Big investors pressure miners, resources over climate
Climate investors controlling $US54tn have raised concerns over corporates including BHP and Rio Tinto for failing to match their future spending with long-term emissions goals.
Climate investors controlling $US54tn ($70tn) including major Australian superannuation funds have raised concerns over corporates including BHP, Rio Tinto and Woodside Petroleum for failing to match their future spending with aspirational long-term emissions goals.
A major study by the Climate Action 100+ group found while some of Australia’s biggest emitters are putting emissions goals in place, no corporate has the coverage or ambitions to achieve Paris Agreement goals: keeping temperature increases well below two degrees above pre-industrial levels with an aim of limiting rises to 1.5 degrees.
“Australian companies are starting to set targets, but no company has set targets that have the coverage including material scope 3 sources and ambition to align with a 1.5 degrees or well below a 2 degrees pathway,” Climate Action 100 said in a report released on Monday.
“No Australian company has disclosed how it intends to align its investment and capital allocation decisions with its decarbonisation aspirations and emissions reduction targets.”
The Climate Action 100+ initiative controls $US54tn in global funds and includes local investors AustralianSuper, AMP Capital, Cbus, IFM Investors, QSuper and BT Financial Group as members.
It targeted Australia’s biggest carbon polluters in September over their move to net zero emissions by the initiative as part of a move to benchmark companies over their commitment to tackle climate change.
The study found Australian companies are second to Europe on setting net-zero targets and are the highest performers globally on disclosure with all focus companies producing information in line with the Task Force on Climate-Related Financial Disclosures.
But while Australian companies beat the global average for creating short-term targets, no companies with material scope 3 emissions have included these in their target and none of the targets assessed are aligned with a 1.5 degree pathway despite moves by BHP and Rio in recent months.
AustralianSuper, a member of Climate Action 100+ with $180bn in assets, said companies need to be given time to map out their carbon strategy.
“It’s not concerning yet. Companies do need time to work out that roadmap to a low carbon transition,”
AusSuper director of environmental, social and governance Andrew Gray said.
“Sectors are facing their own supply chain issues, their own technology issues and strategy issues so it is very different sector to sector. As investors we’re willing to work with companies. For them to successfully transition to low carbon businesses, that’s good for us and that’s the way we will maximise returns for our members and manage investment risk and opportunity.”
Australian businesses are also increasingly under pressure on climate change as institutional investors such as Climate Action 100+ use their power to hold companies to account and improve their environmental performance.
The world’s largest fund manager Blackrock in March incorporated climate change assumptions into its share strategy for the first time, as it ratchets up action to confront global warming in a move set to weigh on companies without a clear path to net zero emissions.
The US asset management giant headed up by Larry Fink has changed its long-term forecasts of risk and return, known as capital markets assumptions, to reflect its view that climate change will become the biggest driver of asset pricing.
Meanwhile, hedge fund billionaire Chris Hohn has Australia’s big four banks in his sights.
The British executive turned climate activist, founder of $US30bn The Children’s Investment Fund Management, is pressuring companies to properly divulge their carbon exposure and give shareholders a vote on their climate plans.
The original target for Climate Action 100 when it was created in 2017 was for companies to reduce emissions in line with the Paris climate agreement, but that has since been overtaken both by some companies targeting more aggressive goals and a more pressing need for action.
Australian corporates Incitec Pivot, Orica and Oil Search have only recently been added to the focus list and will be assessed in Climate Action’s next review round.
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