BTX3100 Sustainability Regulation for Business Assignment

Assignment task

Question 1, Part A

Human Habitat Ltd is a large land and housing development company listed on the ASX. The company operates across Australia and focuses on greenfield developments, specifically targeting first-home buyers with affordable

house and land packages. Given the current political focus on housing affordability, the company invests considerable time building strong relationships with local members of state and federal parliament (MPs) that represent key growth areas.

Human Habitat Ltd has recently purchased a new tract of land north of Melbourne in the vicinity of the Melbourne airport (and adjacent to Melbourne’s North Growth Corridor) for a greenfield housing development. Following the purchase of the land, the local state government MP released a public statement supporting the company’s investment in affordable housing in the electorate.

The land, which is zoned for agricultural purposes, has been used for many years for grazing sheep and cattle. It is however in relatively good condition with scattered mature trees and significant areas of native vegetation along

watercourses and on higher ground, including threatened ecological communities like grey box grassy woodland and associated grasslands.¹ There are very few protected conservation areas in the vicinity, with most intact native

vegetation occurring on private land. Indeed, the local environment group SunGreen has teamed up with the

Victorian National Parks Association and Environment Victoria to campaign for better protection of biodiversity in the region.

A recent ecological survey commissioned by these environment groups recorded breeding activity of several threatened bird species, including the regent honeyeater and swift parrot. The local creek is also known to support a healthy population of platypus and provides suitable habitat for various frog and toad species.

The local Registered Aboriginal Party² recently issued a press release discussing plans for a new cultural heritage assessment of the broader area in which the proposed development is located. The press release highlights that the assessment will focus on the ‘large intact Indigenous landscapes containing items such as artefact scatters, tree markings and stone quarries.’

Prior to te purchase of the land, Human Habitat Ltd conducted their standard due diligence process, focusing largely on environmental values. Based on previous experience, the company is confident it will get the required approvals to develop the land as planned but is anticipating having to purchase biodiversity offsets to compensate for loss of native vegetation. However, considering recent high-profile rejections of large residential developments under the

federal Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act),³ and ongoing reforms to this legislation,⁴ it is seeking updated advice on legal issues that may emerge in the environmental assessment and approvals process. It is also concerned that indigenous cultural heritage issues were not well covered in the initial due diligence assessment and that there are ongoing calls for law reform to strengthen protection of indigenous cultural heritage in Victoria.⁵

Please prepare an advice brief for Human Habitat Ltd covering the following issues:

• Is the project likely to trigger the EPBC Act? Do you think this project would be approved under the Act? In your answer, please discuss the assessment and approval process under the Act and apply it to this fact scenario provided.
• What should the company do to ensure it complies with the Aboriginal Heritage Act 2006 (Vic)? What could the company do to pre-empt and avoid conflict over its approach to cultural heritage protection with this development?

In preparing your answer, you may like to consult:

• Environment Protection and Biodiversity Conservation Act 1999 (Cth)
• Australian Government Dept of the Environment, Matters of National Environmental Significance –Significant impact guidelines 1.1 (2013) –
• Australian Government Dept of Sustainability, Environment, Water, Population and Communities,

Environment Protection and Biodiversity Conservation Act 1999 – Environmental Offsets Policy (Oct 2012)
Question 1, Part B

As a large public, listed company, Human Habitat Ltd, has voluntarily prepared a sustainability report for the last five years. The 2023 report included information on the company’s climate change targets and a range of new projects to revegetate and restore habitats. The company often donates to local conservation groups in the vicinity of new

developments and sees this as an important part of building good community relationships and maintaining their social license to operate. These types of initiatives are usually highlighted in the Sustainability Report.

Following the introduction of mandatory climate risk reporting in Australia, the company is now preparing to report more extensively on climate change from 2025. Although the company’s sustainability team has been tracking the development of the Taskforce on Nature-related Financial Disclosures (TNFD),⁶ and monitoring the Australian

Government’s Sustainable Finance agenda,⁷ there has been little time to discuss the potential implications of these developments more broadly across the company. Some of Human Habitat’s largest institutional shareholders are

now requesting further information on nature-related risks, how the company plans to manage their adverse impacts on nature in the future, and the company’s stance on the TNFD.

You have been asked to prepare some initial advice on the implications of the TNFD for Human Habitat Ltd. In your advice, please cover the following:

• What types of nature-related risks and impacts are relevant for the company?

• How should the company approach reporting on nature and biodiversity issues in the future?

Question 2, Part A

International battery manufacturer, Future First LLC (US) is a major global player in all facets of the battery market.

Future First LLC was called in by the Victorian Government last summer to build a mega-battery to deal with

electricity outages across Victoria caused by bushfires impacting energy infrastructure and unplanned maintenance at one of the Latrobe Valley power stations.⁸ As a result, the company established an Australian subsidiary, Future First Pty Ltd, and operations in the outskirts of Melbourne to house its mega-battery, and to distribute its other

popular brands of home and commercial batteries. All battery components are manufactured overseas, but assembly and casing manufacture happens on-site.

The Future First Energy Facility (FFEF) is located in an area of mixed use commercial and residential properties on Melbourne’s urban fringe⁹. The area was chosen because of its proximity to Melbourne’s largest energy demand and high voltage power transmission. The mega-battery provides ‘swing capacity,’ whereby the battery switches on within half a second when the grid becomes unstable or can push power into the grid for several hours if the energy price

hits certain thresholds to reduce severe pricing peaks¹⁰. The initial installation was completed under emergency powers and permitted as a pilot plant 12 months ago, however the company now needs to finalise the environmental permits.¹¹

The facility sits opposite a small creek and the nearest residential buildings are 250 metres away. Under normal conditions, the facility does not emit air or water pollution. However, in constructing the casing for new battery unit installations, some hazardous chemicals in liquid form are mixed and can release an unpleasant odorous gas.

The company was not prepared for the rapid uptake of its home and commercial batteries in Australia. With a range of new state government subsidies recently introduced for home and office battery storage systems, demand is continuing to grow, and the company has trebled its imports to Australia in the last 12 months. As a result, the numbers of defective or damaged batteries that are being returned to the company are also increasing. Defects

requiring a battery to be returned occur in only 0.05% of batteries, but with the number they are now selling, this is becoming a significant issue.

The charismatic CEO of Future First LLC has been championing battery storage technology and fuelling growth ahead of the company’s listing on the Nasdaq in the United States. Growth has been the company’s mantra and shipping units its main measure of success. Little attention or resources have been put towards dealing with damaged or used batteries. Management believes that by the time this is a problem the science and resources to fix it will be available.

In Victoria, until now, Future First Pty Ltd has stored all defect or damaged batteries at a local metals recycling facility owned by Allen Brothers Pty Ltd. Yet with increased volumes, the company is now being forced to look for alternative options. In the immediate term, the batteries will need to be transported to a new battery storage depot. Eventually, Future First Pty Ltd would like to ship damaged and used batteries to either their planned recycling facility in Thailand or set up a facility locally in Victoria.

Future First is seeking further advice on legal issues that may emerge in relation to its rapidly growing battery business in Australia. The company is keen to better understand how the regulation of air and water pollution and waste management in Victoria might impact the company’s plans. It is also concerned about the potential for new

product stewardship regulations as part of policy reforms to encourage a more circular economy in Australia,¹² especially given most batteries sold by the company reach the end of their commercial life in 8-10 years,¹³ and

because exporting used batteries is likely to be highly complex as a result of the international Basel Convention and its implementation in Australia.¹⁴

Please prepare an advice brief for the company covering the following issues:

• What type of environmental permissions are Future First likely to need for their existing mega-battery and new operations (battery casing manufacture, distribution, waste storage) in Victoria. How is the General Environmental Duty under the Environment Protection Act 2017 (Vic) relevant to the company’s plans? 
• What are the implications of the Recycling and Waste Reduction Act 2020 (Cth) and the Battery Stewardship Scheme¹⁵ for the company’s plans regarding end-of-life batteries?

In preparing your answer, you may like to consult:

• Environment Protection Act 2017 (Vic
• Environment Protection Regulation 2021 (Vic), including Schedule 1
• Recycling and Waste Reduction Act 2020 (Cth)
• Battery Stewardship Scheme

Question 2, Part B

During preparations for the transport of the damaged batteries held at Allan Brothers recycling facility, a forklift

reversed into a large battery and damaged its casing. The highly reactive lithium combusted and caused a major fire at the facility, leading to significant emissions of toxic gases over neighbouring areas. Four children from the Yarra

Views Daycare Centre were taken to hospital for precautionary observation after exhibiting difficulty breathing but were later discharged. The Parents and Citizens Association (P&C) for the Daycare Centre has been in the media saying they want to hold someone accountable. The Environment Protection Authority (EPA) has mobilised to the site and is overseeing clean-up efforts. The EPA has requested information from Future First and local media reports have identified Future First’s used batteries as the source of the fire

Please prepare some initial advice on the potential legal consequences of this air pollution incident:

• Do you think that Allan Brothers and/or Future First are likely to be found in breach of the Environment Protection Act 2017? Which provisions might the companies have breached? What types of penalties may they face?

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