2021 Sustainability Report - Delivering for a sustainable future - Aurizon
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2021 Sustainability Report Delivering for a sustainable future
Disclaimers
No reliance on this document general informational purposes only without “forecast”, “estimate”, “goals’, “aims”, “target”
This document was prepared by Aurizon taking into account the recipient’s investment and other similar expressions are intended
Holdings Limited (ACN 146 335 622) objectives, financial circumstances, taxation to identify forward-looking statements.
(referred to as “Aurizon” which includes its position or particular needs. Each recipient Indications of, and guidance or outlook on,
related bodies corporate (including Aurizon to whom this document is made available future states of affairs are also forward-
Operations Limited)). Whilst Aurizon has must make its own independent assessment looking statements. The forward-looking
endeavoured to ensure the accuracy of the of Aurizon after making such investigations statements are not based on historical facts,
information contained in this document and taking such advice as it deems necessary. but rather on current beliefs, assumptions,
at the date of publication, it may contain If the recipient is in any doubts about any of expectations, estimates and projections of
information that has not been independently the information contained in this document, Aurizon. These statements are not guarantees
verified. Aurizon makes no representation or the recipient should obtain independent or predictions of future performance, and
warranty as to the accuracy, completeness or professional advice. involve both known and unknown risks,
reliability of any of the information contained uncertainties and other factors, many of
in this document. Aurizon owes you no duty, Scenario analysis and ESG targets which are beyond Aurizon’s control. As a
whether in contract or tort or under statute This document also contains scenario result, actual results or developments may
or otherwise, with respect to or in connection analysis of long-term coal scenarios and differ materially from those expressed in
with this document, or any part thereof, ESG targets. The scenario analysis that the forward-looking statements contained
including any implied representations or informs this document was undertaken by in this document. Aurizon cautions against
otherwise that may arise from this document. Aurizon, supported by an expert third party. reliance on any forward-looking statements
Any reliance is entirely at your own risk. The analysis is based on the information or guidance. Except as required by applicable
available at the date of this document and/ regulations or by law, Aurizon is not under
Document is a summary only or the date of Aurizon’s planning processes any obligation to update these forward-
This document contains information in a or scenario analysis processes. There are looking statements (or scenario analysis) to
summary form only and does not purport to inherent limitations with scenario analysis reflect events or circumstances that arise
be complete and is qualified in its entirety and it is difficult to predict which, if any, of after publication. Past performance is not an
by, and should be read in conjunction with, the scenarios might eventuate. Scenarios indication of future performance.
all of the information which Aurizon files are neither predictions nor forecasts and
with the Australian Securities Exchange. Any do not constitute definitive outcomes for No liability
information or opinions expressed in this Aurizon. We do not assign probabilities and To the maximum extent permitted by law
document are subject to change without future performance may be outside of the in each relevant jurisdiction, Aurizon and
notice. Aurizon is not under any obligation ranges presented. Scenario analysis and its directors, officers, employees, agents,
to update or keep current the information the outcomes of those scenarios rely on contractors, advisers and any other person
contained within this document. Information assumptions that may or may not be, or prove associated with the preparation of this
contained in this document may have changed to be, correct and may or may not eventuate, document, each expressly disclaims any
since its date of publication. and scenarios may be impacted by additional liability, including without limitation any
factors to the assumptions disclosed. liability arising from fault or negligence, for
No investment advice any errors or misstatements in, or omissions
This document is not intended to be, and Statements about the future from, this document or any direct, indirect or
should not be considered to be, investment This document contains “forward-looking consequential loss howsoever arising from
advice by Aurizon nor a recommendation to statements”. The words “expect”, “anticipate”, the use or reliance upon the whole or any
invest in Aurizon. The information provided “likely”, “intend”, “should”, “could”, “may”, part of this document or otherwise arising in
in this document has been prepared for “predict”, “plan”, “propose”, “will”, “believe”, connection with it.
We acknowledge the Traditional Custodians
of this land and pay our respects to the elders
past, present and future for they hold the
memories, the traditions, the culture and
hopes of Aboriginal Australia. We must always
remember that under the ballast, sleepers, rail
systems and office buildings where Aurizon
does business, the land was and always will be
traditional Aboriginal land.
Aurizon staff at Hexham NSW with local indigenous artist John Robinson and his family
CONTENTS 03 Managing Director and CEO message 04 About Aurizon 10 How we operate 20 Governance and risk 28 Safety and health 34 Future of commodities hauled 48 Climate change 54 Environment 58 People 62 Community 64 Tax at Aurizon 68 Sustainability metrics 72 Statement of limited assurance 76 Glossary
ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
80%
of our employees work
6.6%
of our workforce is Aboriginal
across regional locations or Torres Strait Islander, up
in Australia from 6.2% in FY2020
23% 8%
AURIZON’S SUSTAINABILITY
of our workforce is improvement in Lost
female, up from 22% Time Injury Frequency
in FY2020 Rate (LTIFR)
PERFORMANCE – FY2021
Climate
Strategy
and Action Plan launched
3%
increase in our Total
including a net-zero Recordable Injury
operational emissions Frequency Rate (TRIFR)
target by 2050 against FY2020
46
charities
supported through
2%
decrease in greenhouse
our Community gas emissions intensity
Giving Fund against FY2020
$1.2
billion
spent with suppliers
8%
adverse performance in
Rail Process Safety
against FY2020
2 Aurizon 2021 Sustainability Report
FUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
MANAGING Rate, Lost Time Injury Frequency
Rate and Rail Process Safety. We
DIRECTOR remain focused on continuing to
AND CEO
drive improvements to our safety
performance, with investments in new
MESSAGE
technology, processes and leadership
capability together with enhancing
safety culture. One such initiative is
On behalf of Aurizon, I am TrainGuard, which you can read about
in this report.
pleased to share our eighth
Sustainability Report. As well as delivering products and
commodities, we also recognise that
as a business it is important that we
contribute to the communities in
which our employees live and work.
ANDREW HARDING, MANAGING Through our Community Giving Fund
DIRECTOR AND CEO we provide cash grants to eligible
community organisations with
projects focused on community safety,
environment, education or health
As Australia’s largest rail freight supply chains that serve our nation. and wellbeing. This year, 46 groups
operator, we are committed to Rail is already the safest and most benefited, bringing the total number of
being open and transparent on the environmentally friendly mode of land local charities we have supported over
environmental, social and governance freight transport. Technology advances the past 10 years to more than 450.
(ESG) aspects of our business, with will consolidate these advantages and
disclosures on how we operate and unlock further productivity, safety and During the year, we also extended our
manage risks. environmental benefits for customers reach into the community with two new
and the community. partnerships. The first is a three-year
In May 2021, Aurizon maintained partnership with Orange Sky Australia,
a ‘Leading’ rating for the seventh At the Aurizon Investor Day in which offers free laundry and shower
consecutive year by the Australian June 2021, we presented various services for people experiencing
Council of Superannuation Investors scenarios on how we will continue homelessness. Aurizon also became
for Corporate Sustainability Reporting to deliver sustained value for our the new Principal Partner of the
in Australia. We also participate in the customers and investors. Aurizon has Queensland Firebirds who compete in
FTSE4 Good Index Series, MSCI and a unique place in critical supply chains the national Super Netball competition.
Sustainalytics ESG Ratings, and this across the nation, and our involvement
will be our fifth year reporting against in improving these supply chains will In our communities and along our
the Task Force on Climate-related support long-term demand for key supply chains, we are committed
Financial Disclosures. commodities in global export markets. to responsible environmental
The key takeaway is that we have management. We do this by
We recognise that ESG is a matter of an adaptable business with our Coal employing proactive and evidence-
importance as the world works to slow and Network businesses, providing a based management measures covering
climate change and transition to more resilient base to support the growth key environmental issues, such as
renewable energy sources. In October ambitions of our Bulk business. biodiversity and land management,
2020, we published our Climate waste management and resource use,
Strategy and Action Plan, outlining our Our Bulk business provides integrated and minimising emissions. You can
commitment and a clear plan to reduce supply chain services, including rail and read more about our measures in
our carbon footprint, with a target of road transportation, port services and this report.
net-zero operational emissions (Scope material handling for a range of mining,
1 & 2) by 2050. This includes a 10% metal, industrial and agricultural With the rapidly changing COVID-19
reduction in greenhouse gas emissions customers in Queensland, New South situation in Australia, Aurizon has
intensity target between 2020 and Wales and Western Australia. It is maintained constant vigilance across
2030. We also have committed to a well positioned in markets serving our national footprint to protect the
$50 million investment over 10 years, the global uptake of electric vehicles, health of our employees, together with
in low-carbon technologies for our telecommunications and renewable the customers we serve in our freight
fleet and the use of more renewable energy infrastructure that is driving supply chains. As an essential service,
energy for our electrified rail network. demand for Australian resources, we have been fortunate to continue
Work has started on a project to such as cobalt, copper, lithium and operating throughout COVID-19. We
develop battery-powered heavy- nickel. With these markets expected understand the responsibility that
haul locomotives, and Aurizon is to grow strongly, Aurizon will continue comes with continued operation, and
also assessing the longer-term to identify growth opportunities and the important role we play in delivering
opportunity for hydrogen-powered expand further across supply chains, freight across Australia.
freight movements. including port and terminal services.
I am proud of the outstanding efforts
As we move to a lower carbon future In FY2021, our safety performance of our employees as we continue on
for Australia, rail can play a key role results were mixed across the metrics the journey of building a stronger and
in the decarbonisation of transport of Total Recordable Injury Frequency more sustainable business.
Delivering a sustainable future 3
ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
ABOUT What we deliver
As shown in figure 1, our operations
AURIZON primarily span Queensland (QLD),
New South Wales (NSW), and Western
Australia (WA). Our biggest economic
Aurizon (ASX: AZJ) is Australia’s footprint is in regional Queensland,
largest rail-based transport business. where our employees support our
coal haulage business, deliver bulk
commodities, and ensure that the
Our purpose is to grow regional Australia by delivering bulk commodities to CQCN is running safely and efficiently.
the world. In FY2021, we transported more than 250 million tonnes of Australian Our key operational areas are broken
commodities, connecting miners, primary producers, and industry with into three business units: Coal, Bulk
international and domestic markets. and Network.
We provide customers with integrated freight and logistics solutions across an Coal
extensive national rail, road and port network that traverses Australia. We have Our Coal business provides a critical
a fleet of around 600 locomotives and 12,500 wagons. We also own and operate service to Australia’s $39 billion1 export
one of the world’s largest coal rail networks, the Central Queensland Coal Network coal industry, the nation’s second
(CQCN), a critical piece of infrastructure supporting approximately 90% of largest source of export revenue in
Australian metallurgical coal export volume. FY2021. We haul around half of
FIGURE 1 AURIZON’S OPERATIONS
4 Aurizon 2021 Sustainability Report
FUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
Australia’s export coal volume. As a west regions of the state. In December Our Bulk business
supply chain partner for our customers, 2020, the Bulk business in NSW includes haulage
we transported 202 million tonnes of expanded its supply chain capability
of a range of bulk
coal in FY2021. through the acquisition of ConPorts, a
stevedoring, bulk storage, and handling commodities, such as
Coal hauled is split approximately business. The acquisition includes long- iron ore, bauxite, alumina,
evenly between metallurgical coal term leases at the Port of Newcastle base metals, grain,
and thermal coal, with demand linked with ship-loading facilities adjacent
to Asian steel production and energy to rail lines. ConPorts has now been
livestock and fertiliser-
generation, respectively. Through this integrated into the APS business. To related products.
business, we employ more than 2,000 support WA’s strong export industry,
people, with a large majority of these we continue to deliver our customers’
employees living and working in products to the ports of Geraldton,
regional communities in QLD Esperance, Fremantle, Kwinana,
and NSW. Bunbury, and Albany.
We connect mines in the Newlands, Network
Goonyella, Blackwater, Moura and We operate and manage the CQCN
West Moreton systems in QLD, and under a 99-year lease arrangement
the Hunter Valley and Illawarra coal with the QLD Government. The CQCN
systems in NSW, with domestic connects over 40 mines to five export
customers and coal export terminals. terminals, as well as to domestic
We are the only rail operator with customers (see figure 2).
services to all six coal export ports A loaded bauxite train in Western Australia
on Australia’s east coast. The CQCN is a critical part of the
global supply chain, with around
Bulk half of all global seaborne export
Our Bulk business includes haulage metallurgical coal travelling across
of a range of bulk commodities, such the network. This 2,670-kilometre
as iron ore, bauxite, alumina, base multi-user track network comprises
metals, grain, livestock and fertiliser- four major coal systems: Newlands,
related products. During FY2021, our Goonyella, Blackwater, and Moura.
Bulk business delivered 51 million The Goonyella Abbot Point Expansion
tonnes of commodities. The business (GAPE) is the connecting system
also provides supply chain services to link for the Newlands and Goonyella
customers, including ballast cleaning, systems. Around 70% of volume hauled
hook-and-pull, and port services. across the network is considered
metallurgical coal (remaining 30%
In QLD, we service the North West is thermal coal), with demand linked
Minerals Province from Mount Isa to to Asian steel production. Access to
the Port of Townsville, including bulk our rail network is managed under a
storage and handling services as part process approved by the competition
of Aurizon Port Services (APS). We regulator, the Queensland Competition Loading of a cattle train in Townsville
also service the central and south- Authority (QCA).
FIGURE 2 AURIZON’S CENTRAL
QUEENSLAND COAL NETWORK (CQCN)
Legend
Newlands
Goonyella
Blackwater
Moura
Coal Export Terminal
Delivering a sustainable future 5
ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
FIGURE 3 AURIZON’S REVENUE (FY2021)2
Together, our Coal and Bulk haulage
businesses are referred to as ‘above rail’,
while our Network business is referred
to as ‘below rail’. As shown in figure
3, approximately two-thirds of our
above rail revenue relates to coal, with
our Bulk business contributing to the
remaining one-third.
Group Above Rail revenue
Revenue commodity type split
59% Above Rail 34% Metallurgical coal
41% Network 34% Thermal coal
32% Bulk
FIGURE 4 AURIZON’S STRATEGY IN ACTION FRAMEWORK Our strategy
Our Strategy in Action framework
provides a strategic guide for our
Purpose business in our pursuit of both short-
and long-term value creation (see
Growing regional Australia by delivering bulk
commodities to the world. figure 4).
Central to our strategy are our Strategic
Levers, which help us prioritise key
Vision drivers of value, and execute on these
priorities throughout the organisation.
The first choice for bulk commodity
transport solutions.
Our strategic priorities are periodically
reviewed by management and Board,
and are adjusted to reflect our view of the
Values current and future external environment
and our organisational goals.
We are currently focused on the
following priorities:
Safety People Integrity Customer Excellence
We know We seek We have the We strive to We set and Optimise: Progressing major
safe, we diverse courage to be the first achieve transformation efforts
choose safe. perspectives. do the right choice for ambitious We are continuing to progress
thing. customers. goals. major transformation efforts across
our business, and are investing in
operational technology programs,
such as Condition Monitoring
Strategic Levers
and TrainGuard, to support the
optimisation of our cost base and
improve our competitiveness. Our
focus on continual improvement has
contributed to Bulk improving from
Optimise Excel Extend a loss-making business in FY2017, to
Our existing to create to grow our
providing a $112 million Earnings Before
core business competitive business and deliver
advantage long-term growth
Interest and Tax (EBIT) in FY2021. In
addition, the capital-intensive nature
of our operations makes improving
our Return on Invested Capital (ROIC)
6 Aurizon 2021 Sustainability Report
FUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
a priority to ensure sustainable and We are seeking to proactively
efficient returns. Project Precision is optimise capital and fleet deployment
an example of how we are delivering
to support Bulk growth and maximise
on this focus by improving asset
utilisation across above and below enterprise value.
rail. In FY2021, we have delivered
turnaround time improvements across
all our CQCN corridors, enabling greater
asset utilisation and productivity to be
captured in our above rail operations and
improving outcomes for our customers.
AURIZON INVESTOR DAY
Excel: Optimising capital proactively
We are seeking to proactively optimise In June 2021, we held an Investor Day in Newcastle, NSW, detailing our
capital and fleet deployment to strategy to continue to deliver sustained value for investors and customers.
support Bulk growth and to maximise The modelled cash flow scenarios indicated resilience across the business
enterprise value. With more than over the 20-year period, and identified the opportunity for the Bulk business
40% of our fleet readily interoperable to target new markets and expand across supply chains, including port and
between Coal and Bulk, we have the terminal services.
opportunity to best optimise the
deployment of our rollingstock assets The Investor Day presentation, in addition to the transcript and webcast, is
across the enterprise. Our ability to available on the Aurizon website.
cascade fleet gives us a high degree of
flexibility to respond to shifting market
dynamics, and supports our focus on
capital productivity and cash flow.
We are committed to maintaining long-
term, stable cash flows. This will be
enabled by the stable and high-yielding Resilient coal and Growing bulk business Evolving mix reduces
network business with new markets thermal coal exposure
nature of our core business operations
and our ability to flex our cost Safety, cost, Our aspiration to Targeted bulk growth
productivity and achieve 20-25% market would result in revenue
base and fleet according to market
capital focus supports share in 10 years within from thermal coal falling
conditions. As outlined at our Investor Bulk Growth. an approximately to less than 20% of
Day in June 2021, our modelled long- $1.25bn market profit Above Rail portfolio
term cash flows can be resilient under pool would imply before 2030.
multiple coal outlook scenarios by $250m-$300m EBIT^.
flexing operating expenditure, capital
^Market share opportunities assume Aurizon secures a portion of an available range of organic and
expenditure and growth levers. inorganic growth. There are no guarantees that Aurizon will secure any or all growth opportunities.
Extend: Growing our Bulk business
While Coal and Network form
our solid cash flow core, the Bulk
business provides potential for
growth outside coal markets. While
we have traditionally focused on bulk
rail markets across Australia, there
is an opportunity to capture further
growth by expanding our services
into adjacent production-to-port
value chain segments. By expanding
the scope of what we do, we have
increased our addressable market
and continue to seek compelling end-
to-end, multimodal solutions for our
customers, thereby creating greater
efficiencies, and reducing supply chain
costs for all participants.
Delivering a sustainable future 7
ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
FIGURE 5 SHAREHOLDER RETURNS (CUMULATIVE)
How Aurizon creates value
We create tangible and sustainable
value for our primary stakeholders
– including investors, customers, $5.0b
employees, and the community
(see figure 5).
Buy-back $4.0b
Our value creation record over the Dividends Paid
past five years, measured by dividends $3.0b
and share buy-backs, has been
significant and provides a platform for
the future (see figure 6). These efforts $2.0b
have resulted in a stable cash flow
that has delivered over $4 billion in $1.0b
distributions to our shareholders over
the past six years through dividends
and buy-backs. $0.0b
1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21
FIGURE 6 HOW AURIZON CREATES VALUE
Stakeholder Description Value Created in FY2021
Investors Our integrated business model provides a —$
529 million has been returned to investors
defensive stream of earnings from our regulated through dividends
track infrastructure (the CQCN), while our rail
—$
300 million buy-back completed, increasing
haulage business is largely leveraged to Australia’s
shareholders’ effective interest by approximately 4%
bulk commodity exports.
Customers We deploy our significant asset base, capital —2
53 million tonnes of bulk commodities
investments and industry-leading expertise to transported at an estimated value of over
provide reliable, safe and efficient bulk transport $30 billion for our customers
solutions for our customers.
Employees We provide stable employment and rewarding — More than 4,800 people employed
career development in a safe and high-performing
— $ 836 million in wages and benefits paid
work environment, as well as the opportunity to
contribute to the economic prosperity of Australia. — N o JobKeeper payments received
Community Our key role in bulk supply chains enables —A
pproximately 80% of our employees reside in
economic prosperity and growth for all regional areas
Australians. We help sustain regional communities
— $351 million in taxes collected and paid3
by providing employment and economic benefits
in areas where we operate. — $ 1.2 billion spent with suppliers
1 Australian Bureau of Statistics.
2 Group revenue pie chart: Above Rail excludes Coal track access revenue. Above Rail revenue pie chart: Track access revenue for both Coal and Bulk excluded.
Revenue allocation for Coal based on estimated volume split.
3 E xcludes PAYG income taxes.
8 Aurizon 2021 Sustainability ReportFUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX Delivering a sustainable future 9
ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
HOW WE
OPERATE
Our business model supports
sustainable business practices and
enables us to operate efficiently
and effectively.
We have worked hard to build a stronger, more sustainable business in recent
years, and are committed to being open and transparent on the environmental,
social and governance (ESG) aspects of our business. We aim to continuously
improve and ultimately create value for the benefit of our employees,
customers, communities, and investors.
Our approach
to sustainability United Nations Sustainable Development Goals7
Our approach to reporting In 2015, the United Nations General Assembly adopted the 2030 Agenda for
We keep stakeholders informed of Sustainable Development, which includes the Sustainable Development Goals (SDGs).
our corporate governance and financial The 17 goals and related targets act to address significant ESG issues across the globe.
performance via announcements to the We began mapping our operations against the SDGs in our 2018 Sustainability Report.
Australian Securities Exchange (ASX) Acknowledging that our business contributes to some SDGs more than others, we
and our website. Investors can access continue to focus on the five goals that are most aligned to our business, our values,
copies of announcements to the ASX, and our operational environment.
notices of meetings, annual reports,
policies, investor presentations,
webcasts, and transcripts of those GOAL 3
presentations on our website. In Good health
addition to the above disclosures, and well-being
we take a direct approach to reporting
environmental, social and governance We continue to develop and adopt safe practices, enabling us to build a resilient
(ESG) disclosures to our stakeholders operation, an adaptive workforce, and agile systems of work to deliver safer
with the publication of our annual outcomes. We will continue to make sure we are well placed to work with our people,
Sustainability Report. This report our customers, and the communities in which we operate, providing safe and reliable
is prepared with reference to the rail operations now and into the future. In FY2021, we continued to embed our
Global Reporting Initiative’s (GRI) updated enterprise safety strategy to focus and prioritise improvements to our safety
standards to provide investors with systems and culture, and to achieve our safety goal of protecting ourselves, each
comparable information relating to ESG other, and the communities in which we operate. We also continued to focus on the
performance. Our approach considers mental health of our employees during the year. As outlined in our Safety and health
the GRI’s principles for defining report chapter, we provide Employee Assistance Program (EAP) services to our employees,
content that covers stakeholder and have trained over 150 Mental Health First Aiders who have formed the foundation
inclusiveness, sustainability context, of our Peer Support Network.
materiality, and completeness.
We recognise that our climate change GOAL 5
disclosures are one of the key interests Gender equality
to stakeholders. Since 2017, we have
aligned our climate-related disclosures
to the Task Force on Climate-related We continue to increase the diversity of our workforce, recognising diversity is a lever
Financial Disclosures (TCFD) as for better business performance and growing our business sustainably. As outlined in
recommended by the Financial our People chapter, our female workforce representation has increased from 22% in
Stability Board. This framework FY2020 to 23% in FY2021 achieving our target.
enables consistent climate-related
financial risk disclosures for use by This year on International Women’s Day, we launched a three-year Gender Balance
companies in providing information to Action Plan that outlines initiatives aimed at creating gender balance through higher
investors, lenders, insurers, and other female participation in our workforce. We remain focused on closing the gender pay
stakeholders. Our response to climate- gap, through initiatives such as mentoring programs, facilitating career pathways into
related risks is outlined within the larger or more senior roles, annual analysis to monitor pay equity, and a data-driven
Governance and risk chapter of approach to talent, succession, and remuneration decision-making. These initiatives
this report. are guided by our Gender Balance Reference Group, led by the Group Executive of our
Coal business.
During FY2021, we published our
first Climate Strategy and Action
Plan (CSAP). The strategy builds on
10 Aurizon 2021 Sustainability ReportFUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
our existing work in reducing our
carbon footprint, as detailed in our
GOAL 8 Sustainability Report each year since
Decent work and 2014. We recognise that we all have
economic growth a responsibility to act on climate
change – government, business, and
Our operational footprint spans QLD, NSW, and WA, with the majority of our the general community – so we can
staff living and working in regional centres across these three states. Strong and achieve an effective transition to a low-
economically stable communities are the backbone of a healthy regional Australia, carbon future. As Australia’s largest
and we are committed to continuing to develop strong local relationships with rail freight operator, we can have a
local businesses and suppliers across our regional footprint. We continue to invest significant and positive influence on
in and develop regional facilities with a focus on development of safe workplaces, the decarbonisation of Australian rail
operational equipment, and capabilities that allow our people to do their job in the freight supply chains, as supported by
safest and most efficient way. See our Community chapter for more information. our new target of net-zero operational
emissions by 2050. Progress on our
In FY2021, we have spent approximately $1.2 billion with suppliers from across our emissions reduction efforts is outlined
operations. This figure, however, does not consider the further economic benefits in our Climate change chapter. The
of our workforce living and working in regional communities. Our Coal business greenhouse gas (GHG) emissions data
also provides a critical service to Australia’s $39 billion 8 export coal industry, the (scope 1, 2 and 3) provided in this
nation’s second largest source of export revenue in FY2021. chapter has also been independently
assured, and a statement of limited
assurance is included in this report.
GOAL 9
Industry, innovation
A lower-carbon future must go hand-
and infrastructure
in-hand with business sustainability,
customer service and economic
As a capital-intensive business, we aim to ensure our assets and infrastructure development. We are a crucial part
are high-quality, reliable, sustainable, and resilient. Our CSAP is underpinned by of the supply chains for Australia’s
a range of targeted initiatives and investments to build supply chain resilience, agricultural, industrial and resource
decarbonise our operations, and contribute to a low-carbon freight transport sectors. This is also consistent with the
sector in Australia. As outlined in our Climate change chapter, during 2021 our Future of commodities hauled chapter
Fleet Decarbonisation team made significant progress in establishing forums for in this report, which recognises that
collaboration with key peers, manufacturers and research organisations focused while the move to renewable energy
on the development, trialling, and implementation of low-carbon technologies for sources continues, we expect demand
Australia’s heavy haul freight sector. for high-energy lower-emission
Australian coal to be sustained for
We see collaboration and partnerships as the key to achieving step-change many years to come.
emissions reductions through technology investment and innovative energy
pathways. We also continue to improve our operations through the development of There are also strong opportunities
other innovative technologies. As shown in the Our future with technology section for our Bulk business in the
of this report, key projects such as TrainHealth and TrainGuard, as well as the transition to a low-carbon future,
integration of virtual reality technologies into our training processes, demonstrate supported by growing demand for
how we are using technology to better assist our operations, our people and our inputs to renewables and batteries,
safety capabilities. infrastructure development and global
food consumption.
GOAL 13 External participation
Climate action and recognition
With a focus on direct disclosures
to stakeholders, we take a selective
As Australia’s largest rail freight operator, we recognise our role and responsibility in approach to participation in external
helping to reduce global greenhouse gas (GHG) emissions. We accept the scientific initiatives. With an estimated 600
consensus on climate change, and support the objective of finding a pathway to ESG ratings globally4, we consider
limit global warming to less than 2°C, aligned to the Paris Agreement9. We also each opportunity for participation,
acknowledge the Intergovernmental Panel on Climate Change’s (IPCC) Special with a view to actively participate only
Report on the impacts of global warming of 1.5°C above pre-industrial levels10. where such initiatives significantly add
We have already made progress towards reducing our operational GHG emissions, value for our stakeholders. As at June
with a 20% reduction in our locomotive carbon footprint (GHG emissions intensity) 2021, we actively participate in the
since 2010. During FY2021, we published our CSAP, announcing our commitment to FTSE4Good Index Series, MSCI, and
a target of net-zero operational emissions by 2050. Sustainalytics ESG Ratings5.
Supporting this goal, we have also set an emissions intensity reduction target of In May 2021, we received a ‘Leading’
10% by 203011, and will invest $50 million over 10 years through our Future Fleet rating for the seventh consecutive
Fund, targeting low-carbon technologies across our operational fleet. We continue year by the Australian Council of
to advocate for the significant role that rail contributes in the transition to a low- Superannuation Investors (ACSI)
carbon economy. See our Climate change chapter for more detail. for corporate sustainability reporting
in Australia 6.
Delivering a sustainable future 11ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
Material priorities and announcements, investor days, and We recognise
relevant stakeholders site visits. We also attend regional that fostering trust
As part of our business-as-usual and industry-specific conferences
with our people is
processes, we engage directly with to facilitate effective two-way
our key stakeholders (see figure 7). communication with investors and a key enabler of a
Our approach to stakeholder other financial markets participants. safety and high-
engagement involves both formal Access to senior executive and performance culture.
and informal mechanisms that are operational management is provided to
tailored to our audience and the investors and analysts at these events,
engagement outcomes being sought. with separate one-on-one or group
The following outlines a few of the meetings offered, whenever possible.
primary methods of engagement
with our key stakeholders. Briefings, including our Annual
General Meeting (AGM), are also
Employees webcast live so they can be viewed
We recognise that fostering trust by all shareholders, thereby ensuring
with our people is a key enabler of a investors receive information at the
safety and high-performance culture. same time. Shareholders who are
During the year, we have progressed unable to attend our AGM can vote
a range of initiatives focused on directly using electronic means. The
fostering trust and engagement with presentation material provided at
our workforce. Employee surveys these events is sent to the ASX before
and leader-led communication play a commencement and subsequently
key role in supporting and informing posted on our website, including the
current and future safety and culture webcast and transcript, if applicable.
initiatives. Refer to our People chapter
for more information. We also continue to work with our
financiers to ensure that we plan for
Customers the long-term funding needs of our
We recognise the importance of business and that we manage our
clear and transparent communications funding sources, and maturities. As
with our customers. We treat the our financiers become progressively
relationships with our customers with more engaged with the concept of
the utmost importance, and proactively sustainability, we look to support
look for ways to improve their their request for environmental, social
experience. Through a continuous and governance data, in particular
feedback loop, we seek to work with through disclosure within our annual FIGURE 7 KEY STAKEHOLDERS
our customers to deliver the best Sustainability Report.
service possible. This is achieved Key stakeholders
through internal reviews, combined Understanding our material impacts
with external feedback and discussions is necessary to develop our strategy Employees
through scheduled meetings, customer and operate sustainably. Addressing
forums, and ongoing customer these impacts is also key in continuing Customers
relationship management. to create sustainable value for our
stakeholders. We strive to ensure Communities
Communities that our Sustainability Report reflects
Investors
We consider ourselves to be part of the significant economic, environmental,
local communities where we operate. and social priorities that may influence
Financiers and insurers
Engaging with our communities is an strategic decision-making and business
integral component of operating each performance. As such, we continuously Industry analysts
of our businesses. We consider our assess the material issues that affect
communities when making business our business, our stakeholders, and our Traditional owners and custodians
decisions and taking actions. operating environment. Report content
has been informed by our material Rail network providers
We directly engage with our priorities, as outlined in Table 1.
community groups through listening Suppliers
and responding to feedback, involving
our employees in local community Non-government organisations
activities (e.g. helping a local Landcare
association to plant saplings) and Governments
encouraging the local community
in Central Queensland to report any Regulators
safety issues relating to the operation
Unions
of the CQCN.
Joint venture partners
Investors and financiers
We conduct regular market briefings, Industry groups
including half year and full year results
12 Aurizon 2021 Sustainability ReportFUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
TABLE 1 MATERIAL PRIORITIES
Material Priority Description Chapter
How the structure of our business supports sustainable business practices and
enables us to operate efficiently and effectively.
About Aurizon
Business model How we continuously improve through technology advancements, where possible,
How we operate
to reduce resource use, increase productivity, and ultimately create value for the
benefit of our employees, customers, communities, and investors.
How we ensure that we are the first choice for our customers’ bulk commodity
transport solutions by delivering innovative, efficient, and reliable services to help
Customers our customers compete in global commodity markets. How we operate
How we aim to maintain collaborative engagement with our customers to provide
competitive solutions.
How we continue to manage our operations and deliver value through regulatory How we operate
Regulation
processes, and advocate for policy improvements in areas such as energy and
and policy Governance and risk
emissions policies, and rail versus road access pricing.
How we operate with integrity and conduct business ethically through our governance
structure and Code of Conduct.
Business integrity How we operate
How we remain transparent in our interactions with internal and external stakeholders.
and transparency Governance and risk
How we promote transparency and sustainable procurement practices with our direct
suppliers across our supply chain.
How our Board provides oversight and strategic direction to sustainability through
Sustainable our clear governance structure.
governance and Governance and risk
risk management How we manage risk within our strategic framework, including identification and
mitigation of contemporary and emerging risks, and low-likelihood, high-impact risks.
How we manage the climate-related risks to our business in alignment with the
Financial Stability Board’s Task Force on Climate-related Financial Disclosures
Managing climate Governance and risk
(TCFD) recommendations.
change impacts Climate change
How we plan to decarbonise our operations in line with our target of net-zero
operational emissions by 2050, through supporting commitments and action.
How we manage the safety, health and mental wellbeing of our employees,
contractors and communities through promoting safety culture, avoiding workplace
Safety, health,
fatalities and injuries, promoting mental health and wellbeing initiatives, and Safety and health
and wellbeing
ensuring public safety, recognising the key role that our safety performance plays in
building and maintaining trust with our stakeholders.
How we continually monitor and evaluate the demand for and supply of Australian
Portfolio resilience
commodities and key market drivers to test the resilience of our business under Future of
and growth
divergent and plausible long-term scenarios, which in turn are used to inform commodities hauled
opportunities
strategic planning.
How we effectively manage our environmental performance by maintaining air
Environmental
quality, avoiding or offsetting impacts on native biodiversity, and minimising noise, Environment
management
waste to landfill, and water use through our operations.
How we promote a diverse and inclusive workforce across all management levels,
Employee
strengthen organisational capability and talent acquisition and retention, and career People
engagement
mentoring, and invest in knowledge transfer from longstanding employees.
How we focus on growing regional Australia through our economic contributions and
local procurement, and our role in long-term community investment.
Sustaining
How we manage our impacts on the communities in which we operate through Community
communities
prioritising community employment opportunities and transparent and collaborative
community engagement.
Delivering a sustainable future 13ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
Our customers Capital (ROIC) and preserve cash Our Bulk business has been
We strive to be the first choice for flows for the Coal business while successfully turned around, with the
our customers’ bulk commodity safely delivering excellent service next phase of growth underway. Our
transport solutions through the for our customers. During FY2021, customers’ needs drive our broader
delivery of efficient, reliable, and we had the following updates for our focus on Bulk logistics (not just rail),
flexible services, while always Coal business: to offer an integrated service with
maintaining our focus on safety. production-to-port capability.
Glencore: Existing agreement as
Our ability to design, build and operate primary hauler for Queensland Our goal includes a focus on growth
rail infrastructure enables us to mines extended for Newlands, markets, strategic partnerships, and
effectively manage our customers’ Goonyella (excluding Hail Creek) better operational performance.
supply chains and interfaces between and Blackwater mines
port and mine. We provide technological Contract updates from our
innovation and significant haulage Anglo American: Goonyella – new Bulk business during the financial
experience for our customers each day agreement across various mines; year include:
to support the delivery of commodities. Blackwater – new agreement
for German Creek mine; Moura – Co-operative Bulk Handling
Above rail portfolio extension of Dawson mine. Group (CBH): Ten-year grain
Our Coal business continues to haulage contract
invest in and develop initiatives that Our above rail contracts are long-term,
give our customers greater insight particularly in our Coal business, with South32 Worsley: Three-year
into their ordering, rail planning and 48% of the portfolio having a remaining contract extension for alumina
daily activities. Project Precision seeks contract life of 7 or more years (see and associated inputs
to increase capacity and improve asset figure 8). The long-term nature of our
productivity in the CQCN, as well as contracts provides greater certainty Mineral Resources: Expansion
optimising maintenance practices for our future revenue streams, as well of services (beyond Esperance)
to improve asset availability and as greater commercial and operational with additional iron ore services
reliability. With a strong contract book, certainty for all stakeholders across the into Kwinana.
we aim to improve Return on Invested supply chains in which we operate.
BULK ADDS MORE
MUSCLE TO PORT SERVICES
During FY2021, our Bulk business again signalled its
growth ambitions with the acquisition of ConPorts,
a stevedoring, bulk storage and handling business at
the Port of Newcastle, NSW. Now a part of Aurizon
Port Services (APS), the business currently provides
services for export of about 500,000 tonnes of mineral
concentrates annually. It includes a direct interface
between rail and sea transport with a dedicated private
rail siding where wagons can be unloaded adjacent to
the shipping berth.
This is now the second business under the banner
of APS. In March 2020, we acquired Townsville Bulk
Handling and Storage, a bulk transport, handling, and
stevedoring services business, with facilities at the Port
of Townsville. These acquisitions aim to extend supply
chain services beyond our core rail capability and to
pursue growth opportunities in bulk haulage markets in
Australia. We have been clear on our intent to profitably
grow the Bulk business, through organic growth as
well as strategic acquisitions. We have built a strong
foundation in Aurizon Bulk, with rollingstock assets and
facilities in strategic parts of regional Australia.
The growth outlook for bulk commodity markets in
these areas remains strong, supported by the demands
of the modern economy and a general increase in
living standards throughout the world. The Future of
commodities hauled chapter outlines the continued
growth opportunities for the key commodities that
we haul for both our Coal and Bulk customers.
14 Aurizon 2021 Sustainability ReportFUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
FIGURE 8 ABOVE RAIL COAL CONTRACT PORTFOLIO EXPIRY
PROFILE (AS AT 30 JUNE 2021)12
48% 7+ years
46% 3 to 7 years
6% 0 to 3 years
In partnership with Our future with technology inform the health of the locomotive,
Croomo, we were this We are continuously improving our enhance asset reliability and
operations by developing innovative maintenance decisions for the fleet, in
year awarded four
technologies for the benefit of addition to providing greater visibility
platinum awards by the employees, customers, and shareholders. on driver variability and supporting
international LearnX We deliver these prioritised technology business decisions for on-time running.
2020 award program investments in conjunction with people,
process, and data change. With installation completed for 99% of
for our virtual reality the CQCN Siemens electric locomotive
(VR) technology work. Application fleet in FY2021, installation across
modernisations (AppsMod) the CQCN diesel fleet is scheduled to
AppsMod is a multi-year program to commence in FY2022.
decommission more than 10 legacy
systems and replace them with three TrainGuard
platforms that can be used on TrainGuard is a platform that
multiple devices. uses European Train Control
System (ETCS) technology to
The delivery of the first platform, support driver decision-making,
Vista, for Mainline Operations has particularly in relation to speed
enabled situational awareness of train control and signal enforcement.
services when they are operating
between yards. We have already seen TrainGuard will support safer and
improvements to our employees’ ability more efficient train operations with
to make informed decisions and do fewer rail process safety issues and
their work more effectively. better train handling. Operational
demonstration of TrainGuard has been
AppsMod continues to focus on completed and preparations continue
improving use of assets while reducing for the deployment on the Blackwater
operational losses. Introduction of mainline (Callemondah to Bluff).
new functionality will continue as we
streamline and standardise business Recognition awards for
processes. We will enrich our customer our virtual reality technology
experiences with real-time data and In partnership with Croomo,
information. The remaining functions we were this year awarded four
will be released incrementally over the platinum awards by the international
coming years. LearnX 2020 award program for
our virtual reality technology work.
TrainHealth and TrainGuard Virtual reality training solutions via
We continue to work on strategic next-generation training technologies
technology investments designed to is an example of how we are using
improve the safety and productivity technology to better assist our people
of our rollingstock and people. and safety capabilities.
TrainHealth This training tool enables training in a
TrainHealth provides Aurizon with safe, simulated environment, reducing
capability to monitor performance the reliance on operational resources
of locomotives and train handling/ needed for the practical components
utilisation in real-time. of the training.
This initiative enables access to real-
time asset data that is being used to
Delivering a sustainable future 15ABOUT AURIZON HOW WE OPERATE GOVERNANCE AND RISK SAFETY AND HEALTH
community. Inclusion at Aurizon
goes beyond what we do internally
as an organisation.
Our operations primarily span
QLD, NSW and WA. Given the
regional nature of our business,
we recognise the importance of
contributing as partners in the
communities where we operate.
In FY2021, we spent an estimated
$1.2 billion with suppliers. See
our Community chapter for
more information.
Increasing our spending with
Indigenous businesses is one way
that we can create greater social
value impact and support for the
communities in which we operate.
As a part of our commitment within
our Reconciliation Action Plan (RAP),
we have committed to increase our
procurement spend with Aboriginal
and Torres Strait Islander-owned
businesses to improve economic
outcomes for those organisations
and Indigenous Australians.
In FY2021, we had an overall spend
of $6.7 million, an increase of $1.3 million
from FY2020 and a $2.6 million rise
from FY2019.
Maintaining a membership with
Supply Nation, which gives us access
to Australia’s leading database of
Our suppliers we recognise the importance of verified Indigenous businesses, is key to
Our suppliers play a critical role responsible procurement, not only allowing us to achieve this commitment.
in creating value and enabling a for our business, but for our customers’
sustainable future for our employees, operations as well.
customers, communities, and investors.
As such, we want to engage with like- We commit to supporting and
minded businesses. respecting the protection of
internationally proclaimed human
Working sustainably with rights, as set out in the Universal
our suppliers Declaration of Human Rights13 and
We understand the importance of The Ten Principles of the United
managing ESG considerations with Nations Global Compact14. In October
our suppliers. Our Supplier Code of 2020, Aurizon published its first
Conduct outlines our commitment to Modern Slavery Statement, which
five key principles: Safety; Business addresses the Company’s obligations
Integrity; Labour and Human Rights; contained in the Modern Slavery Act
Communities; and Environment. 2018 (Cth). A copy of this statement
can be found on our website.
The code is available in the supplier
portal on our website. Furthermore, in Local procurement
FY2021 the Supplier Code of Conduct Our supplier relationships extend from
was communicated to all existing local operators through to international
suppliers, and we are actively working suppliers. This gives us the flexibility to
with our priority suppliers to gain their match supplier solutions to the specific
agreement to the code. needs of operational requirements or
a project.
Modern slavery and
human rights Through local procurement, we can
Given that our business forms a key generate employment opportunities
part of our customers’ supply chains, and provide economic benefits to the
16 Aurizon 2021 Sustainability ReportFUTURE OF COMMODITIES CLIMATE CHANGE ENVIRONMENT PEOPLE COMMUNITY TAX
Regulation and policy These include: Energy policy
The policies and regulations of We are one of the largest energy
governments and regulatory bodies a 10-year undertaking term consumers in QLD, and operate the
have significant impacts on the current (2017-2027) only electrified heavy haul rail network
and future development, operation, in Australia. Reliable and affordable
and efficiency of transport supply an independent capacity review and electricity is important for our business
chains. We engage directly with mechanisms to remedy any deficits and our customers.
policy development processes that
are relevant to our businesses and an improved return that better We have consistently advocated for
the industries in which we operate. reflects the risks of owning and the benefits of electric traction, and
We also participate in the policy operating the CQCN have made substantial investments
and regulatory work of a number of to improve the electric infrastructure
industry associations (as outlined in e
nhanced reporting and engagement across the CQCN.
our Governance and risk chapter). on maintenance and renewals budgets
However, the realised efficiency
Embedding the operating cost efficiencies retained and environmental benefits of
UT5 customer agreement by our business electric traction over the medium to
Aurizon Network’s Access Undertaking long term are dependent on clear and
establishes the framework for access rebate mechanisms to effective policies from the federal and
to the CQCN rail infrastructure. In incentivise performance. state governments.
December 2019, Aurizon Network
received final approval from the While embedding the Revised UT5 Policy actions taken by governments
Queensland Competition Authority Access Undertaking, we aim to achieve that are aimed at reducing the price of
(QCA) for its Revised Access stronger customer relationships and electricity and improving the reliability
Undertaking (UT5). better outcomes for all stakeholders of of supply are welcome. Lowering
the CQCN. These improved outcomes electricity costs reduces the risk of
As a result of the landmark agreement include a stronger linking of future the replacement of electric traction
reached with coal customers, we investment to performance and allowing locomotives by diesel locomotives.
now have a regulatory model that the CQCN to continue to be an efficient
delivers long-term investment export supply chain while meeting At the same time, a clear and
certainty and promotes productivity future capacity requirements. The Initial consistent long-term emissions
and performance in the QLD coal Capacity Assessment by the Independent reduction policy is also very important.
supply chain. UT5 delivered significant Expert has been delayed from the Transport infrastructure and rail supply
regulatory reform and a range original target date in June 2021. chain assets are underpinned by
of material benefits for both our We will continue to provide updates investments that have timeframes of up
customers and Network business. as we progress against the agreement. to 30 years. We prepared a submission
and have engaged with the Australian
Government on the development of
its Investment Technology Roadmap,
which was released October 2020.
The Technology Roadmap
recognises the importance of
better enabling industry to make
longer term investments in the
development and introduction of
new energy technologies that offer
emissions reduction, reliability, and
efficiency benefits.
It is also important that current
and short-term emissions reduction
policies, including the Safeguard
Mechanism15 and the Climate Solutions
Fund16, recognise the substantial
benefits of electric traction, and are
flexible and responsive in allowing
access to emissions reduction
incentive arrangements for freight
operators that use electric traction.
We continue to contribute to
consultation processes, and to
engage directly with the federal
and state governments on the
need for further policy changes,
including improvements to the
Safeguard Mechanism.
Delivering a sustainable future 17You can also read
