“Risk has always been at the heart of Macquarie”, said Nicholas Moore, managing director and chief executive officer at today’s annual general meeting in Sydney.
As part of its risk framework, Macquarie Group will now begin producing a scenario analysis – stress testing the group’s multi-billion dollar worldwide operations and investments against several global warming scenarios including one in which the Paris climate change accord’s aim of limiting warming to well below 2 degrees.
Watch chairman Peter Warne’s comments below:
But when asked if Macquarie would release the stress testing results within the next 12 months, Peter Warne admitted it would probably take several years, given that ‘the industry is still working out how to do” scenario analysis. Watch below:
Macquarie Group’s loans to Quadrant Energy – an oil and gas producer in Western Australia – also came under scrutiny with shareholders wanting to know if Macquarie had conducted a scenario analysis on Quadrant and other carbon intensive businesses. Macquarie also finances coal mines, invests in oil and gas pipelines and terminals, and it runs leasing businesses for motor vehicles and aeroplanes – all priority areas identified by the G20 Task Force on Climate-Related Disclosure.
Peter Warne conceded that since Macquarie is taking a risk based approach, they will be starting with assets that are most carbon intensive – their investments in fossil fuels, despite in his view these representing a “very small part of our portfolio”.
See his statements here:
If Macquarie carries out this stress testing seriously, it could mean a big shift for fossil fuels – especially if they are the first to be tested. However it’s vital that Macquarie does this as soon as possible to ensure we are working towards a stable climate.
Embarrassment for the chairman
While seeking re-election, Peter Warne was questioned on his ability to lead the company on climate change risk disclosure. Of particular concern to the shareholder was Mr Warne’s apparent ignorance at last year’s annual general meeting (AGM) as to what the Task Force for Climate Related Financial Disclosures (TCFD) was – an industry initiative backed by $100 trillion worth of investors to systematise the disclosure of climate change risk. Mr. Warne insisted that at the 2017 AGM he was aware of the initiative – just not the acronym. However as you can see from this video, he was presented with the full initiative name….
It is important that all companies incorporate climate risk into their business plan. Click here to contact regulators ASIC and APRA to make climate risk disclosure mandatory for Australian companies.