Home > Revealed: AMP exposed to Adani Abbot Point

Revealed: AMP exposed to Adani Abbot Point

11 May 2017

Major Australian financial services company AMP faced intense questioning from concerned shareholders at the company’s annual general meeting in Sydney today after it was revealed AMP Capital has an existing financing relationship with Adani.

Adani is the Indian energy giant planning to open up Queensland’s Galilee Basin to coal mining with their mammoth Carmichael coal project. The Adani group already owns and operates the Abbot Point coal port, which sits at the edge of the Great Barrier Reef World Heritage Area, sending hundreds of ships full of dirty coal through its precious waters every year.

It’s that very coal port which AMP’s financing arm, AMP Capital, facilitated a US$335 million (AU$420m) loan for in January 2015. With the loan not due to be repaid until 2020, AMP’s ongoing relationship with Adani makes them likely to be approached for finance for the dirty Carmichael coal mine.

In response to shareholder questions at today’s AGM, AMP Chair Catherine Brenner confirmed the company is currently exposed to Adani, and could not categorically rule out any investment in the company’s Carmichael coal project.

Take action! Tell AMP to rule out funding Adani Carmichael

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To AMP, Re: Adani Carmichael coal project I am aware that AMP has previously arranged and provided finance to the Adani group’s coal operations in Australia, having loaned US$335m to the Abbot Point coal port in January 2015. I am highly concerned that your existing relationship with Adani makes it likely you will be involved in Adani’s plans to mine and export coal from the Galilee Basin in Queensland. I want you to confirm to me personally, and announce publicly, that you will not provide any further finance or support for any part of Adani’s Carmichael coal project. The proposed mine poses numerous environmental risks, including the depletion of groundwater, increased particulate air pollution along the transport and shipping corridor, as well as in the region where the coal is burned, increased industrialisation of Great Barrier Reef World Heritage Area coastal boundary as a result of larger shipping volumes, and potentially the dredging and construction works for a new terminal at Abbot Point. The project also does not stack up economically, pushing against the tide of a declining coal sector, and becoming increasingly reliant on public subsidies to be financially sustainable. Most critically of all, the world is on the brink of triggering runaway climate change, and the Paris climate change agreement struck in 2015 aims to hold global warming to well below 2˚C above preindustrial levels. Building Australia’s largest thermal coal mine is about the clearest example of what we need to avoid if we want a stable long-term climate. The Carmichael coal mine has become one of the most controversial projects in the world, opposed by the majority of Australians with hundreds of thousands taking action through petitions or public activities to demonstrate their opposition. Any company associated with the project will be held accountable by the community for its support of this environmentally destructive and economically reckless project. Again, I urge you to confirm that AMP will not help facilitate Adani's destructive and dirty Carmichael coal plans. I expect your prompt reply to unequivocally rule out any involvement by AMP in any element of the Adani Carmichael coal project. Sincerely,
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Click here to see The Adani List. Find out which companies could make or break the Adani Carmichael coal project, and take action to make sure dirty Galilee Basin coal never sees the light of day.

A conversation 10 years in the making

AMP seems to have something of a disjointed understanding of the risks climate change poses to assets, both physical – like dirty coal ports – and equities – like the billions of dollars worth of fossil fuels company shares AMP owns.

As early as 2006, AMP’s Head of Investment Strategy recognised the inevitability of emissions-constraining regulation, and the risks it posed to investments. Yet at the company’s 2016 AGM, then Chairman Simon McKeon said the board had never considered what keeping global warming to below 2°C would mean for the company.

Shareholders were glad to hear climate risk addressed in Ms Brenner’s opening address, and that “the economic impacts of climate change” and “stranded assets” were now considered by the board and risk committee.

The question remains though, what on earth was the AMP board doing in the 10 years after its own Chief Economist warned of climate risks to their investments?

Earlier this year, financial system regulator APRA warned of climate risk to investors, recognising that, in order to have a 2 in 3 chance of limiting global warming to below 2 degrees, we will have to restrict future global emissions to around 800 gigatonnes of CO2. An AMP shareholder asked if the board concurred with this analysis, and if so, how AMP Capital’s investment strategy has evolved to address the limitations of the carbon budget.

When asked if the board agreed with APRA’s comments, Ms Brenner restated the company’s broad support for the Paris Agreement and action “along the lines of which Geoff Summerhayes talked about”. Unfortunately, when pressed on what this meant for AMP’s investment strategy, Ms Brenner was only able to point to the continued application of the company’s existing ESG (environmental, social and governance) framework, which does not include an explicit screen on fossil fuel companies.