There is undeniably a reset happening and the naysayers have found their voice, which means reluctant corporates can use the pendulum swing to back track on their commitments, citing commercial reality for their decisions.
The carbon club says the battle is between greenies and greedies; the former won’t do anything on anti-emissions policy unless it’s perfect and the latter just chase short-term cash returns.
Trump’s rapid withdrawal from the Paris Climate Accord and the World Health Organisation has opened the door for China to take a lead but it’s largely just noise.
The danger of course is the pendulum could swing too far, slowing emissions reduction progress further.
But the same commercial reality faces company directors who agree to investments which create climate risks or banks lending to big emitters.
The LA bushfires and record winter storms across the centre and east of the US tell you the fundamentals haven’t changed – and no matter how good he thinks he is, the US President can’t slow climate warming.
Larry Fink and other corporates may be grandstanding about their new green-lashing positions, but Fink’s oft quoted line in 2023 remains true: climate risk is investment risk.
It doesn’t matter what global organisation you are a signatory to. If insurance companies won’t insure your home for climate risk, that isn’t going to make cost of living and home ownership any easier and won’t get you a mortgage from the bank.
Federal Opposition leader Peter Dutton has partly followed Trump by promising to abolish mandatory corporate emissions disclosure, which would give voice to those wanting to change the rules based on forcing only big emitters to disclose.
A guide to sentiment was this week’s headlines on Woodside slowing its US hydrogen push as evidence of Trump, despite Origin’s withdrawal from the Newcastle hydrogen project last year being treated as simply commercial reality.
Hydrogen is expensive and investment in it is tough.
Likewise Rabobank didn’t hit page one when it recently offered discounted loans to farmers who adopt environmental planting programs.
Dutton will find, as did former energy minister Angus Taylor, that corporate Australia is light years ahead of Canberra on climate issues.
The fact is that while Trump is riding his momentum, in his switch to government policy – based on testing what he can get away rather than the law – his electoral victory was not quite as sweeping as the US college votes tell you and fall well short of a revolutionary mandate.
As a percentage of votes cast, Trump won the popular vote by 1.5 per cent which compares with 2016 when Hillary Clinton won by 2.1 per cent, Biden’s 4.5 per cent victory in 2020 and Obama’s 3.9 per cent win in 2012.
Undeniably, a comfortable victory but not the popular landslide some would have you believe.
The rash of state government lawsuits against his presidential decrees and signs of dissent from Elon Musk suggest the battle won’t be all his way.
Dutton’s climate spokesman, Ted O’Brien, has almost guaranteed that if the Coalition wins power he will have some sort of inquiry into the safeguards policy which requires big emitters to cut emissions each year from a set baseline.
It is a Coalition policy but, under then minister Angus Taylor, baselines were moved to make them meaningless and any backtracking will be negative.
The present government tightened the rules and March marks the first deadline with 5 per cent cuts required companies such as Qantas, BlueScope and BHP.
The carbon price, as measured by Australian carbon credit units (ACCU), has eased from a near-term peak of $42.50 in the fourth quarter last year to $34.75 a unit – in part due to perceived excess supply.
Core Markets carbon chief Marco Stella told The Weekend Australian that “the recent softening in the ACCU market has coincided with concerns over the higher-than-expected creation of safeguard mechanism credits likely later this month, alongside concerns about the potential for a Coalition victory at the looming election”.
“The market could yet experience some fireworks however, given the imminent compliance deadline in March, should substantial purchases still need to be made by liable entities,” he said.
Australian carbon credit units can be acquired to meet safeguard targets.
Tony Goldner from the taskforce on nature-related financial disclosures told The Weekend Australian: “The reality is that companies and the financial institutions providing capital and insurance solutions to them face growing climate and nature risks because the resilience of business depends on the resilience of nature.
“Internal assessment work is in companies’ enlightened self interest and investors are continuing to seek reassurance that companies understand and are managing their nature-related and climate-related issues.”
Investment group on climate change boss Rebecca Mikula-Wright noted that despite the noise her membership keeps growing and supported mandatory climate reporting to help “capital flowing as investors look for credibility, certainty and stable policy direction”.
There may be a self-serving element in these statement but, as noted in this column before, Wesfarmers chairand father of federal MP Kate, Michael Chaney, 38 years ago wrote the company’s charter which is remarkably similar to the ESG prayer book.
In 1987 he wrote the company mission wads “to deliver a satisfactory return to shareholders” – but “believes this is only possible over the long term … by looking after customers, staff, the environment, suppliers, communities in which it operates and … acting with integrity and honesty”.
If the pendulum swung too far to the ESH and DEI (diversity, equity and inclusion) side of the agenda then the danger is it swings back too far.
In between, the scientists attest the world is getting hotter and global deadlines are not being met.
Starmer demands growth
While Trump grabs the headlines, UK Prime Minister Keir Starmer has reportedly sacked Competition and Markets Authority (the ACCC equivalent) boss Marcus Bokkerink for not being pro-growth enough.
He is being replaced as at least a temporary measure by former Amazon UK executive Doug Gurr in what is a massive change in UK competition regulation,
Our federal government still uses the ACCC to make political points and late next month will have its final report on supermarket pricing, primed for the election campaign.
Tech doesn’t rate here
The latest rankings from colleague John Connolly and Partners underlines the dearth of tech giants in Australia, with Afterpay parent Block the only tech stock in the top 10 – at number nine.
Commonwealth Bank is number one, knocking BHP off a perch it has held most of this century, while at number six Macquarie Bank is now worth more than ANZ.
In brief, the top 10 by market capitalisation are in order: CBA, BHP, CSL, NAB, Westpac, Macquarie, ANZ, Wesfarmers, Block and Newmont.
In 1998 the list was Telstra, NAB, BHP, Westpac, ANZ, CBA, Rio, Amatil, Lendlease and Coles.
In 1958 it was BHP, Coles, CSR, MIM, Westpac, EZ, ACI, Consolidated Zinc, IAC and Tooths.
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Donald Trump cannot issue an executive order to abolish climate change and, although his election has magnified the green-lashing sentiment switch, the fundamentals sadly have not changed.