It’s taken a while to get to this point, and by international standards our climate change skepticism has been staggeringly high. According to a study of 25 national polls collected from 2009 to 2019, four in ten Australians said climate change isn’t driven by human activities, or that they “don’t know” what is causing it.
But that now seems to be changing and the recent federal election “may well be remembered as the first cracks in the dam wall” of Australia’s climate skepticism, as discussed in this The Conversation article.
One lesson from election day was that voters are serious about climate action.
A record number of pro-climate independents were elected — the “Teal independents”, who largely campaigned on proactive agendas around ESG issues such as climate change, setting up an anti-corruption commission, and gender equality. The Greens also won a record number of seats, including their first in Queensland.
Further down the line, at the company level, business decisions are being increasingly driven by climate activism.
Climate, and ESG more broadly, is an increasingly important issue for investors, who are now putting money on the table to change business operating models and upend their governance to ensure ESG risks are mitigated.
Globally, under the Net Zero Asset Managers initiative, US$16 trillion in funds under management has been committed to meeting net zero targets. The initiative has seen investment funds, the likes of Allianz Global Investors, BlackRock, and Royal London Asset Management, pledge to achieve net-zero emissions across their entire portfolios.
In Australia, shareholder activist groups have become a feature of annual general meetings in recent years, with their motions attracting growing support.
Back in 2015 there were just four shareholder resolutions relating to ESG issues in corporate Australia, and in 2016 there were none. That figure has since grown to no fewer than 36 shareholder ESG resolutions in 2020 (the most recent available data). These ESG issues have been elevated above the usual debates around executive pay.
Billionaire climate activist, Mike Cannon-Brookes has made several attempts to take private Australia’s largest energy company — and biggest carbon emitter — AGL Energy and accelerate the closure of its coal and gas-fired power stations.
While he is still to achieve that ultimate goal, he has been successful in getting other shareholders onside and blocking AGL’s demerger plans to split the company’s coal-heavy generation and power distribution assets that would see its coal-fired plants run for another two decades.
Importantly, this activism has ultimately changed the company’s management and Board, with the CEO, Chairman, and two other Directors leaving the business.
“The Board will now undertake a review of AGL’s strategic direction, change the composition of the Board and management, and determine the best way to deliver long-term shareholder value creation in the context of Australia’s energy transition.”
And AGL isn’t the only company facing backlash on ESG issues.
Last year, Rio Tinto became the first Australian company to support activist shareholder resolutions on climate change filed against it when it came under pressure to improve its emissions reduction targets.
Support for the resolutions followed the earlier resignation of Rio’s CEO amid the fallout from its blasting of ancient Aboriginal rock shelters in 2020.
America’s largest oil company, ExxonMobil has also bowed to shareholder activism. Exxon lost three board seats to activist investor Engine No. 1, a hedge fund that criticised Exxon’s carbon emissions reduction targets and pushed to shift focus away from fossil fuels. While the fund held just a 0.02% stake in Exxon, it won support from a number of large pension funds to get the resolutions.
If this can happen to multinational companies, it can happen to any company. That’s why it’s important that companies have adequate ESG reporting procedures in place, including on climate and greenhouse gas emissions.
With Socialsuite’s ESG solution I'm proud to help small and medium sized businesses establish corporate ESG reporting and demonstrate ongoing disclosure of their ESG progress.