Nothing explosive about Orica’s climate disclosures

Orica provide explosives, blasting and tunnelling services to the mining, oil and gas, and construction industries. Unlike some of its industry peers, Orica’s published reports do give shareholders some sense of reality: the company accepts the science of climate change, recognises the need for scenario analysis, and this year began classifying climate change as a material financial risk to their business.

Orica’s 2018 Sustainability Report states: “As the global economy decarbonises and adopts new technologies and sources of energy, the business will also face long-term shifts in commodity demand and customer mix. We are identifying and minimising risk in anticipation of these long term trends and we are committed to meeting evolving disclosure requirements on climate-related issues.”

While this sounds promising, Orica has not yet backed up their talk with any disclosure of scenario analysis, actions plans, or interim emissions reduction targets in any of its mainstream reports.

At their AGM in Melbourne today, one shareholder asked if Orica could therefore “commit to developing and disclosing in 2019 a low-carbon transition plan that aligns with the Paris Agreement’s goal of restricting global warming to 1.5 degrees?”

The board’s response was uninspiring. “We follow closely what’s happening [with the Paris agreement] and as you can imagine it’s outside of our control.”

It also is at odds with this statement in the sustainability report: “We are also preparing the business for the longer-term transition to a net zero emissions future.” And according to the 2018 carbon disclosure project report, Orica “do not have a low-carbon transition plan.”

CEO Alberto Calderon forecasts that in two years’ time, services to thermal coal will make up less than 20% of Orica’s business, in line with an expected downturn in the global coal market. This represents a slight improvement from last year when he had said “we’re concerned about global warming but not in terms of affecting us directly.”

Calderon sees the transition away from coal as “a topic that is coming, it’s inevitable, we monitor it closely but we have to have some flexibility.” The company won’t commit to phasing out services to coal mining.

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