IOOF’s attitude to climate disclosure: “there’s really not much we can do”

23 November 2017

When asked by shareholders, at today’s annual general meeting, if IOOF would implement recommendations from the the Task Force for Climate Related Financial Disclosures, chairman George Venardos said ‘there’s really not much we can do.’ It is alarming that an ASX 100 company managing more than $143 billion would be so flippant about its risk disclosure obligations. 

The TCFD suggests financial institutions provide detailed reporting as they face a high potential impacts from climate change. In response to a shareholder’s query about whether the Board is considering providing public disclosures in accordance to the TCFD recommendations, Venardos answered, “Our influence in that space is not huge in our investment process.”

IOOF’s 2016 Corporate Governance Report stated that the Board believes that there is no environmental and social sustainability risk for IOOF”. This year climate change was included under Environmental, Social and Governance risks. However it is still not considered to be of Material Financial Risk according to the 2017 Director’s Report. Venardos today highlighted the company’s efforts to minimise their footprint through efficient use of energy and water, but without acknowledging the systemic support IOOF’s investments provide to climate change’s drivers, particularly the fossil fuel industry, these behavioural measures seem token at best.

The chairman’s statements are incongruous with the fact that IOOF MultiMix is heavily invested in fossil fuel companies like BHP Billiton and Wesfarmers, the biggest emitters of carbon dioxide in Australia’s Materials and Consumer Staples industries respectively. Pauline Vamos, ex-CEO of the Association of Super Funds, stated earlier this year that super funds can lead the way on climate risk disclosure by adopting recommendations from the TCFD.

IOOF MultiMix Balanced Growth Trust does not disclose the vast majority of holdings, which other fossil fuel companies does the fund own? Click here to take action!

Lagging behind its Peers

While many Australian financial institutions like ANZ, IAG and CBUS are moving forward with climate risk management and committing to disclose information to the public and their shareholders, IOOF is clearly behind the pack. IOOF has scored “F” for not responding to the Carbon Disclosure Project’s request for climate change disclosures for the last 2 years.

IOOF has also lagged behind its peers in the Asset Owners Disclosure Project (AODP) Global Climate Index, which is an international standard for assessing the world’s 500 largest investors on climate-risk management. The index rates funds and insurance companies from AAA to D grade, with X category representing funds that perform the worst, demonstrating no initiative to manage climate risk. In 2016, IOOF scored an X on the Global Climate Index, but leaped up 159 ranks to grade C (‘learners’) in 2017. IOOF still has a long way to go to reach a ‘leaders’ rank, which has already been achieved by six of its Australian super fund peers.

In order to effectively contribute to the climate solution, IOOF must do more than just ensuring energy efficiency at its office premises. The company must provide robust climate risk disclosures, engage forcefully with recalcitrant companies, and divest from those that fail to produce transition plans in line with the aims of the Paris Agreement.