A recent investor-led study by the Transition Pathway Initiative has found the vast majority of the world’s biggest coal companies are not demonstrating plans to reduce their carbon emissions in line with the Paris agreement. Only two of the 20 largest coal mining companies have set emissions reductions targets, while three don’t even acknowledge climate change as a business issue.
Australian investors, including our super funds, should be put on notice by this study, which placed Whitehaven Coal in the second lowest category of carbon risk management. Whitehaven Coal is listed in the ASX 200, meaning super funds that don’t have exclusions or restrictions on investments in coal companies are very likely to own shares in the company.
Find out if your super is invested in Whitehaven or other fossil fuel companies
Super funds often say they prefer to engage with fossil fuel companies to change their behaviour, rather than divest. But this new report’s findings provide further proof that investor engagement with the most emissions intensive companies is failing to bring them into line with the requirements of Paris agreement.
Using Whitehaven as an example, we can see that Australia’s super funds have so far failed to get the company to commit to reduce its greenhouse gas emissions in line with the decarbonisation required to meet the Paris Agreement.
Market Forces has written to Whitehaven Coal, asking the company how it plans to implement the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD), which make it clear that companies exposed to climate risk should disclose those risks and how they are being managed.
If Whitehaven still can’t show investors how it plans to manage the necessary transition to a low carbon economy, how can investors claim their engagement has been effective? It’s hard enough to imagine how any pure play coal company would have a future in a less than two degree world, let alone one that has failed to set any targets to reduce its climate impacts.
The report also found that smaller companies tended to perform worse on carbon risk management. This is especially worrying given the prevalence of smaller coal companies in Australia, and therefore within our super portfolios.
We need our super funds to be taking the lead and demanding full and frank disclosure of climate risk from the companies they own. This extends far beyond coal miners, with oil and gas companies, energy utilities, large energy users, and other sectors potentially exposed to climate risk.
For companies, like Whitehaven Coal, that can’t show investors a viable plan to bring their business into line with the Paris Agreement, investors should take a moral stand and divest.