21 September 2017
At Suncorp’s Annual General Meeting (AGM) in Brisbane today, company chair Ziggy Switkowski made the quite unexpected commitment to reduce the company’s fossil fuel exposure to an ‘immaterial’ amount over the next two years. The revelation came in response to repeated questions from shareholders about climate change, including Suncorp’s management of climate risk, and the impacts of sea level rise on its insurance and lending businesses.
Suncorp is one of Australia’s largest insurers, and operates the largest retail banking business outside of the big four. Suncorp’s approach to managing climate risk is a work in progress. Just two years ago, climate change didn’t get a single mention in either its Annual Report or its Annual Review. Last year, climate change got six mentions, and this year 50 mentions across the two reports. It’s quite the turnaround from a company whose CEO declared his climate scepticism prior to last year’s AGM, only to retract the comments days later. So how much of this shift is talk rather than action? Well, at today’s AGM, shareholders found out that Suncorp may be shifting in the right direction, however it’s not far enough, as the company still fails to recognise climate change as a material business risk.
The Task Force on Climate-related Financial Disclosures (TCFD) published their final recommendations in June this year, which were immediately endorsed by numerous international banks and insurers including Allianz, ANZ, AXA, Bank of America, Citigroup and Swiss Re. The board were asked why Suncorp had only committed to “examine the recommendations” rather than implement them. This is how chair Ziggy Switkowski responded:
Suncorp only recently published its very first Responsible Investment Policy, which is great news in principle, but the devil is in the detail. The policy talks a lot about ESG (Environmental, Social and Governance) risks, but ESG means different things to different people “from a basic awareness of non-financial influences on a company’s performance, to restricting investment in anything from tobacco to fossil fuels.” Suncorp’s new Responsible Investment Policy fails to define what exactly it defines as ESG risks, and who will be responsible for defining them. The board was asked these questions, and specifically whether the company was going to divest from coal and other fossil fuels. Here is how chair Ziggy Switkowski responded:
Suncorp are making the right noises, but shareholders want to see their talk followed up with action. As both a bank and an insurer, the most important step Suncorp can take is to have an honest conversation with its customers about the risks that climate change poses to their homes and property. Suncorp must also ensure its Responsible Investment Policy is not just in name and actually has a material impact on what Suncorp invests in, particularly assets like the world’s largest coal port. Finally, given the material risk that climate change poses to its insurance and lending businesses, Suncorp must become an advocate for climate action. For far too long, large corporations have stood on the sidelines and watched the climate debate get to the ridiculous state it is now in. We need sensible heads engaged in the debate, particularly those with as much skin in the game as Suncorp.
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