Some of Australia’s largest super funds have threatened companies not taking action on climate change with votes against company directors that are not acting in line with climate targets.
The threat comes from the Australian Council of Superannuation Investors (ACSI), who made the move to threaten companies not taking action on climate change with direct voting action against management teams that don’t take necessary action within their organisation.
The ACSI has a reported $1 trillion worth of superannuation funds under its management, and holds around 10% of the shares in Australia’s largest 200 companies.
The move to threaten companies not taking action on climate change comes as the ACSI releases its new climate policy, which details an expectation of companies operating in Australia to meet the goals of the Paris Climate Accord.
According to a report from The Guardian, “ACSI said that companies should also work out and fully disclose what physical and financial risk global heating poses to their assets, as well as making sure that their lobbying efforts – including through industry associations – do not undermine efforts to limit climate catastrophe.”
The new policy also supports new measures to implement public reporting on climate related risks to their shareholders at each annual meeting.
The ACSI has said that if companies are unwilling to meet these requirements, they risk direct voting action being taken against their management teams in those shareholder meetings.
“Our recommendations will focus on the individual directors most accountable for oversight of climate-change related risks, for example company chairs, and the chairs of the risk and sustainability committees or similar,” the ACSI’s new policy reads.
The Chief Executive of the Australian Council of Superannuation Investors, Louise Davidson has said that “I don’t like to use the word threat,” but added that “accountability for having proper climate strategy and proper climate focus as companies lies with directors.”
“If companies don’t have their house in order on climate, and a clear strategic path to being successful operating in a low-carbon environment, where’s the investment going to come from?”
She continued to explain that “we are now saying to directors, ‘this is our expectation and we will hold you accountable for it.”
Super Funds Threaten Companies Not Taking Action on Climate Change
Davidson added that in spite of the absence of climate commitment from the Morrison government, business needs to lead the way in terms of climate goals.
“The world’s going to move without us,” she said. “So it’s really important for Australian companies that are globally exposed to be on that train, you know. We can’t sit around saying, well we haven’t got regulation, we need policy… all of those things would be helpful, but the world is moving on,” she said.
The news comes just a week after the Australian Prudential Regulation Authority drafted new guidance that would see banks and super funds identify any risks to their bottom line stemming from climate change.
The CEO of the Investor Group on Climate Change, who has more than $2 trillion under its management has said that the new guidance would “go a long way to consolidating accelerating action across the financial sector to address the systemic financial risks created by climate change.”
Estimates from Swiss Re show that global GDP could be hit by 13.9% if the globe heats by more than 2.6C, but these would be lessened to between 0.5 and 4.2% if the Paris Climate Accord model is upheld.