MAC: Mines and Communities

Shareholders pressing big miners on climate change disclosure

Published by MAC on 2016-02-04
Source: Canadian Press, Blue & Green

Investment firms now evaluating climate risks in big resource plays

The shift to "strategic resilience" to climate change could be a game-changer in financing for major projects.

Bruce Cheadle

The Canadian Press

2 February 2016

OTTAWA—The Canada Pension Plan Investment Board and Quebec’s Caisse de depot are among institutional investors seeking greater transparency from three of the world’s biggest mining conglomerates on how they’re dealing with climate change.

The “strategic resilience” resolutions put forward by a coalition of international investors ask giants Rio Tinto, Glencore and Anglo American to provide investors with more information on the risks and business opportunities from a changing climate, starting in 2017.

The resolutions follow a similar move last year that targeted oil giants BP and Shell.

Four of the 10 biggest pension funds in the world are part of the British-based “Aiming for A” investor coalition, including the Canada Pension Plan and its $272.9 billion in assets.

“We’re supportive of the work ‘Aiming for A’ does on transparency,” said Dan Madge, a spokesman for the CPP investment board. “We see this as an important thing for companies to do, which is why we’re lending our name and our influence.”

Investors say a new international climate deal brokered in Paris in December puts added pressure on companies to assess their long-term strategic resilience in a carbon-constrained world.

Last week, the Liberal government announced that all major resource project applications in Canada are now required to include an assessment of their upstream climate impacts, including the emissions created in the extraction and processing of oil and gas destined for pipelines.

Mark Carney, the Canadian governor of the Bank of England, warned the investment and insurance communities last fall about the potential for stranded assets _ unburnable reserves of coal, oil and gas _ on a warming planet limited by future carbon budgets.

The shareholder resolutions filed by the “Aiming for A” coalition are not shaming exercises or publicity stunts, but rather investor efforts to ensure companies come to grips with the long-term business impacts of climate change.

The coalition bills the resolutions as “supportive but stretching” of the targeted companies. Helen Wildsmith, a charity fund manager and founder of the group, described the latest resolutions in December as a means for companies to show investors “that their evolving asset portfolios are resilient across future scenarios.”

Almost 200 countries agreed in Paris in December to limit global warming to less than two degrees Celsius above pre-industrial levels.

ClientEarth, an environmental law non-governmental organization which works with the investor coalition, says the ambitious Paris agenda has global investment implications.

“The Paris agreement was a game-changer for carbon-intensive industries and company reporting,” Alice Garton, a lawyer with ClientEarth, said in a release Monday.

“These resolutions, which we expect will become binding on management after the AGM (annual general meeting) votes, are an excellent example of investors’ desire for more complete information post-Paris.”

Some companies aren’t waiting for shareholders to vote on transparency resolutions. Mining giant BHP Billiton published an investor report, “Climate Change: Portfolio Analysis,” last September.

Unprecedented Investor Call For Climate Risk Transparency From Mining Giants

Blue & Green

1 February 2016

Investors responsible for more than $8 trillion have called on mining giants Anglo American, Glencore and Rio Tinto to be more transparent over climate change risks and opportunities to their businesses. The move comes in the form of shareholder resolutions which have received unprecedented support, including from four of the world’s ten largest pension funds: Dutch funds ABP via APG and PFZW via PGGM, North American funds CalPERS and the Canada Pension Plan Investment Board.

For the first time in the UK, investors backing an AGM resolution make up 5% of a company’s voting shares – in this case Anglo American’s.

In another first, more than 100 co-filers who have Rio Tinto as part of their main investment portfolio have backed that resolution.

The ‘Aiming for A’ investor coalition filed two successful strategic resilience resolutions focusing on climate change with BP and Shell last year.

This year, as well as four of the world’s ten largest pension funds, four of continental Europe’s ten largest Fund Managers have also backed the resolution, including Aegon Asset Management, Amundi Asset Management, AXA Investment Managers and BNP Paribas Investment Partners.  There are eight co-filers across the UK’s ten largest pension funds and ten largest asset managers, including BT Pension Scheme, Railpen, USS, Aviva Investors and Schroders.

Schroders co-filed across the largest number of Anglo American shares, and Jessica Ground, Global Head of Stewardship, said: “We have been engaging with companies for some time on these issues and having a constructive dialogue. By co-filing and working with ‘Aiming for A’ we are supporting a more transparent and public discussion of these risks.”

The Paris Agreement has provided a major incentive for carbon intensive companies to assess and report on the risks and opportunities facing their organisations as a result of climate change.

The investors were supported by ClientEarth lawyer Alice Garton, who said: “These historic resolutions show how much investors value transparency on the climate risks and opportunities facing companies. The Paris Agreement was a game-changer for carbon intensive industries and company reporting. These resolutions, which we expect will become binding on management after the AGM votes, are an excellent example of investors’ desire for more complete information post-Paris.”

Funds belonging to the Local Authority Pension Fund Forum (LAPFF), which has been part of the coalition since its inception, made up half of the largest co-filers by shares held at Anglo American, with 18 funds co-filing across the three companies.

Cllr Kieran Quinn, LAPFF Chair, said: “Since co-filing the first strategic resilience resolutions in 2015, there has been a step-change in investor confidence. We are now seeing the larger pension funds and fund managers stepping forward to co-file. Part of this is testament to the positive engagement undertaken by the coalition and in-kind response from the company chairmen and boards.”

The ‘Aiming for A’ coalition believes that carefully crafted supportive but stretching shareholder resolutions can play a positive stewardship role during the multi-decade low carbon transition.

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