Aus­tralian min­ing gi­ants 'may be break­ing law' by ig­nor­ing cli­mate change risks

The Guardian Australia - - Opinion / Finance - Ben Smee

More than a dozen of Aus­tralia’s largest min­ing and in­fra­struc­ture com­pa­nies may be in breach of their le­gal du­ties by re­fus­ing to con­sider the fi­nan­cial risks posed by cli­mate change, an in­vestor ac­tion group says.

In Septem­ber, the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion pub­lished a re­port that said “the law re­quires” rel­e­vant com­pa­nies to “in­clude a dis­cus­sion of cli­mate risk” in their an­nual re­port.

Mar­ket Forces, a group that ad­vo­cates for en­vi­ron­men­tally sus­tain­able in­vest­ment, as­sisted share­hold­ers at com­pany an­nual gen­eral meet­ings. Al­most all of those com­pa­nies ig­nored or dis­missed cli­mate change as a fi­nan­cial risk to their busi­ness.

“Di­rec­tors are legally re­quired to con­sider cli­mate risk. Fail­ure to do so may con­sti­tute a breach of their le­gal du­ties,” Mar­ket Forces cam­paigner Rachel Deans said.

“It ap­pears di­rec­tors are openly ad­mit­ting to break­ing the law at their share­holder meet­ings and Asic seems to be well aware of it.”At the Prairie Min­ing AGM, chair­man Ian Mid­dle­mas was asked whether the board sup­ported the Paris agree­ment tar­gets. “It’s not on our radar,” he said.

“I think they are the sort of ques­tions that are for peo­ple that are pro­duc­ing prod­uct and have got an ac­tual op­er­a­tion. We’re just sim­ply ex­plor­ing.“So I’m not sure ... just try­ing to think of what’s a good ex­am­ple … it’s like if you have a tod­dler at home and some­one asks which uni­ver­sity will he go to, well the answer is ‘we will work it out when he is 18’.“I’d love us to be in a po­si­tion where we have to have an idea about cli­mate change, and an idea about Paris you know … what you just raised. But it’s sort of like hav­ing an idea of what hap­pens in Sydney when you live in Perth.”

When asked whether Senex En­ergy fol­lowed a 2C or 3C cli­mate in­crease tar­get, the com­pany’s chair­man Trevor Bourne said: “We don’t op­er­ate our com­pany on ei­ther.“Whether it is two or three [de­grees] that is a big­ger is­sue for the gov­ern­ment to ad­dress. If they get off their back­side and do some­thing about it, it would make our in­vest­ment de­ci­sions much clearer.”

In Septem­ber Asic au­dited 60 com­pa­nies and found only 10 iden­ti­fied cli­mate as a ma­te­rial risk.

Among the find­ings of that re­port was that com­pa­nies were legally bound to “in­clude a dis­cus­sion of cli­mate risk when it could af­fect the en­tity’s achieve­ment of its fi­nan­cial per­for­mance or dis­closed out­comes”.

“Di­rec­tors should also con­sider the re­quire­ment to in­clude any rel­e­vant an­a­lyt­i­cal com­ments and spec­ify how risk fac­tors that are within the con­trol of man­age­ment will be man­aged.”A

le­gal opin­ion, writ­ten for the Cen­tre for Pol­icy Devel­op­ment, warned of po­ten­tial con­se­quences for a lack of dis­clo­sure. “It is likely only a mat­ter of time be­fore we see lit­i­ga­tion against a di­rec­tor who has failed to per­ceive, dis­close or take steps in re­la­tion to a fore­see­able cli­mate-re­lated risk that can be demon­strated to have caused harm to a com­pany,” the opin­ion said.

Deans said it was not just a le­gal re­quire­ment, but also a re­spon­si­ble busi­ness prac­tice.

“Share­hold­ers are frus­trated that com­pa­nies are not look­ing at the fi­nan­cial risks cli­mate change poses to their busi­ness,” she said. “It is likely we will see more cases of di­rec­tors be­ing sued if they don’t start tak­ing cli­mate risk se­ri­ously.”

Pho­to­graph: Ar­tyom Geo­dakyan/Getty Images

The Aus­tralian Se­cu­ri­ties and In­vest­mentsCom­mis­sion au­dited 60 min­ing and in­fra­struc­ture com­pa­nies and found only 10 iden­ti­fied cli­mate as a ma­te­rial risk.

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