A shareholder resolution has been lodged with Whitehaven Coal, calling on the company to disclose the risks it faces from climate change and align its strategy with a scenario that holds global warming to less than two degrees.
The resolution was signed by 106 shareholders and coordinated by Market Forces. It is the first resolution in Australia that explicitly calls for a company to ensure its strategy is aligned with the goals of the Paris Agreement on climate change, something Whitehaven Coal has shown no interest in to date.
Whitehaven Coal is Australia’s biggest pure play coal mining company and hasn’t shown any interest in diversification away from the most greenhouse-polluting fossil fuel. At the company’s 2017 AGM it projected a 10% increase in coal power globally by 2040, a scenario consistent with up to 6 degrees of global warming and one that is already out of sync with the reality of waning coal power generation. Whitehaven continues to develop the Vickery project and is ramping up coal production at its Narrabri and Maules Creek mines, while sinking even more money into exploration.
This is effectively calling the bluff of the 197 nations that signed the Paris Agreement on climate change in 2015, and basing the company’s future on a scenario in which runaway climate change is triggered. Environmentally, that is a highly risky strategy but also one that is making investors nervous.
Investors are growing increasingly concerned about the financial risks companies face as the world’s economy shifts to decarbonise, and as the impacts of climate change hit the bottom lines of companies. The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommends companies disclose the extent of financial risks they face from climate change impacts and transitions and, in particular, how they perform in a scenario where global warming is contained to less than 2ºC.
Whitehaven Coal – a company that not only deals in a highly greenhouse-intensive fossil fuel but has also told shareholders its future is based on unrealistic growth projections for coal – is exactly the sort of company that the TCFD was made for.
Initiatives like the TCFD and, more recently, the Climate Action 100+, which support greater climate risk disclosure have enjoyed the backing of investors that manage tens of trillions of dollars. However, when those intentions are put to the test in shareholder resolutions, investors more often than not vote down the resolution.
As an ASX100 company, most Australian superannuation funds will hold shares in Whitehaven Coal, meaning most Australians are invested in the company. This also means superannuation funds will be voting, on behalf of their members, as to whether or not to support these resolutions.