Scope 1 and 2 emissions

As an urban services provider, Downer operates within capital and carbon-intensive industries such as asphalt manufacturing. A key challenge is the effective management of our carbonrelated activities and the implementation of strategies to reduce our GHG emissions.

In FY22, Downer completed the sale of its Open Cut East Mining business, representing the finalisation of the divestment of its Mining operations. The sale of these businesses has substantially reduced the Group’s capital expenditure and also reduced our Scope 1 and 2 GHG emissions by approximately 35 per cent – or 206,000 tonnes – of carbon dioxide equivalent, based on FY20 data.

Downer has determined its boundary using the concept of ‘operational control’, compliant with Australia’s National Greenhouse and Energy Reporting (NGER) scheme. For the purposes of energy and GHG data in this Sustainability Report, this boundary determination extends to our operations outside of Australia.

Downer has an extensive subcontractor network and collecting data requires significant effort and remains a challenge. Therefore, we use an estimation methodology when unable to obtain actual data. In FY22, approximately 35 per cent of our Scope 1 emissions came from subcontractors (actual and estimates), which consisted of 16 per cent from our Road Services business, 18 per cent from New Zealand and one per cent from Utilities.

The methodology for estimating data is described below:

Subcontractors are grouped into categories on the basis that they perform similar types of work when engaged by Downer and therefore are very likely to use similar types and relative volumes of energy consuming resources. The information received from these subcontractors forms the actual resource usage data. The remaining energy reported is based on a ratio between actual energy versus equivalent spend, which is applied across the remaining spend per category.

Downer’s New Zealand business was unable to collect actual subcontractor data during this reporting period due to contractor resourcing constraints, therefore the estimation procedure for subcontractor emissions could not be used. Instead, an alternative method was used, with the fuel consumption-to-subcontractor spend ratios calculated through the standard procedure being replaced by the average ratios from the Australian business for similar subcontractor types (haulage and other contractor types).

Downer’s overall Scope 1 and 2 emissions decreased by 26 per cent. Scope 1 emissions decreased by 21 per cent, and this was largely due to the completion of the Mining Services divestment, which has led to a significant decrease in fuel usage. 

Percentage breakdowns of Scope 1 and 2 emissions by source

Liquid fuels
Electricity
Natural gas
Refrigerants
Fugitive emissions from coal mining
Emissions from wastewater
Steam

Breakdown of Scope 1 and 2 emissions by Business Unit

Road Services
New Zealand
Utilities
Rail and Transit Systems
Facilities
Infrastructure Projects
Corporate Services
Downer Defence
Mineral Technologies
Joint ventures (external)

Weather impacts, such as flooding, also had an impact on Downer’s emissions. Floods restricted access to a number of sites for our Infrastructure Projects business for extended periods (such as the Eyre Peninsula site in South Australia) which saw emissions drop during the early part of 2022.

Scope 2 emissions dropped by 48 per cent, again predominantly due to the divestment of Mining Services which has led to a significant decrease in electricity usage. Downer has also performed a comprehensive review of its operational control status for its Facilities Business Unit and Defence Business Unit, and removed some facilities from its operational control boundary, which had previously contributed a significant amount of Scope 2 emissions.

In FY22, 48 per cent of Scope 1 and 2 emissions came from the Road Services business. This is due to the high number of diesel fleet and subcontractor fleet operating, as well as the high carbon intensity of asphalt plants. Downer is investigating opportunities to further improve the efficiency of these asphalt plants through upgrades and alternative fuel sources, as well as reviewing opportunities for fleet optimisation when commercially viable alternative fuel options become available.

One of Downer’s core strategies to reduce our GHG emissions is to decarbonise our fleet through Electric and Alternate Fuel Vehicles.

In Downer’s FY21 Sustainability Report, we committed to continue piloting EVs across the organisation. In FY22, we implemented a number of EV initiatives. This included Downer’s Technology and Communications Services team making the switch to hybrid vehicles, with a fleet of nine Toyota RAV 4 Hybrid vehicles, and our New Zealand team introducing 40 MG ZS electric SUVs into their fleet, as part of their light vehicle replacement plan.

Scope 3 emissions

In FY21, Downer performed a full assessment of our Scope 3 emissions portfolio in accordance with the Greenhouse Gas Protocol’s Corporate Value Chain (Scope 3) Standard. In FY22, Downer has improved on this data quality through the information provided from the Carbon Disclosure Project Supply Chain portal.

Downer has commenced proactive engagement with our customers and our supply chain, through the development of our Scope 3 emissions inventory and registration with the Carbon Disclosure Project Supply Chain program (see page 106). With regard to our customers, Downer’s role is to ensure we are providing low carbon products, and managing assets in a way that is minimising their carbon intensity – either through maximising their efficiency or recommending replacement where this is economically viable.

Overall, it has been determined that emissions from purchased goods and services are Downer’s most material emissions source. Other significant sources include lifecycle emissions from asphalt production, downstream emissions from the transport of goods produced by our Minerals Technologies business, and supplier emissions.

Breakdown of Scope 3 emissions
Category name
 
FY20 emissions
 
FY21 emissions
 
FY22 emissions
 
Description
1. Purchased goods and services

   

 885,902 *5     1,243,284 *5    1,238,933

 

 This includes all goods and services purchased within the reporting period excluding fuels, intercompany transfers, capital goods and subcontractors, as these are either included within other categories or within Scope 1 and 2 disclosures. This was calculated through the hybrid method using actual emissions allocated to Downer-related activities by suppliers within the Carbon Disclosure Project (CDP) Climate Change survey. If this wasn’t available or suitable, self-reported intensities or CDP sector averages were used against the supplier’s FY22 spend.
2. Capital goods

 

 154,725 *5    145,208     172,251

 

 This includes property, plant and equipment (PPE) additions within the reporting period. This was calculated through the spend-based method using the dollar value of PPE additions in the reporting period, converted to USD and inputted into the Quantis Scope 3 Evaluator ⁶
3. Fuel and energy related activities   55,496 *5   44,308 *5   31,317 *5   This includes all fuel and energy used by sites and activities under Downer’s operational control as defined by Downer’s Scope 1 and 2 boundaries. This was calculated through the average-data method using the total quantities either from direct supplier invoices or accruals. Subsequently, emissions factors were applied from National Greenhouse Accounting (NGA) factors ⁷ and Measuring Emissions: A Guide for Organisations ⁸
4. Upstream transportation and distribution   N/A   N/A   N/A   This category is not applicable due to associated emissions being captured within CDP’s sector averages in category 1 and within lifecycle assessments in category 11.
5. Waste generated in operations   20,267   18,430   23,971   This includes all waste generated by sites/activities under Downer’s operational control as defined by Downer’s Scope 1 and 2 boundaries. This was calculated using the waste-type-specific method using total waste generated and applying the NGA factors ⁷ for all non-hazardous waste generated.
6. Business travel   31,558   12,847   9,729   This includes emissions associated with Downer using other providers to travel for business purposes, but not for the purposes of Downer’s direct operations. (For example, air travel, car hire). This was calculated using the distance-based method where total kilometres travelled was multiplied by emissions factors from DEFRA ⁹
7. Employee commuting   38,606   36,444   23,121   This includes employee commuting, not already included in Scope 1 emissions (where travel is undertaken in a tool of trade vehicle in order to carry out work on a Downer site). This was calculated through the average-data method using Downer’s employee headcount multiplied by national average kilometres travelled, multiplied by emissions factors from DEFRA ⁹
8. Upstream leased assets   N/A   N/A   N/A   For Downer, this category is not applicable due to operational control boundary as any upstream leases are included in Scope 1 and 2.
9. Downstream transportation and distribution   50,952   46,377   54,513   This category only includes emissions associated with the transportation and distribution of products sold by the Mineral Technologies business. All other associated transportation and distribution emissions are accounted for within other categories. Weight and distance data were entered into the GHG Protocol’s Transport Tool v2.6 to capture emissions from freight
10. Processing of sold products   N/A   N/A   N/A   All products sold by Downer are ‘final’ and hence this is not applicable.
11. Use of sold products   140,318   112,249   103,923   Downer sells three products that have been included: asphalt, bitumen and concrete. Total quantities had lifecycle analysis emissions applied and Scope 1 and 2 emissions subtracted ¹⁰
12. End-of-life treatment of sold products   N/A   N/A   N/A   This category is not applicable as end-of-life treatment is considered within LCA factors used in category 11.
13. Downstream leased assets   N/A   N/A   N/A   This category is not applicable to Downer. Downer does not lease assets to third parties.
14. Franchises   N/A   N/A   N/A   This category is not applicable to Downer. Downer does not operate a franchise model.
15. Investments   347,205   368,160   457,658   This relates to Downer’s joint ventures and associates, which fall outside of Downer’s operational control boundary. This was calculated through the average-data method using joint venture and associates revenue for the reporting period and inputting into the Quantis Scope 3 Evaluator tool ⁶
16. Other (Water)   1,154   625   288   This relates to water usage across all of Downer’s operations and was calculated through the hybrid method using actual data and proxies from invoices applied to supplier spend. Total calculated quantities had DEFRA9 emissions factors applied.

 

⁵. Restated from FY21 due to changes in methodology.
⁶. Quantis Scope 3 Evaluator https://quantis-s -3-Evaluator/
⁷. National Greenhouse Accounting (NGA) factors for the relevant year was applied for Australian and International operations.
⁸. Measuring Emissions: A Guide for Organisations – Summary of emission factors applied for New Zealand operations
⁹. DEFRA (UK Government GHG Conversion Factors for Company Reporting)
¹⁰. Asphalt LCA factors were obtained from the Review of Emissions Reduction Opportunities – Department of Planning, Transport and Infrastructure. Bitumen LCA factors were obtained from Sustainable Asset Management (Subtopic: Carbon emissions modelling of road pavement treatment strategies). Concrete LCA factors were obtained from the Centre for Earth Systems Engineering and Management (Life Cycle Assessment of Pre-Cast Concrete vs cast-in-place concrete).

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