19 May 2020
In response to questioning from shareholders at its annual general meeting today, Australian construction material company Adelaide Brighton suggested its weak emission reduction targets could be stepped up to align with the Paris climate goals over the coming year.
Investors must now use their position to hold the company to account on this issue, and ensure it produces short, medium and long-term targets that are demonstrably consistent with holding warming to 1.5°C in the next year.
Despite being a target of the Climate Action 100+ investor initiative, Adelaide Brighton has been slow in responding to calls to disclose and manage its exposure to climate change risk. Lagging many of its peers, Adelaide Brighton is still yet to disclose detailed analysis of how the company financial position and prospects would be impacted in a low-carbon scenario consistent with the Paris Agreement’s goal of limiting global warming to 1.5°C above pre-industrial temperatures.
As one of Australia’s largest greenhouse gas emitters, by far the most important way Adelaide Brighton can demonstrate climate risk management is by setting strategies and targets to bring down its emissions in line with the climate goals set out in the Paris Agreement.
Unfortunately, Adelaide Brighton’s current target to reduce scope 1 and 2 greenhouse gas emissions by 7% over the next five years appears well short of the ambition required to bring down emissions in line with the Paris goals. The UN says holding warming to 1.5°C will require global emissions to fall 7.6% every year from 2020 to 2030.
By comparison, peer Fletchers Building has set a target to reduce its scope 1 and 2 emissions by 30% by 2030, which has been recognised as Paris-aligned by the Science-Based Targets Initiative.
When challenged over its unambitious emission target, Adelaide Brighton weas quick to point to past emissions reductions, which are appreciated but don’t excuse the company from its responsibility to continue to decarbonise in line with the Paris goals.
Most importantly though, the company stated that it will be determining appropriate and credible targets as it goes through the process of modelling different climate change scenarios.
Given the company’s slow progress in this area to date, investors must take this opportunity to push Adelaide Brighton to produce detailed climate scenario analysis, which includes at least one scenario in which the Paris Agreement’s 1.5°C target is met without relying on unproven carbon capture and storage technology. It is imperative that this scenario is used to determine short, medium, and long-term targets for Adelaide Brighton to bring down its greenhouse gas emissions.
Climate change and sustainability was clearly front of mind for shareholders tuning in to today’s online AGM. The company was also questioned over the extent to which it is investing in production of ‘green concrete,’ which uses recycled industrial waste.
Another question related to the company’s current use of dirty coal power for its lime and cement factory in the Perth suburb of Munster and its health impacts on the local community. The company said it is looking for alternatives, and ‘hope to make an announcement in the foreseeable future,’ but stopped short of a commitment to ditch coal power completely by a set date.