Australia’s 2035 Climate Target: Key Insights for Corporate Leaders

Table of Contents

• Clearer Outlook for Business Planning
• Policy Signals That Will Shape Corporate Action
• Implications Across Key Sectors
• Opportunities for Early Movers
• What Should Businesses Do Now?
• Looking Ahead

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Australia’s 2035 climate target is a new national commitment to reduce emissions by 62–70% by 2035. This strengthens the earlier commitment of a 43% reduction by 2030 and signals a clear shift in expectations for decarbonising Australia. Analysis by the Climate Change Authority (CCA) and consultation with the Government underpins this move, combining economic modelling, sector reviews, and stakeholder input.

We recently hosted a webinar to unpack what this means for business, exploring the implications for strategy, investment, and risk management. As Eliza Murray, Deputy CEO of the CCA, noted, “Australia can be more than a quarry – we can be the workshop of a cleaner world.” This perspective highlights the opportunity for industry growth and innovation alongside compliance, themes we unpack below.

Clearer Outlook for Business Planning

The 2035 target provides a defined national pathway for decision-making. Australia will need to accelerate emissions reduction across the economy with a focus on electricity, transport, industry, resources, and agriculture. For businesses, the electricity transition is largely being managed at a system level, but Tennant Reed, Director – Climate Change and Energy from the Ai Group warns that

“We should not underestimate the breadth and the amount of work to reach the target range.”

Much of what needs to happen will occur within corporate Australia.

“Higher national targets don’t stay confined to Canberra, they cascade. They flow through to stronger policy levers, sharper investor scrutiny, and tighter disclosure requirements. If you’re a board director, you’ll feel it through sustainability reporting standards, the Safeguard Mechanism and forthcoming sector transition plans. If you’re an investor, you’ll see it in the capital flows shifting toward credible science-aligned strategies. And if you’re an executive, you’ll find it in social licence, market licence and regulatory licence increasing. Increasingly the same license, they’re just merging together.

So the business question isn’t really how do we comply, but how do we compete?

Because the same forces that tighten compliance also create opportunity. Investors want credible transition plans. Customers demand low-carbon supply chains and governments are offering co-investment and certainty for early movers. So those who see climate ambition as a strategic signal, not a regulatory chore, will capture the growth markets. We’re looking at green iron, green hydrogen, critical minerals and low carbon manufacturing.” Eliza Murray.

This new target marks a pivotal moment. Higher national targets don’t stay confined to Canberra; they cascade. They flow through to stronger policy levers, sharper investor scrutiny, and tighter disclosure requirement.”

Eliza Murray, Deputy CEO Climate Change Authority

Policy Signals That Will Shape Corporate Action

The government’s new Net Zero Plan will steer a fair and efficient transition, enabling businesses and communities to plan, invest, and act for long-term value. In our webinar, we explored some of the key levers set to drive change and shape corporate strategy.

• Safeguard Mechanism Review
  The next Safeguard Mechanism reform will be conducted by the Clean Energy Regulator in the 2026–27 financial year. Expect discussion on baseline decline rates, coverage thresholds, and offset restrictions. Ai Group anticipates a desire for more abatement within company operations, alongside expanded and intensified federal and state policies. The Carbon Market Institute recently released some interesting analysis on what the new reforms could cover. Safeguard 3.0 at least in draft form is expected within 18 months.
• Mandatory Climate Reporting
  Reporting to AASB S2 under the Australian Sustainability Reporting Standards (ASRS) is underway from the beginning of this year, requiring up to 6,000 companies to disclose climate risks, opportunities, and emissions performance. This transparency will influence investor decisions and regulatory oversight. Setting Scope 1 and 2 targets and eventually Scope 3 is becoming standard through the disclosures. These requirements will cascade beyond the largest companies who have to report, into their value chains. The ASRS Scope 3 component and rising expectations for decarbonisation mean businesses across sectors will need credible targets and transition plans.
• Capacity Investment Scheme (CIS)
  Immediate focus on firming and renewable generation will shape energy markets under the CIS – the a federal program that guarantees revenue for renewable and clean energy projects, reducing investor risk and speeding up infrastructure development. “The government is closely watching the National Electricity Market Review, which is shaping up to be critical for making investment in the full range of electricity services easier, essential for a very clean grid to function,” Tennant Reed.
• New Vehicle Efficiency Standards
  Further reviews for Australia’s new vehicle efficiency standards will accelerate transport sector change, with implications for logistics and procurement.
• Carbon Border Adjustment Mechanism (CBAM)
  Tennant Reed from Ai Group notes the CBAM could interact with the Safeguard Mechanism, creating complexity for trade-exposed sectors.

These signals will cascade through boardrooms, shaping sustainability reporting, capital flows, and compliance strategies. For executives, market licence and regulatory licence are merging, where investors are increasingly linking capital access to credible transition plans.

Implications Across Key Sectors

• Electricity: Expected to deliver about half of the national emissions reduction to 2035 through renewable growth, firming investment, and coal plant retirements.
• Industry: Facilities will need to consider electrification, process changes, and efficiency improvements. Cement, steel, and chemicals may see new policy measures to support competitiveness.
• Transport: Vehicle efficiency standards and electrification will reshape fleets and logistics.
• Agriculture: Improvements in fertiliser use, electrification of equipment, and herd management will lead. Feed supplements remain at an early stage for broad adoption.
• Resources: Mining and extraction operations will face pressure to decarbonise through electrification, renewable integration, and low-emission technologies for processing.
• Built Environment: Buildings will need to adopt energy-efficient design, electrified heating and cooling, and low-carbon materials to meet tightening performance standards

Opportunities for Early Movers

• Investment Confidence: Clear national direction supports capital attraction. Investors favour organisations with credible emissions pathways and transparent reporting.
• Market Differentiation: Customers and supply chains seek reliable climate information and lower-carbon products. Demonstrating progress strengthens competitiveness.
• New Industry Growth: Australia’s renewable resources and critical minerals create opportunities for clean energy supply chains and low-carbon manufacturing.

What Should Businesses Do Now?

1. Review exposure to policy changes across electricity, transport, and industry, and understand implications for your operations.
2. Prepare for mandatory reporting under ASRS, including Scope 3 emissions and a credible climate transition plan aligned with science-based targets.
3. Build internal capability for climate governance, data management, and scenario planning to support long-term decision-making.
4. Engage supply chain partners on emissions data, target setting, and collaboration opportunities.
5. Assess nature-related risks and opportunities, alongside carbon strategies to ensure future resilience and compliance with emerging frameworks.
6. Explore technology investments in electrification, energy efficiency, and low-carbon production methods.

Looking Ahead

Australia’s 2035 target signals a decisive phase of transition. Ai Group expects expanded and intensified policies to meet the target range. For business, this creates a stable setting for planning and an environment that supports innovation and investment.

Organisations that act early with credible, science-aligned strategies will be positioned to adapt and compete in a low-carbon economy.

How Anthesis Can Help

At Anthesis, we guide organisations to turn climate ambition into practical action. From setting science-based targets and preparing for ASRS or Safeguard reporting to designing decarbonisation strategies and integrating nature and ESG priorities, we guide businesses through the complexity of transition. Our focus is on creating credible pathways that manage risk, meet investor expectations, and unlock opportunities for growth in a low-carbon economy. A goal we describe as driving sustainable performance. Contact us today for guidance on your sustainability initiatives.