Corporate titans feel social pressure

Mass protests against a mining giant show being a ‘bad corporate citizen’ is no longer going to cut it. Major companies are now scrambling to look better.

Keenly aware of intense scrutiny over their ESG (economic, social and governance) standing, Australia’s biggest listed companies appear to be getting serious about their climate change policies, with a big leap in those setting goals, a new report shows.

The Australian Council of Superannuation Investors analysed the disclosures of ASX200 companies over the year to March 31 and found 94 companies had set and revealed a decarbonisation target, up from 74 in the 2019 financial year.

A further nine companies signalled an intention to set targets in the near term.

“Capital markets and companies are responding to market signals that ratchet the global economy towards holding warming to 1.5°C,” ACSI said.

There are now 49 companies with net zero commitments, up from 14 in the previous year, including BHP, Rio Tinto, Fortescue Metals, Ampol, Origin Energy, AGL, Transurban and Wesfarmers.

Most notable among these is BHP, which last week confirmed speculation it was offloading its oil and gas projects to Woodside, and AGL, in the midst of a radical restructure focusing on lower carbon-emitting energy sources.

AGL shares have been in free fall for years and the restructure announcement in March 30 didn’t prove to be a circuit breaker.

The plan was revealed as the company’s proposed Crib Point LNG terminal on Victoria’s Mornington Peninsula was knocked back on environmental grounds.

AGL had spent $130m on the project, which had sparked protests.

Another emerging trend noted by ACSI was linking climate change targets to executive remuneration or explicitly disclosing them as hurdles in corporate scorecards.

AGL, Ampol, BHP, Beach Energy, BlueScope Steel, Origin Energy, Orica, Oil Search, Rio Tinto, South32, Santos and Woodside have either made such moves or plan to do so.

Meanwhile, according to the results of a survey of 717 Australians by comparison website Finder released on Monday, 43 per cent would be willing to switch investment funds to those conscious of ESG issues.

“The finite nature of fossil fuels means that the energy industry is looking for alternatives,” the company’s investments specialist, Kylie Purcell, noted.

“This is creating huge growth potential in the clean energy space.”

The findings come as the lithium sector booms on the back of strong demand for commodities used in electric vehicle batteries, including nickel.

BHP is no doubt relieved it reversed previous plans to sell off its Nickel West assets and now has a deal with Elon Musk’s Tesla.

An alarming Intergovernmental Panel on Climate Change report earlier this month warned that without immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting global warming to close to 1.5°C or even 2°C would be beyond reach.

Super fund Australian Ethical responded by urging workers to put their nest egg into a climate-friendly fund, reporting it had increased funds under management by 50 per cent or $2.02bn in just one year, hitting $6.07bn at the end of June.

Originally published as Australia’s biggest companies committing to climate change policies in droves

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