6 December 2019
Washington H Soul Pattinson went to extraordinary lengths to avoid questions on coal and climate change at its annual general meeting today, pushing all questions to the end of the meeting before shutting the entire AGM down after just a few questions.
It’s no surprise that climate change was a sore point for Washington H Soul Pattinson (WHSP) board. With a 50% stake in New Hope Coal, WHSP’s share price has suffered alongside the struggling coal miner’s share price in the past year.
WHSP’s holdings value in New Hope Corporation Limited declined by 21.3% during FY19 from US$1,326 million (FY2018) to US$1,043 million as at end of FY19. Since then, New Hope’s share price has plummetted a further 25%. WHSP’s share price has also fallen in the past year, which isn’t surprising given New Hope made up around 20% of WHSP’s net asset value.
Incredible scenes at Washington H Soul Pattinson’s AGM, where Chairman Rob Millner has just shut down the meeting rather than take shareholders’ and proxies’ legitimate questions on #coal and #ClimateChange. Clearly no interest in engagement – time for super funds to divest!— Market Forces (@market_forces) December 6, 2019
In support of WHSP’s position in New Hope Corporation, the company’s FY2019 Financial Results presentation speaks of “growing demand for Australian coal from customers in the Asian region.” However, the International Energy Agency’s Sustainable Development Scenario projects Asian coal demand falling by 27% by 2030 and 57% by 2040.
The only scenarios that project growing coal demand are consistent with the failure of the Paris Agreement, with global warming reaching 3 degrees or more this century.
So it would appear WHSP is justifying its New Hope holding on the expectation that the Paris Agreement will fail.
In fact, referring to the as yet undeveloped New Acland Stage 3 coal mining project, WHSP’s Annual Report states “New Hope Corporation Limited does not consider there to be a significant risk of climate change materially impacting project outcomes once current approvals are received.”
With scientific evidence telling us that to meet the Paris climate targets, the global transition away from coal power needs to be pretty much absolute by 2040, the Board was asked if it truly believed there is no material chance that the climate targets 197 nations have signed up to will be met.
CEO Tod Barlow’s response showed clear confusion about what the International Energy Agency’s scenario entail, suggesting the 197 Paris Agreement signatories had signed up to do no more than implement their stated policies, rather than ramp those policies up to align with the overarching goals of holding global warming to 1.5°C or at worst well-below 2°C.
WHSP’s apparent misunderstanding of climate change transition risks, and refusal to engage in a meaningful conversation about its exposure to these risks should ring alarm bells for big investors like our super funds.
Clearly WHSP doesn’t want to be engaged when it comes to climate risk management. It’s time for our super funds to divest.