Unlocking Productivity: How Emissions Reduction Can Drive Business Success

Kat Wong | August 4, 2025

A recent report highlights a surprising way to boost Australia’s productivity: tackling climate change. The Productivity Commission, an independent advisory body, says adapting to climate risks and shifting to clean energy can actually lead to better growth and living standards.

This comes as Treasurer Jim Chalmers plans to host a roundtable discussion aimed at solving Australia’s productivity issues. Barry Sterland, a commissioner at the Productivity Commission, noted that while Australia is on its way to net zero emissions, minimizing costs in this transition is crucial.

By designing policies that reduce emission costs, more resources can be allocated to productive sectors. The report emphasizes the need for strong incentives for technology that helps in emission reduction.

The report also suggests reforms, like updating the Renewable Energy Target and introducing new market incentives, as the current systems will not support investments in renewables after 2030. It calls for incentivizing heavy vehicle operators to reduce emissions as well.

Moreover, improving Australia’s environmental laws could better protect the environment while speeding up infrastructure approvals. This could help in reducing energy costs and enhancing overall productivity.

Though Australia aims to cut greenhouse gas emissions by 43% by 2030 and achieve net zero by 2050, the report points out that significant climate risks will remain. Thus, preparation and adaptability are vital for maintaining productivity.

To build resilience against climate impacts, the government is encouraged to strengthen community defenses. For instance, the report proposes a housing resilience rating system to help homeowners and builders implement necessary upgrades.

This upcoming roundtable led by Dr. Chalmers could drive these reforms forward. Experts like former Treasury Secretary Ken Henry have already emphasized the need for significant changes to environmental laws, warning that inaction could derail Australia’s economic aspirations.

As societies worldwide grapple with similar challenges, it’s clear that addressing climate-related issues can open new paths for economic growth while safeguarding the future of the planet.

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