Shareholders Target QBE Over Climate Change 'Failure'

Fairfax - Ruth Williams

QBE Insurance Group has become the latest big listed company to be hit with a demand for more transparency about potential risks it faces from climate change, amid calls by a prominent company director for boards to consider "uncomfortable questions" on the issue.
Melbourne NGO Market Forces, which last year filed similar resolutions targeting Santos, Oil Search and Origin Energy, has this time teamed up with the $10 billion Local Government Super to call for more disclosure of climate risks by the insurer.

QBE has been hit with a shareholder resolution on climate risk. Photo: Fairfax

The two groups have filed a shareholder resolution - to be voted on by investors at the QBE AGM in May - asking the company to disclose climate risks using a newly-minted set of rules endorsed by major companies and investors around the world.
LGS, which last year voted in favour of several Australian shareholder resolutions related to environmental or social issues, said climate change risks posed "very significant investment issues for the insurance industry, and these have been felt by QBE in recent years".
Market Forces said the fact that mainstream fund LSG had co-filed the resolution marked a "hardening of investor attitudes towards companies failing to effectively manage climate risk".
t said QBE had so far made "sub-standard" disclosure on the issue and had "failed" to make a commitment to improve.

The matters raised in the resolutions proposed by Market Forces and Local Government Super are important for QBE. QBE spokesman

QBE said it welcomed the dialogue and would be preparing its response to the resolution in coming weeks.
“It’s widely recognised that a changing climate is giving rise to important issues across the insurance sector," a spokesman said. "Indeed we already have a program of sustainability-related work underway across our business.
"In this context, the matters raised in the resolutions proposed by Market Forces and Local Government Super are important for QBE and its shareholders and we welcome the dialogue."

Risky business
The risks posed by climate change to the insurance industry - and the wider financial system - were highlighted by Bank of England governor Mark Carney in a landmark 2015 speech, in which he noted that the number of registered weather-related loss events had tripled since the 1980s - and that inflation-adjusted insurance losses from those events had surged from an annual average of about $US10 billion in the 1980s to about $US50 billion during the past decade.
Climate change risk among listed companies was a recurring topic at the Australian Institute of Company Directors conference in Melbourne on Thursday, where prominent director Sam Mostyn said it was among the difficult conversations that some boards had not, until recently, been having.
In a major speech at the conference, she said regulators - including the Bank of England's Carney and senior figures at the Australian Prudential Regulation Authority - had been asking "uncomfortable questions" that had opened up "a new conversation about director responsibilities presented by climate-related financial risks".

Sam Mostyn says boards must consider climate change risks. Photo: Justin McManus

"If you're not thinking about climate-related risks and you're sitting in a regulated company you're running a risk," said Ms Mostyn, who sits on boards including Virgin Australia, Transurban and Mirvac. "We wouldn't need regulators to tell us this if the right conversations had been happening inside boardrooms, we'd be on to it already."
A 2016 opinion written by Noel Hutley SC found that directors risked breaching their statutory duties if they failed to consider and disclose foreseeable climate-related risks. Meanwhile, institutional investors are becoming increasingly vocal on climate change issues, especially in pushing for companies to boost their disclosure of climate risk along the Task Force on Climate-related Financial Disclosures lines.

Resolving the matter
Passive investment giant BlackRock was among those supporting climate change-related shareholder resolutions at US companies ExxonMobil and Occidental last year.
But BlackRock has not backed Australian climate-related resolutions, with its head of investment stewardship in Asia Pacific, Pru Bennett, telling the AICD conference on Thursday that its own engagement with companies had been followed by "some quite remarkable disclosures and changes in attitude" on the issue.
She said the workload created by shareholder proposals lodged by small groups of investors was "disproportionate" for boards.
Prominent director Ziggy Switkowski, during the same session, said climate change was one of several "important risks and stresses" being faced by companies, also listing political risks, technological shifts and "risks associated with activism and the reinforcement of that through social media".
He said climate risk should be acknowledged and described, but both he and Ms Bennett rejected suggestions that climate disclosure should be mandated.

Links

• None Of Our Insurers Are Keeping Pace With Climate Change
• Climate Change Driving More Risks Than Ever Before
• Insurers Paid Out $50bn For Natural Disaster Claims In 2016
• Australia Faces Rising Perils From Climate Change, Earthquakes: Munich Re Report
• Big investors backed shareholder campaigns on climate, human rights

Weather Alert

ABC - Four Corners

Weather Alert Weather Alert goes to air on Monday 5th March at 8.30pm. It is replayed on Tuesday 6th March at 1.00pm and Wednesday 7th at 11.20pm. It can also be seen on ABC NEWS channel on Saturday at 8.10pm AEDT, ABC iview and at abc.net.au/4corners.

How Australia's warming climate is changing the way we live and work.

"This is very 'now'. This isn't a future problem which is 10 or 20 or 30 years (away)."
Climate Risk Expert

Across Australia, farmers, small businesses, government planners and major corporations have stopped waiting for politicians to decide whether climate change is real. They're acting now.

"That debate can rage around us. If I say to my customers, 'Don't worry, in 200 years it will all be okay.' That's not going to cut it."
CEO

Mounting evidence suggests our changing climate is having an impact on everything - from what we grow, eat and drink, to house prices and the cost of insurance.

"If you own a home in one of those areas and you try to sell it, you may find that the buyer is saying, 'Well, I'm not going to be able to insure it.'... Or even, 'I can't even get a mortgage on this house because the bank is saying, 'Well, we don't want the high-risk properties on our books.'"
Climate Risk Expert

Four Corners has travelled from coast to coast to chart how Australians are adapting to the new weather challenges.

"The temperatures are more erratic. We seem to get frosts in the middle of summer, we've had frosts nearly on Christmas day. We're getting hot, dry weather in the middle of winter."
Cattle farmer
"We were probably sceptics... but when we saw those 10 years of drought and the impact it was having on our business... our board decided that we needed to make some significant changes."
Leading wine maker

From farm kitchens to the board rooms of our major cities, people are changing the way they do business.

"It is clear that directors do have duties to take climate risk into account as a foreseeable financial risk, and a failure to do so may expose them to liability for a breach of their duty of due care and diligence."
Corporate risk adviser

Emergency services and state health departments too, have had to significantly alter the way they operate in the face of increasing "extreme" weather.

"It is a significant hazard for us as emergency management agencies. We need to plan and prepare for it because we can get a significant number of people who will end up being very unwell."
Director of Emergency Management

This is a story that leaves the politics behind and shows what the challenges are for many people across Australia in the face of this 'new normal'.

Links

• TV Networks Did A Really Crap Job Reporting On Climate Change Last Year
• At Climate Feedback, Scientists Encourage Better Science Reporting. But Who Is Listening?
• Analysis: The Climate Papers Most Featured In The Media In 2017
• Most Popular Climate Change Stories Of 2017 Reviewed By Scientists

Why Some Conservatives Are Blind To Climate Change

The Conversation - Jiaying Zhao | Jennifer Whitman | Rebecca M. Todd

Homes are surrounded by floodwaters from Tropical Storm Harvey in Spring, Texas on Tuesday, Aug. 29, 2017. (AP Photo/David J. Phillip, File)

Imagine this: A young professional couple at a party mentions they’re thinking of buying a home in a popular waterfront neighbourhood that scientists have found is vulnerable to coastal flooding.
That flood risk is made extra clear by murals in the neighbourhood marking the predicted water level rise. What’s more, media headlines have warned about sea level rise daily during the past week.
So, what gives? Can the young couple just not see the evidence in front of them?
In recent years, we have been exposed to an abundance of information about climate change. This often takes the form of news articles about carbon emissions and the hurricanes, floods and forest fires bolstered by climate change.
Despite the strong evidence that human activities are contributing to climate change, a small minority of the public disagrees with the scientific consensus.
Do you see what I see?
In the face of the evidence, how can we explain this division?
As psychology researchers, we wondered whether some people are just blind to cues of climate risk.
When we’re confronted by visually crowded settings, we tend to notice emotional words and tune out others. For example, if you were presented a series of words appearing one after another in quick succession — 10 words per second — you would struggle to name all of them. But you would be more likely to catch a word like “danger” than a neutral one.
We set up exactly that kind of scenario in our study. We recruited university students, as well as people in shopping malls in the Vancouver area and in Kamloops, B.C. Then we showed each of them a rapid sequence of words and asked them to pick out two targets, such as a set of digits (555555555) and a word in green font, in the sequence.
Due to limits in our visual system, once the first target has appeared, people are unable to “see” the second target if it appears too soon after the first. This phenomenon is called the attentional blink. It’s as if the mind blinks after the first target, preventing you from seeing the second.
But things change when emotional words are used. Previous research has shown that if the second target is emotionally arousing, then people are better able to see it than if it is neutral — compare the words murder and keyboard, for example.

Smoke rises behind a levelled apartment complex as a wildfire burns in Ventura, Calif. in December 2017. (AP Photo/Noah Berger, File)

 When we modified the test to measure people’s attention to climate change, we found people who are concerned about climate change are better at seeing climate-related words, such as carbon, right after the first target than those who are less concerned.
We also asked participants about their political orientation, income, education, religion, profession, experience with natural disasters and whether they owned a home near sea level.
When we analyzed the data, we found a pattern: Conservatives who were less concerned about climate change were less likely to see climate-related words than liberals who were worried about the issue.
In short, conservatives showed climate change blindness.

Targeted communication
Now that we know people’s political orientation affects their visual attention to climate change, this raises a possible feedback loop, where concerned liberals readily tune their attention to news headlines about climate change and become even more concerned.
But unconcerned conservatives may be more blind to the same headlines about climate change and therefore become more entrenched in their disbelief.
The visual blindness can further deepen the denial of the real risks of climate change such as flooding, hurricanes, drought and heatwaves, and consequently a lack of action to mitigate climate change.
If we’re to be successful communicating the risks of climate change to conservatives, we may need to go about it in a different way. Communications about climate change must tailor the climate-related information to the audience, especially those who are conservative or unconcerned.
We can do this by using messages that align with people’s political ideologies and personal values.
For example, we can frame climate change action as protecting our nation against climate catastrophes, advancing economic and technological development and creating a more caring and considerate society, which is an effective message to engage climate deniers. Framing environmentalism as a form of patriotism can be successful, particularly if the appeal is seen as coming from one’s in-group.
It’s always hard to get someone’s attention, but if the messaging is in line with their personal values and motivations, they will take notice.

Links

• For Earth Day, here’s how Americans view environmental issues
• Affective influences on the attentional dynamics supporting awareness
• Political orientation and climate concern shape visual attention to climate change
• Promoting pro-environmental action in climate change deniers
• Think tank’s talking points deepen the divide over climate change
• Growing inequality in the US is bad news for climate change
• Caribbean residents see climate change as a severe threat but most in US don’t — here’s why
• Is lagging on climate change a political liability?