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Investors split on business climate action

Some of Australia’s biggest companies are under pressure to reduce their impact on climate change but investors are divided on whether corporations could be doing more.

The big banks are among the companies which some investors are demanding take action on climate change this annual general meeting season.

Shareholder activists are hoping more investors will support their agenda item for banks to stop financing fossil fuel projects.

The Australian Shareholders’ Association, which lobbies companies on behalf of `mum and dad’ investors, did not support the unsuccessful fossil fuels call at the Commonwealth Bank annual meeting.

Association members were satisfied with the bank’s progress.

President Allan Goldin said many listed companies had considerably improved their environmental responses in recent years.

“It’s very pleasing. If you compare most big companies with federal government efforts, the companies would leave them behind,” he said.

“Most companies aren’t just talking about it. They are saying `this is what we’re doing, these are our targets, and this is how we’re going against the targets’.”

Investor pressure does not only come through annual general meetings.

Association officials meet with company leaders to discuss issues such as environmental impact.

“We’re aware some companies may do `greenwashing’,” Mr Goldin said. The term refers to companies making deceptive claims about their environmental efforts.

“So you try and probe further to see if it is part of their DNA.”

Mr Goldin said companies such as airlines were in a difficult situation in the global campaign for net zero carbon production by 2050.

Qantas created the role of chief sustainability officer to help achieve the goal.

Yet Mr Goldin did not expect the carrier could achieve it without buying carbon offsets, which are tradeable rights which fund projects to lower emissions elsewhere.

“Unless there is a technological breakthrough, aviation fuel is going to have emissions,” he said.

The Australasian Centre for Corporate Responsibility’s director of climate, Daniel Gocher, has a more stern view of corporate efforts.

He cited an Australian Council of Superannuation Investors study which found almost half of ASX200 companies had emissions-reduction targets, as of March.

“It’s a mixed bag,” Mr Gocher said of corporate responses.

“There has definitely been improvement in the past couple of years. I can give a long list of companies which have increased their ambition in the past 12 months.

“But there are still a bunch of laggards.”

The centre is a shareholder activist group and examines environmental, social and governance measures.

Mr Gocher has found less visible companies often escape scrutiny.

“There is a lot of (environmental) action at the big end of town. But once you get outside the ASX100, there is nowhere near as much ambition,” he said.

“Investors are focusing their attention on the biggest emitters.”

Australian Investment Council chief executive Yasser El-Ansary was asked his view on what would prompt more companies to act.

The ability to see opportunities was his answer.

Discussion on environmental and social matters used to be about minimising impact, he said.

“Today, it’s how do we create a competitive edge for our business by being a first mover? It’s about creating opportunities rather than managing risk.”

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