides about half of the skilled engineering workforce in Australia. The Committee
received conflicting evidence in relation to migration policy in Australia. Some submitters called for greater
migration, such as the expansion of the Enterprise Migration Agreements and skills visas, where other
21
Australian Workforce and Productivity Agency – Future Focus: Australia’s skills and workforce development needs – discussion paper
22
Engineers Australia – 2012 Statistical Overview
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submitters called for caution – arguing that while skilled migration was essential, it would not address the skills
shortage in the long term”.23

Managerial – a 2009 report for the Federal Department of Innovation, Industry, Science and Research 24
found that although Australian management practices rate marginally above average when benchmarked
internationally, management quality does not match the five top tier countries of the US, Japan, Germany,
Canada and Sweden. The report suggested that “improving management performance is a key opportunity for
longer-term sustainable growth for Australia”.

Vocational – although the Vocational Education and Training sector has done substantial work around
sustainability in recent years, a lack of demand from industry has inhibited the uptake of training. Other
inhibitors include the cost of investing in new curriculum, technologies and professional development for
teachers, and uncertainty about sustainability related policy – particularly relating to carbon emission
reductions.
The megatrends and structural changes outlined earlier in this report highlight the skills-related challenges faced by
business. In this new and evolving context, a trend now exists toward considering jobs in terms of the broad set of
skills needed to give businesses the capacity to be resilient in the face of challenges and change.
The IBM Smarter Planet Initiative survey in 2009 reported a global business trend away from routine, top-down
manufacturing-based models to support the global shift to services-based economies. With respect to the workforce
skills required, the report noted:
“ … the types of skills business will most likely need in such an economy are people who have deep knowledge in one
discipline and broader knowledge in others – “T-shaped” people.”25
This is particularly pertinent to Victoria, which is largely a services-based economy.
Higher skills and education levels, both at the managerial level as well as the general workforce in manufacturing
firms, are positively and significantly associated with better management. It follows that engaging better educated
personnel, both as managers and shopfloor workers, and constantly upgrading their skills through training and
development initiatives, will almost certainly contribute to enhanced management performance within firms.
Department of Innovation, Industry, Science and Research – Management Matters in Australia: Just how productive
are we?
“In the area of sustainability, we will know we have been successful when we no longer need sustainability plans or
sustainability officers/personnel – as sustainability practices will be embedded in work practices.”
Young Australian sheet metal worker who won a bronze medal at the 2009 International World Skills Competition in
Calgary
Systemic barriers
Despite a clear understanding that skills shortages and shortcomings are a constraint on business sustainability and
productivity, a number of systemic issues inhibit the move from problem understanding to problem resolution.
Research and consultation conducted by the Committee found that these systemic issues fall under three broad
themes:
1. Shortcomings in workforce capacity to meet business needs – including existing workers and new
entrants to the workforce. Key issues include:
o
the existing workforce is largely untrained in business sustainability, and insufficient guidance and
support exists for new entrants who have been trained
The Senate, Education, Employment and Workplace Relations Reference Committee – The shortage of engineering and related employment
skills
23
24
Department of Innovation, Industry, Science and Research – Management Matters in Australia: Just how productive are we?
25
IBM – Smarter Planet
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o
a lack of clarity, guidance and incentives for transferability of skills (new and existing workers, cross
sector, career path, young and old, etc.)
o
little investment in upskilling of the existing workforce – particularly by SMEs
o
a lack of increasingly important ‘soft’ or cross-cutting skills, such as systems thinking, communication,
critical thinking and reflection, capacity for integrated and cross-disciplinary team work and problem
solving – also lacking is the ability to work with surprise or emergent challenges
o
a lack of incentives for workers to take up training, and limited demand from industry to encourage
training providers to invest in sustainability related training programs.
2. A shortfall in demand for sustainability skills. Key issues include:
o
demand for sustainability training in the current workforce is weak – business is unclear about
business benefit, makes do with its current skills mix, is uncertain about new skills needs and climate
change policy settings, is time poor, and questions the affordability of retraining
o
an inadequate understanding of the benefits of business sustainability manifests itself in a lack of
understanding of the business case for developing and engaging workers with sustainability related
skills
o
cost is regarded as a prohibitive barrier, particularly in light of uncertainty about the benefits of
business sustainability.
3. Shortcomings in workforce development – the structures and processes to support the development of
workforce capacity are inadequate. Key issues include:
o
a disconnect between government, industry and education/training providers in the understanding,
needs and provision of sustainability skill development
o
contrary to what business needs, legacy institutional arrangements and funding models tend to drive
a focus on qualifications rather than training that addresses skill and knowledge gaps
o
the demand for, and effectiveness of, training programs is constricted because businesses have
difficulty accessing training and because of a lack of skilled trainers and incentives for sustainability
training
o
insufficient emphasis on training for increasingly important soft skills and the ability to work with
surprise or emergent change.
Addressing the barriers
The need for a coordinated, strategic response
A coordinated, strategic response is required to address the breadth and diversity of barriers to the development of
skills for business sustainability. This response should ensure that the existing workforce – particularly that employed
by SMEs – and new entrants to the workforce acquire the skills needed to improve business sustainability.
A coordinated, strategic approach is also critical for ensuring that responses to skilling barriers are developed and
implemented in a consistent – rather than ad hoc – manner. Ongoing responses must relate to transparent objectives
and be monitored to ensure that outcomes are achieved effectively and efficiently.
The following considerations should be central when developing a strategic approach to business sustainability skills:

The importance of addressing the skills of the existing workforce and new entrants, including:
o
providing skills that are adaptive, flexible and applicable to differing circumstances while being
relevant to business today and tomorrow
o
developing a workforce that has the requisite technical skills but also soft or cross-cutting skills.

How to create stronger incentives to encourage uptake of business sustainability skills – these incentives
should enhance the understanding of the business benefits of such skills and increase current and future
workforce capacity for improving business sustainability

The need to ensure all key stakeholders are actively engaged in the process – developing responses to
business sustainability skills barriers should take account of all relevant perspectives – it should foster cocreation/co-design and greater connectivity between industry, education and training institutions, industry
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councils, professional bodies and government; and should also increase stakeholder ownership of
sustainability skills training

The need for an enduring commitment by industry, government and tertiary education and training institutions,
with a clear articulation of respective roles

Embedded monitoring and evaluation processes so that progress can be tracked and measures can be
refined over time, as necessary, in response to new knowledge and changes in practice.
The Committee believes that the foundations for developing a strategic response are in place. Recognition of the
problem exists, and a number of response measures are being pursued. The Australian and Victorian governments
are supporting various initiatives to develop sustainability skills, including:

the national Green Skills Agreement (2009 – 2012) led to a review and revision of training packages to include
skills for sustainability

the Australian Workforce and Productivity Agency has been established to develop policy and provide advice
on directing skills funding to industry needs

the former Victorian Skills Commission established a Green Skills Taskforce which produced an audit of skills
needs for the transition to a low-carbon economy

Victorian Government agencies such as the Higher Education and Skills Group, and Sustainability Victoria,
have actively provided strategic advice, and supported and shaped training packages around sustainability, in
areas such as energy efficiency, lean manufacturing, renewable energy, and building and construction

the Australian Government’s four-year, $32 million Clean Energy and Other Skills package will enable
tradespeople and professionals in key industries to deliver clean energy services, products and advice to
Australian communities and businesses.
The Committee is aware that the Victorian Department of Education and Early Childhood Development is pursuing a
new Industry Participation Model approach to training. This approach aims to increase the industry’s influence within
the training market and is expected to be fully implemented from 1 January 2013. The process, overseen by the
Industry Skills Consultative Committee (ISCC) and chaired by the Minister for Education, will:

identify emerging trends that are likely to affect industry productivity, and the skills and training needs of
Victorian workers

be a sounding board on policy issues (both national and state)

advise on potential solutions where the training market is not meeting industry needs

convene an Annual Industry Skills Conference.
Whether the ISCC is the appropriate body to further develop a strategic approach to addressing sustainability skills
issues is a matter for the Victorian Government.
Recommendation
6. Develop a coordinated, strategic approach to ensure that new entrants and the existing workforce – particularly
employees of SMEs – acquire the skills necessary to improve sustainability and grow cleantech businesses. This
strategic approach should consider:
i
skills that are adaptive, flexible and applicable to differing and evolving circumstances, including technical
skills and soft or cross-cutting skills
ii
incentives to encourage business sustainability skill development
iii
addressing shortages in engineering and science skills
iv
ensuring all key stakeholders are actively engaged in the process
v
an enduring commitment by industry, government and tertiary education and training institutions, with a clear
articulation of respective roles
vi
an embedded monitoring and evaluation process.
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5. Victoria leading the way
Protecting the environment while improving regulatory and program
efficiency
This is an important issue for business, and the Victorian Government has already taken a number of important steps
to enhance its approach to fostering business sustainability. As discussed in Section 2, reforms to the EPA and
Sustainability Victoria have clarified roles and laid the foundations for a better targeting of policies and programs.
Victoria has also taken steps to improve the efficiency of its environmental regulation. One measure of success is the
number of environmental licences in different states. A recent report 26 suggests that on this measure Victoria is
performing well, relative to other jurisdictions (Figure 11).
Figure 11. Number of licences in selected Australia states
Queensland
13,569
New South Wales
4,023
Victoria
996
Western Australia
1,190
Source: Department of Environment and Heritage Protection – Review of Environmentally Relevant Activities – Draft
Regulatory Assessment Statement, 2012
However, more can be done through a process of continual improvement to ensure environmental goals are pursued
and achieved in the most efficient manner possible – with regulatory burden on business minimised. This includes
addressing overlapping regulatory requirements between government agencies and across states. Such duplication
negatively impacts on business by increasing business complexity and costs.
Regulatory reform should seek to deliver an aligned national regulatory framework, particularly in areas that present
no obvious reasons for a state-based approach. This includes streamlining and combining reporting requirements,
eliminating duplication between state and federal programs, and providing common formats and timelines for data
submissions. Ideally, environmental reporting should involve a ‘one-stop shop’ aligned to a common reporting period
(i.e. the Australian financial year).
In this context, the Committee welcomes the Victorian Government’s commitment – set out in its Environmental
Partnerships statement – that it will work to improve the efficiency of regulatory performance, including to:

systematically review key areas of Victoria’s environmental regulation

reform Victoria’s statutory framework for environmental impact assessments (EIA) to reduce the regulatory
burden of the EIA while improving the protection of Victoria’s environment

demonstrate national leadership by working with other jurisdictions to maintain high environmental standards
while reducing duplication and streamlining regulatory requirements and practices. 27
26
Department of Environment and Heritage Protection – Review of Environmentally Relevant Activities – Draft Regulatory Assessment Statement
27
Government of Victoria – Environmental Partnerships
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Removing regulatory barriers to business sustainability
improvements
Businesses wishing to improve sustainability sometimes face impediments beyond their control. Committee members
have directly experienced such impediments in pursuing cogeneration and other distributed energy options. As a
result, the Committee adds its voice to calls for market reforms to streamline and improve connection processes for
medium-scale cogeneration and trigeneration.
The Property Council of Australia and ClimateWorks Australia engaged Seed Advisory to prepare a report – including
six real world case studies – into the barriers facing business in deploying cogeneration. The report noted that –
“increasingly, Australian property owners and developers are seeking to incorporate cogeneration into their existing
buildings and new developments. However, they face a complex and burdensome connection process and regulatory
barriers that inhibit them from deploying the technology”.
The report also found that “improving the connection process for mini, small and medium cogeneration systems up to
5 megawatts would translate to several hundreds of thousands of dollars in savings for the six project proponents”
examined in the report, “with much greater system-wide savings achieved for cogeneration project owners in Australia
over coming years”.
Seed Advisory – Unlocking Barriers to Cogeneration
In particular, the Committee supports the Victorian Competition and Efficiency Commission’s (VCEC) recommendation
– made as part of its inquiry into distributed generation – that the Victorian Government indicate to the Australian
Energy Market Commission that it supports proposed amendments to National Electricity Rules to establish
connection standards and rights for embedded generators. VCEC also recommends that should the national rule
change process not be resolved by June 2013, the Victorian Government should add a licence condition requiring
Distribution Network Service Providers in Victoria to establish such standards and rights.
Government leadership through demonstration and procurement
Government can lead by improving the sustainability of its own operations, demonstrating what is possible and
creating opportunities for local business. An important example is the Victorian Government’s Greener Government
Buildings program. This program is projected to reduce the greenhouse gas emissions of government operations by at
least 20 per cent by 2020, delivering over $1 billion in accumulated cost savings.
Government procurement can help build markets for local products – including for cleantech.
The Victorian Government’s Smart SMEs Market Validation Program (MVP) facilitates demand-driven partnerships
between SMEs and host Victorian Government agencies. These partnerships develop innovative products, processes
and services that meet the needs of agencies and offer broader market potential.
As part of the process, SMEs are encouraged to collaborate with universities, research organisations and other
experts to develop a technology solution for their host. The project has 3 stages: (i) government agencies identify and
apply for support to develop new technology solutions for specific needs, with successful applicants funded for a
feasibility study; (ii) a grant is provided for the conduct of the feasibility study; and (iii) successful feasibility studies
progress to a proof of concept, with funding to develop new technologies to the demonstration/prototype stage.
The Victorian Government could build on the Smart SMEs MVP by identifying sustainability related issues for a
dedicated cleantech stream in the program.
Government leadership through behaviour change and awareness
The community’s demand for sustainable products and services – and its support of companies based on reputation
as well as product offerings aligned to their needs and values – is an important driver for business sustainability.
Businesses respond to customer demand and can only shape the market within the limits of the understanding and
awareness of consumers.
The Victorian Government has a long history of community awareness raising programs with over 15 years of
involvement in programs such as waste wise, the Australian Sustainable Schools initiative, kerbside recycling,
Smarter Choice, Detox Your Home, Byteback computer recycling and support for the national Greenpower program.
These efforts are complemented by those of Victorian Councils and NGOs.
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The Committee recognises the important role that broader community awareness plays in the sustainability arena and,
specifically, in supporting the market for sustainable business. The Committee encourages the continuation of these
efforts.
Recommendations
7. Act upon VCEC recommendations about the connection of medium-scale generators such as cogeneration and
trigeneration.
8. Consider further leveraging Victorian Government procurement to: demonstrate the cost-reduction benefits of
resource efficiency improvements; and provide a demand driver for cleantech business growth and innovation.
9. Continue efforts to raise community awareness of the importance of sustainability in general and of sustainably
produced products and services.
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6. Establishing and maintaining momentum
Business sustainability matters and will continue to grow in importance in the face of economic challenges and global
megatrends.
To establish momentum, the Committee’s recommendations will need to be considered and progressed through a
process of cross-portfolio cooperation that engages all relevant Victorian Government agencies. The Portfolio
Coordination Group which currently operates within the Victorian Government’s environment portfolio is an example of
a process that can help deliver improved inter-agency coordination.
It will also be important for the Victorian Government and Victorian business to actively keep business sustainability
on the agenda. This should include:

monitoring progress towards the Vision and Objectives recommended by the Committee

monitoring, reviewing and – as needed – revising the actions taken in response to the recommendations
made in this report.
In addition, the Committee believes it would be fruitful for the Victorian Government to establish an ongoing forum for
dialogue with business leaders regarding progress towards the Vision and Objectives.
Recommendations
10. Establish a cross-portfolio process to consider and progress implementation of the Committee’s
recommendations.
11. Monitor progress toward the Vision and Objectives, and the actions taken in response to the recommendations of
this report.
12. Consider establishing an ongoing forum for dialogue with business leaders regarding progress toward the Vision
and Objectives.
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Appendix 1 – Industry Sustainability Working Committee
Terms of Reference and Membership
Terms of Reference
Objective
The Working Committee is an advisory body that will assist the Victorian Government to:

Develop a strategic policy framework for sustainable business opportunities and employment.

Understand the implications for employment and skills arising from efforts to improve industry sustainability.

Develop an effective strategy for the development, growth and export of cleantech products and services.
Context
Across the globe governments, industry and communities are responding to major environmental challenges, such as
climate change and the impacts of urbanisation and industrial development.
New technologies and practices are being developed and global markets for environmental or cleantech* solutions are
developing rapidly with estimated annual value of over a trillion dollars.
Governments around the world are working with industry to:

maintain industry competitiveness by assisting businesses and industries to reduce their environmental
impact and adjust to new environmental constraints (e.g. sustainable manufacturing and eco-innovation
support, assistance with energy efficiency and new production technology that might assist businesses adjust
to a carbon price);

facilitate employment growth and transition including through job creation and skills development (e.g.
infrastructure, construction and building retrofit programs that were a common response to global financial
crisis); and

develop new knowledge intensive cleantech businesses, jobs and exports (e.g. cleantech strategies that
support the development and deployment of new technology, high-tech job creation and export growth).
The Working Committee provides an opportunity for the Victorian Government to consider these issues, to review
existing measures and activity and consider how well they align with future needs of Victorian industry and the
economy. The Committee will also consider what new measures are required to maximise the economic opportunities
from a transition to a low carbon and more sustainable economy.
*Cleantech products and services include: renewable and low emissions energy, water technology, energy efficiency,
sustainable manufacturing processes; sustainable building materials; green buildings, and sustainable farming and
land use
Key Deliverables
The Working Committee will provide advice to the Government on:
1. A strategic policy framework to encourage businesses to include environmental quality in their strategies and
adopt new sustainable technologies and production practices.
o
Drawing on best practice approaches from Australia and overseas develop a strategic policy
framework for government business sustainability interventions. In developing the framework the
Committee should consider:

the current and anticipated drivers of environmental sustainability;

the roles of different tiers of government and of the private sector in delivering improved
environmental quality and business sustainability measures;

the needs of different types of businesses (e.g. manufacturing and services, small
businesses) and whether measures should be transitional or long-term;
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
the benefits of technological and practice innovation and the barriers to their adoption.
o
Undertake a stocktake of all relevant measures and delivery structures †, consider alignment to the
strategic policy framework and provide advice on future policies, programs and delivery and
coordination arrangements.
o
Develop a coordinated, easy to access and navigate roadmap to help businesses understand both
their obligations, and the programs and the organisations (government and private sector) that might
assist them in enhancing business sustainability. Recommendations about initial steps to achieve this
should be made by April 2012.
2. Understand the implications for employment and skills arising from efforts to improve industry sustainability. In
undertaking this task the Industry Sustainability Working Committee should:
o
draw on the work of the Victorian Skills Commission’s Green Skills Taskforce.
o
advise on the effectiveness of current measures and whether a targeted jobs and skills strategy is
required.
3. The Victorian cleantech strategy which is being developed by the Victorian Government.
4. Provide advice on other matters requested by the Minister for Innovation, Services and Small Business.
†
To encompass regulation, levies, market, incentive, financial assistance and information measures delivered by the
Victoria and Commonwealth and private sector organisations on their behalf
Members of the Committee
Mr Ross McCann – Executive Chairman, QENOS Pty Ltd (Committee Chair)
Ms Rosemary Bissett – Head of Sustainability Governance and Risk, National Australia Bank
Mr Cameron Cormack – Corporate Manager, Strategy and Environment, Toyota Motor Corporation Australia Ltd
Ms Vivienne Filling – National Manager, Business Advisory Services, Australian Industry Group
Mr Jim Galvin – General Manager Retail Markets, Origin Energy
Dr Abid Khan – Pro Vice-Chancellor (International), Monash University
Mr Paul Lang – Environment Manager, Coles Group Limited
Mr John Newton – Sustainability and Environment Manager, Amcor Limited
Mr Andrew Pickering – Managing Director, Cleantech Ventures Pty Ltd
Mr Bruce Rodgerson – CEO and Managing Director, Rubicon Systems Australia Pty Ltd
Mr Jürgen Schneider – Regional General Manager (Victoria, SA and Tasmania), Siemens Limited Australia
Mr Peter Voigt – Chief Executive Officer, Clean TeQ Limited
Mr Jon Ward – National Environment Manager, VISY
Other members
Professor Mike Sandiford – Director, Melbourne Energy Institute (Committee member until May 2012)
Mr Richard Berriman – VECCI (Committee member until April 2012)
Secretariat
Ms Robyn White (Department of Business & Innovation [DBI])
Mr Mark Dess (DBI)
Mr Harry Buskes (DBI)
Ms Marlinda Duskovic (DBI)
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Ms Val MacGregor (Sustainability Victoria)
Thanks to the following presenters and external advisors:
Mr Stan Krpan (CEO – Sustainability Victoria)
Ms Gillian Sparkes (Department of Sustainability and Environment and Chair of the Board of Sustainability Victoria)
Mr John Merrett (Chairman – EPA Victoria)
Ms Robyn Archer (Chair, Green Skills Taskforce)
Mr John Spasevski (Director, Market Facilitation, Skills Victoria)
Mr Nick Rowley (Nick Rowley & Associates)
Mr Mark Burford (Nous Group)
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Appendix 2 – Industry Sustainability Working Committee
Sub-Committees
To advance work in relation to its Terms of Reference, the Industry Sustainability Working Committee (ISWC) formed
three sub-committees:

Strategic Policy Framework Sub-Committee

Cleantech Sub-Committee

Skills for Business Sustainability Sub-Committee.
An overview follows of the approach taken by each Sub-Committee.
Strategic Policy Framework Sub-Committee
Membership

Rosemary Bissett

Vivienne Filling

Abid Khan

Jürgen Schneider

Jon Ward
The Sub-Committee’s work focused on developing advice regarding a Vision and Objectives for business
sustainability, and a set of principles for recommendation to the Victorian Government on the design and
implementation of business sustainability support programs.
As part of its work, the Sub-Committee convened a forum that invited experts to provide their perspective on the
scope and nature of a strategic policy framework. The experts included:

Dan Atkins – Shaper Group

Professor Dave Griggs – Monash Sustainability Institute, Monash University

Romilly Madew – Chief Executive of the Green Building Council of Australia

Nick Rowley of Nick Rowley and Associates

Professor Stuart White – Institute for Sustainable Futures, University of Technology, Sydney.
The Sub-Committee also drew on research into barriers to business sustainability prepared for the ISWC by
NetBalance.
Cleantech Sub-Committee
Membership

Jim Galvin

Andrew Pickering

Bruce Rodgerson

Jürgen Schneider

Peter Voigt
The Cleantech Sub-Committee applied its members’ specialist knowledge about cleantech business and financing to
consider whether there was a need for a Victorian cleantech strategy. The Sub-Committee also considered the nature
and scope of the issues that would arise in developing and pursuing such a strategy.
The Sub-Committee drew on work by WSP and Marsden Jacob Associates, commissioned by the Department of
Business and Innovation – Defining Victoria’s Clean Technology Niche. It also considered a range of literature about
47
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the scale of cleantech opportunities internationally, and approaches being adopted in Australia and overseas to
stimulate the growth of cleantech businesses.
Skills for Sustainability Sub-Committee
Membership

Rosemary Bissett

Cameron Cormack

Paul Lang
The Sub-Committee addressed the ISWC’s Terms of Reference regarding the provision of advice on “the implications
for employment and skills arising from efforts to improve industry sustainability”. It also considered “the effectiveness
of current measures and whether a targeted jobs and skills strategy is required”.
The Sub-Committee oversaw a range of activities in developing its input for the ISWC, including:

A literature review of skills for sustainability, incorporating and building on the Green Skills Taskforce report.

Consultation with a number of external experts and officers from the Department of Education and Early
Childhood Development.

A Skills Expert Forum that gathered expert opinion and evidence to inform the work of the Skills SubCommittee. Experts contributing at the forum included:
o
Ray Ison, Monash Sustainability Institute
o
Garry McDonald, Swinburne National Centre for Sustainability
o
Bob Paton, Manufacturing Skills Australia
o
Matthew Belleghem, EnviroSearch
o
Mark Callaghan, World Skills Australia
o
Ian Caroll, Central Gippsland Institute of TAFE
o
Denise Stevens, TAFE Development Centre
o
Gail Bray, Kangan Institute
o
Olivia Tyler, Treasure Wines Estate
o
Julie Roberts, RMIT
o
Kerrie Dickson, Kangan Institute
o
Lois Stephens, DEECD Higher Education and Skills Group
o
Munjit Gill, DEECD Higher Education and Skills Group.
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Appendix 3 – Principles for government measure design and
implementation
Principle
Elements – measures should …
Understand business needs and
drivers

be co-developed through
interactive dialogue with business

be outcome focused
Implementation – giving effect to
the principles
The design of a measure should
be based on information/evidence
regarding ‘what will work for
business’ rather than on
assumptions by those designing
measures. In this context, it is
important to recognise that a onesize-fits-all design approach will
often be inappropriate. Business is
not homogenous. For example,
measures that may be useful for
large business may not be
effective for small businesses.
Measures should be designed to
achieve outcomes rather than specify
business inputs. For example, if a
measure is addressing energy
efficiency, it is better to frame it in
terms of outcomes such as X%
reduction in energy use per unit of
input, rather than specifying that
technology ‘Y’ must be adopted.
This approach also recognises that
technology changes over time – in
terms of its nature and relative costs.

provide certainty – to the extent
practicable – to underpin sound
business decision making and
investment
Measures that operate for a limited
time – including those that are
designed for longer-term operation
but are terminated – risk undermining
business confidence, including by
giving rise to a ‘boom-bust’ cycle.
Additionally, measures that are
announced as operating only for a
short period of time risk businesses
rushing to apply for support without
having undertaken the preparation
necessary to enjoy the full benefits of
the measure. Alternatively, if
businesses don’t have adequate time
to prepare, they may not bother to
apply for support.
Longevity of measures is important.
However, measures should not be
introduced with the expectation that
they will operate indefinitely or
operate unchanged in the light of
evolving circumstances (see the
principle of “good governance and
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Principle
Elements – measures should …
Implementation – giving effect to
the principles
decision making” below).

Enhance business resilience and
viability
28
recognise the need to provide
business with sufficient lead
time to respond
Businesses need time to determine
the best means of responding to a
measure. For example:

Regulations may need to be
implemented with a lead time
following announcements in
circumstances where businesses
need to modify production
processes in order to comply.

Measures involving financial
incentives such as grants should
include a lead time before
funding starts to enable
businesses to plan for use of the
funds

Where a measure requires
specific skills or capital
equipment in order to be
effective, sufficient lead time
should be provided to ensure
these foundational requirements
are in place. For example, a
measure’s success might be
conditional on the conduct of
energy audits to identify
opportunities for cost-effective
improvements in energy
efficiency. Where this is the case,
it is important, inter alia, that a
sufficient pool of accredited
energy auditors are in place to
underpin the measure.

avoid imposing unnecessary
regulatory and compliance
costs on business
If a regulation is proposed, it should
be designed in accordance with the
Victorian Guide to Regulation 28

strengthen the capabilities and
capacity of business to respond
to today’s and future
opportunities and challenges –
recognising that sustainability will
increasingly be a factor that
underpins business
competitiveness
Pressure on businesses to improve
environmental performance/resource
efficiency comes from a range of
factors, including regulatory
requirements in overseas markets,
regulatory and market-based
measures operating nationally (e.g.
carbon pricing and the Renewable
Energy Target scheme) and at a
state level (e.g. EPA licensing,
Environmental Resource Efficiency
Plans), and customer
preferences/demands from end
Department of Treasury & Finance – Victorian Guide to Regulation
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Principle
Elements – measures should …
Implementation – giving effect to
the principles
consumers and other businesses in
the supply chain. These pressures
have implications for business cost
structures and competitiveness.
Measures should be designed and
implemented to help build business
capability and capacity to deal with
these pressures.
Easy to understand and access

be cognisant of national and
international standards and the
evolving business environment
In designing measures, government
should reflect upon existing (and
emerging) national and international
standards. It is critical that Victorian
measures do not contradict such
standards or seek actions from
Victorian businesses that may be
counterproductive in the longer term.
For example, measures that promote
actions by Victorian businesses that
are inconsistent with evolving
business trends may ultimately be a
waste of resources and/or may not
be consistent with the long-term
viability of a business.

be designed to achieve enduring
outcomes
Measures should be designed to
engender and institutionalise
behavioural change in the target
businesses. Measures that only
foster short-term/non-enduring
change are unlikely to be regarded
as effectively achieving sustained
positive outcomes.

be easy to learn about and
access, and be clear and
simple to understand
Business is less likely to adopt
complex measures or those that
impose a large administrative burden.
For example, where grants funding
involves overly complex application
processes, and/or where the
prospects of receiving funding are
uncertain or low, businesses may be
reluctant to incur the administrative
effort and cost of applying.
Measures are unlikely to be effective
if businesses are not fully aware of
their existence and
requirements/offerings. When
implementing a measure, sufficient
funding should be provided to ensure
effective communication/awareness
raising.
A problem for business – in the past
and at present – is the lack of an
authoritative, central point of
information for all government
measures relating to business
sustainability. All measures –
irrespective of departmental/agency
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
51
Principle
Elements – measures should …
Implementation – giving effect to
the principles
implementation responsibilities –
should be identified on a single
government website/portal.
Make a difference

involve a low administrative
burden for recipients and
government
Measures should also involve a low
administrative burden on government
– high administrative overheads
erode what is often limited funding
available for measures.

be appropriately designed and
scaled to the relevant problem
Measures should operate at an
adequate scale – with respect to
scope (i.e. breadth of businesses
affected by the measure) and depth
(i.e. with sufficient resourcing/impact
to make a real difference to
businesses affected by the measure).
The creation of a ‘confetti’ of smallscale measures should be avoided.
This approach is unlikely to be
efficient or effective (i.e. make a
genuine difference across the
spectrum of Victorian businesses). It
also risks confusing businesses
about which, if any, measures they
may be eligible for or will find helpful.
Measures may be introduced as
demonstration projects or feasibility
studies. It is often important to
demonstrate the effectiveness of a
measure. However, demonstration
projects/feasibility studies should only
be pursued where there is a genuine
expectation of a measure being
scaled up if the demonstration proves
successful. This could include an
intention for Victoria itself to scale the
measure or it could be a means of
advocating a position to the
Commonwealth or through national
processes. Demonstration projects
should not be ‘strung out’ by further
small rounds of demonstration
projects, including projects that are
simply a rebranding of previous
demonstrations.

be effective and efficient
Measures should be assessed to
ensure that the anticipated benefits
exceed expected costs – that is, a
measure should have a positive
benefit-cost ratio at the level of
business and the wider
economy/society.

seek to leverage – and not
duplicate – existing measures at
the state and national level
Scarce resources will likely be
wasted or inefficiently used if Victoria
implements measures that duplicate
or substantially overlap
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
52
Principle
Elements – measures should …
Implementation – giving effect to
the principles
Commonwealth measures. This
situation also risks confusing
business.
That said, Victorian measures may
be justified, even if
Commonwealth/national measures
are in place, if ‘value add’ can be
demonstrated. An example would be
where Victorian funding leverages
Commonwealth funding to benefit
Victorian businesses.
Where Victoria regards a
Commonwealth/national measure as
inadequate or poorly designed, the
first recourse should be to advocate
for reform of that measure rather than
establishing a further Victorian
measure. Should advocacy fail, the
need for Victorian measures should
be determined by applying the other
principles set out here.

Underpinned by good governance
and decision making

operate as a
connected/integrated package
that is internally consistent
be appropriate to the roles of
government
Businesses are subject to minimum
levels of sustainability related
requirements as established by
Federal and Victorian
legislation/regulation, including
market-based measures such as
carbon pricing (which are
underwritten by
legislation/regulation). Victorian
measures introduced to enhance
business environmental sustainability
should align with compliance
requirements. In particular, these
measures:

should not undermine compliance
requirements

should avoid ‘paying’ businesses
to take action required by
regulation – that is, measures
operating in conjunction with
compliance requirements should
seek to encourage businesses to
move beyond compliance and,
therefore, provide improvements
that are additional to those driven
by compliance.
This is a threshold question that must
be addressed at the outset when
considering potential action by the
Victorian Government to encourage
improved environmental sustainability
by Victorian businesses. Key factors
to consider include:

Industry Sustainability Working Committee Advisory Report
State Government of Victoria
Does the Constitution or
53
Principle
Elements – measures should …
Implementation – giving effect to
the principles
convention/practice dictate that a
proposed measure is within the
purview of the Victorian
Government?

Is there an overriding need for
national consistency which
mitigates against Victoria
introducing a measure that
applies only to Victoria?

If a proposed measure is likely to
require substantial resources to
be effective, is this level of
resourcing feasible for Victoria
acting alone? If not, is it
appropriate for Victoria to
implement the measure initially
as a means of demonstrating its
value with a view to it being
picked up later by the
Commonwealth or through
national processes? Similarly,
even if it may be preferable for
action to occur nationally, is there
benefit in establishing a proposed
measure in Victoria as a means
of demonstrating its value for
promoting improvements in
business sustainability?

Would the measure be useful in
supplementing existing
Commonwealth action in order to
leverage that action to benefit
Victorian businesses and the
wider economy?

Will particular Victorian business
needs be insufficiently
recognised by national processes
or by the Commonwealth
focusing on ‘average’ national
circumstances?

be supported by transparent
decision-making
Analyses underpinning the case for a
measure should be publicly available.
As set out in the principles relating to
understanding business needs and
drivers, measures should be
developed through interactive
dialogue with business.

be adaptable/flexible but based
on clear, timetabled and
transparent review processes
Businesses operate in a dynamic
environment. Government measures
to help businesses become more
sustainable must be adaptable as the
business environment and factors
like technology change.
Additionally, measures should not be
introduced in the expectation that
they will operate indefinitely or
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
54
Principle
Elements – measures should …
Implementation – giving effect to
the principles
continue to operate unchanged in the
face of changing circumstances. For
example, evolution in technologies
and their costs, changing business
conditions and so on, may require
that measures be modified over time.
It is important that measures operate
as planned, and effectively and
efficiently achieve their stated
objectives. Even where this is initially
the case, changes in factors beyond
the measure (e.g. changes in
technologies and/or their cost,
changes in business operating
conditions, etc.) may mean that the
original design of a measure may no
longer be entirely suitable, or that the
measure itself may no longer be
appropriate or needed.
Consequently, measures should be
subject to periodic evaluation and
review. Ideally, a review schedule
should be announced as part of
measure design. This would create a
clear and transparent expectation
about the timing of the review, and
would also ensure that business
knows about the timing, creating
greater confidence in the measure.
Evaluation and review processes
should be transparent and should
involve an element of independence
from the departments/agencies that
implement the measure.

be effectively coordinated
across delivery agencies
As part of sound governance,
implementation responsibilities for a
measure should be clear and
transparent. This is also important for
businesses which need to know
which department/agency to contact
about a measure.
Where a measure involves more than
one government department/agency,
one of the implementing
departments/agencies should be
nominated as the lead body.
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
55
Research commissioned by the Industry Sustainability
Working Committee
Barriers Facing Victorian Businesses in Pursuing Measures to Improve Resource Efficiency – prepared by
NetBalance, 2012.
Establishing the characteristics of good practice in the provision of information for business regarding resource
efficiency and sustainability – prepared by Helen Millicer and Associates, 2012.
Literature review on systemic issues that inhibit the uptake of skills development – Business sustainability skills –
prepared by Swinburne University of Technology, National Centre for Sustainability, 2012.
Victorian Industry Sustainability: Alignment of Measures – prepared by Nous Group, 2012.
Industry Sustainability Working Committee Advisory Report
State Government of Victoria
56
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