“…we don’t consider it [climate change] to be one of the significant business risks or financial risks for Transurban”
Marcus Laithwaite, auditor
11 October 2018
You might not have heard of the company, but chances are you’ve driven on one of their roads. Transurban operates major tollways in Australia such as Melbourne’s Citylink and Sydney’s Cross City Tunnel. At its annual general meeting today, shareholders asked the company how seriously it took climate change. The response was it does not consider climate change a material risk to its business.
In a week in which the Intergovernmental Panel on Climate Change (IPCC) released a landmark report that indicated we only have 12 years to limit global warming to 1.5 degrees, Transurban needed to prove to shareholders it’s doing what’s necessary to aid this global challenge.
Transurban’s own emissions are on the rise and they have more major infrastructure projects in the pipeline (the Westconnex and Northconnex projects, among others). They are also in a sector that’s exposed to a greater level of physical climate-related risk, according to the Task Force on Climate-related Financial Disclosures (TCFD) 2017 report.
Australian Prudential Regulation Authority (APRA) president Geoff Summerhayes asserted in 2017 that climate risk was “foreseeable, material and actionable now“. However, Transurban’s auditor openly admitted they “don’t consider it [climate change] to be one of the significant business risks or financial risks for Transurban”:
Noel Hutley’s 2016 legal opinion states directors have a legal obligation to perceive and act on climate related risks, and more recently the Australian Securities and Investment Commission (ASIC) has indicated directors are responsible for educating themselves on the climate related risks to their businesses. Chairman Lindsay Maxtead openly admitted to the audience that Transurban’s board had not done this:
One of Transurban’s non-executive directors, Samantha Mostyn, is also a member of the NSW Climate Change Council and Chair of the Stakeholder Advisory Council of the CSIRO’s Climate Adaptation Flagship. These credentials would suggest a strong stance on climate but, when a shareholder today asked whether Mostyn believes Transurban has taken a proactive approach to ensure climate change is regarded as material, she responded only that the board were considering the comments made by APRA and ASIC.
The company is also yet to release any climate related financial disclosures. Transurban has indicated it will include financial related climate disclosures from 2020 – three years after the Task Force on Financial Related Disclosures (TCFD) released its final recommendations.
This has Transurban lagging behind its ASX100 peers on disclosure, classification and governance of climate related risks. With only 12 years left to keep warming below 1.5 degrees, and a number of resource-intensive projects in its pipeline, Transurban ought to be thinking much more seriously about the risks that climate change poses to its business.