27 June 2018
There was plenty of praise for the Federal government’s fossil fuel-loving policies at the CSR annual general meeting this morning.
CSR Limited is a major Australian ASX100 company, supplying building and construction materials across the nation. It owns just over 25% of Australia’s largest aluminium smelter, Tomago Aluminium – the single biggest consumer of electricity in New South Wales – which hit the headlines this month when power disruptions to the plant reignited conversations about Australia’s energy crisis.
While the Tomago debacle dominated question time during today’s AGM, the company’s board referred to shareholders’ climate-change related questions as “an area that is fraught with all manner of political colours”. Pressed about their crucial role in ensuring Australia can deliver a 26-28% reduction in greenhouse gas emissions by 2030, the board made several claims about being on track to achieve the targets set by the government. Amid all the self-congratulation, however, they conveniently neglected to answer the critical question of when CSR would produce a scenario analysis in line with the 2ºC warming limit of the Paris Agreement.
In 2017, Tomago Aluminium’s power consumption accounted for 12% of the state’s total capacity. But with AGL’s Liddell coal power plant proving to be unreliable and due to be shut down by 2022, and the current contract between Tomago and AGL allowing for disruptions to the electricity supply, the smelter is left vulnerable to outages and spot pricing during times of limited supply. The contract with AGL, renewed in November 2017, was cited as a key factor in CSR’s 15% reduction in before-tax earnings for the 2017 financial year, announced prior to their AGM. The company also reported high energy costs impacting Tomago’s competitiveness in the global aluminium market – all of which raise questions about increasing energy costs and wavering supply, which many shareholders took to the board this afternoon.
CSR directors, though, were quick to defend the AGL contract and even promote Tomago as a martyr for the local community (alluding to AGL’s strategy of cutting power to the smelter at peak times to ensure electricity supply to “schools, homes and other small businesses”). CSR also heaped praise on the Federal government’s national energy guarantee (NEG) and their support of supplying fossil-fuel power to industry. Board members did not hold back in expressing their disregard for renewable alternatives as options for powering Tomago Aluminium, revealing that the solar solutions they had so far considered could only supply 1% of the smelter’s needs.
Investors in Australia and abroad are rightfully demanding companies disclose information on climate-related risks. Although CSR has identified climate change as a material business risk, the company has so far provided little detail on its mainstream reporting in the types of risks considered and the implication of those risks on the company’s financial performance. The company’s responses at today’s AGM were typical of their smoke-and-mirrors approach of participating in the conversation, but not in the actual solution – clearly “corporate social responsibility” is not what CSR stands for.