19 November 2018
Earlier this year, Market Forces released its Investing in the Dark research on climate risk disclosure among the top 100 ASX listed companies. Analysis revealed that Wesfarmers has made progress in:
- acknowledging the science of climate change
- classifying climate risk as a financial risk
- considering the risks that climate change poses to the business.
However, the company has not yet:
- created a business-wide emission reduction plan
- disclosed an analysis about what the company would look like under different scenarios including one in which global warming is kept to below 2°C.
Wesfarmers has a diverse portfolio, with several large retail chains under its banner including household names Kmart, Target, Bunnings, and Officeworks. It also specialises in industrial areas such as chemicals and fertilisers, vinyls, and natural gas distribution. The demerger of previously owned Coles was approved by Wesfarmers shareholders on 15 November 2018.
In its 2018 annual report, the company signalled it will disclose an analysis of what the company’s operations would look like under a scenario where global warming is limited to 2°C: “We will move towards more granular analysis, including comprehensive one, two, and four degree scenario analysis, resulting in improved disclosures. We expect to be in a position to include this scenario analysis in next year’s annual report.”
As it’s unclear when they plan to disclose this analysis, a shareholder at last Thursday’s annual general meeting asked if the board would provide detailed quantitative data in the 2019 annual report.
Chairman Michael Chaney refused to commit the company to a time frame or level of disclosure, saying only that “we have noted in the annual report that we are intending to carry out those scenario work over the next year and include it in the annual report next year.”
Another shareholder asked if the board supported the Paris Agreement, as this also wasn’t made clear in the company’s annual report.
“The board does recognise the consensus on climate change,” Chaney replied. “We are determined to ensure our emissions are reduced. With the disposal of the coal business it was a big step in that regard.”
Chaney and CEO Rob Scott then drew attention to other financial decisions that have an impact on emissions, such as replacing light bulbs, installing solar panels, and improving refrigeration systems across some of their retail operations.
While ditching its coal assets is definitely a step in the right direction, much more is needed from Wesfarmers to give investors confidence that the company’s operations are aligned with a scenario that limits global warming to 1.5°C.
Wesfarmers is one of many companies on the ASX that need to disclose all the risks they face from climate change. Tell your super fund to enforce climate risk management and push companies like Wesfarmers to have a concrete emission reduction plan.