In an interview with The Sydney Morning Herald and The Age, Edward Mason, the head of responsible investment at Church Commissioners for England, a fund worth £8.3 billion, said runaway climate change had to be urgently addressed for the sake of a stable global economy.
«Climate change is by far the biggest issue in responsible investment, it is an urgent problem, the [direction] in which we are going is not good for the planet, society or investors,» he said.
Mr Mason said the issue was a global, not national, one and while the church was sensitive to the importance of resources to the Australian economy «it’s important that there is a transition in all countries from the cost of coal».
«… We understand it’s a long-term process but it is an urgent and important one and one that we can’t escape for short-term political demands,» he said.
Coal is set to overtake iron ore as Australia biggest export this financial year, with thermal and coking coal exports tipped to reach $67 billion in 2018-19.
Mr Mason said with Climate Action 100+ controlling $US32 trillion ($45.1 trillion) of assets, «investors can make a real difference on climate change», in the interests of both the planet and profit — and in the church’s case, an added desire to shield the world’s poorest from the effects of global warming.
«In the long term, the ethical and the financial align on this issue because there aren’t investment returns to be made in a world in which climate change exceeds two degrees or warmer,» he said.
«Although Australia has suffered very significantly from climate-related events, it’s wealthy enough for most people to be insulated, but if you look at poorer countries and the vulnerable citizens in those countries, they won’t be able to protect themselves.»
The nation’s biggest superannuation fund, $140 billion heavyweight AustralianSuper, on Friday stressed its involvement was about mitigating risks as part of a long term investment approach.
«Climate Action 100+ has no position that all coal mines should be closed. The focus of Climate Action 100+ is on engagement and not divestment,» AustralianSuper senior manager of investment governance Andrew Gray said.
«As a major investor, the responsible thing to do is to ensure our investments are appropriately managing climate change risks and for the fund to thoroughly understand these risks so that we can make the best decisions on behalf of members.»
A string of prominent Australian companies are on the hit list of Climate Action 100+ (an initiative launched in 2017 to engage the world’s largest corporate greenhouse gas emitters on climate change), including Adelaide Brighton, AGL Energy, Boral, Qantas Airways, Santos, South32, Woodside Petroleum, Woolworths Group, Bluescope Steel and Origin Energy.
On Friday, several of the targetted companies including AGL, Woolworths, Santos and Boral said they were engaging positively with the issues raised by Climate Action 100+ and pointed to the actions they were taking to both reduce emissions and improve transparency.
“Their response to our disclosure and management of climate related risks has been very positive,» a spokesman for construction materials giant Boral said.
“We take this matter seriously, which is why we are working hard at reducing our greenhouse gas emissions.»
Mr Mason said the church’s next target would be Exxon Mobil, with a shareholder proposal already planned for the company’s next annual general meeting.
Since 2015, the Church of England divested and no longer invests in fossil fuel companies that generate more than 10% of their revenue from the extraction of thermal coal and tar sands.
Mr Mason said he preferred to use shareholder powers to drive change in companies in an «active and assertive» but not «confrontational» way, rather than through divestment.
«What we’re seeing is that companies are responsive to shareholder engagement and it would be a pity were we to have to make divestments, because in a sense that would be a measure of failure rather than success in creating change together,» he said.
Climate change the No.1 issue
Fiona Reynolds, chief executive of Principles for Responsible Investment (PRI), established in 2006 to bring sustainability issues into capital markets, said its initial focus had been on issues like executive pay and diversity but in the past four years had been dominated by climate change.
For its 2300 signatories, representing $US80 trillion of assets, climate was the number one issue they wanted more information and assistance on.
Ms Reynolds said both risk and opportunity were driving investors towards responsible investing.
«They don’t see climate as a political issue, it is not a political issue, it is a scientific fact and it’s a fact that they know when they look out for their investors in the long term it’s going to impact their investment,» she said.
«And this is why these coalitions are established — there’s not really many investors who have the power to tackle the issue alone.»
Climate Action 100+, of which PRI is a partner organisation, was the biggest ever engagement between investors and corporations, she said.
«You have to align people’s profit and [the] planet together,» she said. «A lot of investors get that, I wish the Australian government got it.»
With Stephen Miles, Sumeyya Ilanbey, Nick Bonyhady
Latika Bourke is a journalist for The Sydney Morning Herald and The Age, based in London.