'Out Of Line': Top Australian Companies Accused Of Undermining Paris Deal

The Guardian - Ben Smee

Action group Market Forces urges shareholders to divest holdings in 22 ‘uninvestables’

The companies reported to be ignoring the Paris climate deal are worth a combined $121bn and represent 7% of the ASX300 index. Photograph: Tim Wimborne/Reuters 

New analysis shows 22 of Australia’s largest companies are actively working to undermine the Paris agreement targets, betting shareholders’ money on strategies that assume global climate change action fails.
Investor action group Market Forces says those companies – worth a combined $121bn and representing 7% of the ASX300 – are “out of line and out of time” and has called on shareholders to divest their holdings.

Paris-alignment of ASX 300 companies by weight

The group’s legal analyst, Will van de Pol, said it was the first time Market Forces had “named names” and called out companies whose business strategies relied on the world failing to meet the Paris targets to restrict the global temperature rise to 1.5C above pre-industrial levels.
“A handful of Australian companies are undermining efforts to limit global warming by pursuing new fossil fuel projects, or basing their business plans on energy projection scenarios that would doom the Paris agreement to failure,” the report says.
“These companies have now been given more than three years to align their business with the Paris goals, but have dismissed the notion.”
The list of “uninvestables” includes mainly resource and energy companies, but also diversified investment vehicles including WH Soul Pattinson and Seven Group Holdings.

The Market Forces study found that 199 ASX300 companies, representing 64% of total market capitalisation, faced heightened transitional climate risk but had not yet demonstrated business strategies consistent with the Paris agreement.
There were 143 companies with policies “not overtly inconsistent with Paris”, and just eight had aligned their strategy with the agreement.
Three companies – AGL, Origin and BHP – earned a reprieve from the list of the worst offenders, despite acting in a similar manner, because Market Forces said they had shown some progress towards aligning their goals with Paris.
In recent years, the boardroom has become an increasingly important front for climate activism.
This month, Norway’s sovereign wealth fund, the largest in the world, announced it would divest from firms that explored for oil and gas. Last month, Glencore said it would no longer back new coalmines in response to investor calls for the company to act on climate change.
Pressure is also increasing on Australian companies, though many still refuse to even consider the financial risk posed to their businesses by climate change.
In September, a report from the Australian Securities and Investments Commission said “the law requires” relevant companies to “include a discussion of climate risk” in their annual report.
In February, the Asic corporate governance council released new recommendations that directors and companies should make climate risk disclosures.
The Market Forces report singled out “coal cowboys” Whitehaven and New Hope, which it said had plans to establish new coalmines, or expand existing ones, based on forecasts that assume the failure of Paris.
Oil and gas companies Woodside, Santos and Oil Search had each “faced increased investor engagement over climate change in recent years, but this has done nothing to dissuade their plans to increase fossil fuel production”, the report said.
“Investors determined to play their part in the fight against runaway climate change must immediately reallocate capital away from these companies.”

Links

• Out of line, out of time (pdf)
• Australian companies still failing to properly disclose climate risk
• Australian mining giants 'may be breaking law' by ignoring climate change risks
• Australia's coal bonanza at risk as Chinese import 'ban' spreads
• Authorities can do nothing about pro-coal ads linked to Glencore campaign
• Coalition considers letting power companies buy offsets to cut emissions
• Queensland accused of breaking ‘no public funds for Adani’ promise
• Coal-fired plant shifted $1bn offshore while pocketing $117m from Australian taxpayers
• Coal in decline: Adani in question and Australia out of step
• Big Australian banks invest $7bn more in fossil fuels than renewables, says report