Aussie investors most shouty in the world against companies considering climate risk
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Australian investors are much louder about their investments not spending money on climate change risks than in other jurisdictions, a BHP executive says.
“I still get shouty letters from people saying ‘why is BHP spending shareholders’ money?’” BHP (ASX:BHP) VP for sustainability and climate change Dr Fiona Wild said at the corporate cop ASIC’s annual get-together on Friday.
“It’s not uniquely Australian but there’s something quite Australian about it,” she said as she noted that complaints in Australia tend to be “much louder” than the ones the company fields in other countries.
But Citi head of ESG research Zoe Whitton says she’s fielding fewer of those conversations and emails, partly because in the last few years people in the private sector have started being able to see solutions, rather than just a big black hole of a problem.
She did say there are lots of people in markets who don’t believe in climate change, and previously many of those thought it was “probably invented by the Chinese”.
Climate change risk management is becoming a factor for public boards.
Local regulators and the ASX are beginning to follow overseas examples demanding that companies start including some recognition of the risk the impacts of climate change could have on their bottom line.
Banking regulator APRA, corporate regulator ASIC, the RBA, the ASX and in April 2017 a Senate committee all outlined early stances, and all in some respect referencing recommendations last year from the Task Force on Climate-Related Financial Disclosures (TCFD) led by former UK Reserve Bank governor Mark Carney.
In September last year ASIC took apart 60 ASX300 companies and 25 IPO prospectuses for not doing enough to tell investors about the threat of climate change to their businesses, in the “Climate risk disclosure by Australia’s listed companies” report.
And finally, in March Noel Hutley QC updated his landmark opinion from 2016 on climate change legal risks. Hutley and Sebastian Hartford Davison say individual company directors are increasingly exposed to climate change litigation.
Amber Johnston-Billings, the director of climate change and sustainability at KPMG, says legal action stemming from the impacts of climate change are already focusing the minds of boards at major companies.
She says there are over 100 court cases in action now around the world, many of which have been taken out against companies by local councils which can’t afford the costs of climate change-induced damage.
In Australia, Commonwealth Bank (ASX:CBA) has been sued for not disclosing climate risk a material risk in its annual report — the case was dropped after it began doing so — and last year retail industry super fund REST was taken to court for not factoring climate change into its investment decisions.
Large companies may be getting the message, but for small caps climate change risk is still largely not a factor.
Last year Stockhead analysed the agriculture stocks on the ASX.
We found few mentioned climate change in their annual reports, despite many being on the front line.