As a member of Climate Action 100+, Australia’s largest super fund says it will challenge industry groups that lag on climate agendas

This article is more than 11 months old

This article is more than 11 months old

Australia’s biggest superannuation fund, the $170bn AustralianSuper, has warned the Minerals Council its position on the climate crisis was not good enough and the peak mining body needed to do more.

AustralianSuper’s head of environmental, social and governance issues, Andrew Gray, told Guardian Australia the council was a good example of a group of industry associations that had made a general commitment to the principles of the Paris agreement, designed to limit global heating to 2C, but had failed to say how their members would do so.

“They’ve got a very high-level statement about alignment with Paris but I want to see them do more,” he said.

The substance behind its statement needed to be developed.

“A high-level statement like that was probably where people were at a few years ago, but people need to keep evolving,” he said.

Over the coming year, tackling industry associations whose climate agendas did not match the stated goals of member companies would be a priority for Climate Action 100+, a global group of investment funds including AustralianSuper that control more than $35tn in assets.

BHP could quit Minerals Council after clashes over climate policy Read more

Other members of the 370-strong group include Australian fund manager BT, global bank HSBC and California’s state pension fund Calpers.

In its first progress report, the group – which was set up in December 2017 – said many companies were making progress but more needed to be done.

Gray, who sits on the Climate Action 100+ steering committee, said the initiative was still in its early days.

“I’m not disappointed about the progress to date but that’s not the same as saying much more doesn’t need to be done,” he said. “I think these achievements are really significant and we’ve got a lot of momentum.”

The Minerals Council’s position on the climate has already caused significant pain for the peak body, with its chief executive, Brendan Pearson, leaving the organisation in November 2017 after clashes with BHP and Rio Tinto, who were unhappy with its advocacy for coal.

Despite changes at the council, activists and investors have continued to pressure the big miners over their continued membership.

Rio Tinto threatened to quit if the council made statements contradicting the Paris agreement, and BHP is reviewing its membership of all industry organisations.

On Tuesday, after lobbying from Climate Action 100+, BHP released new guidance that broadened the issues it would examine when deciding if it should be a member of industry groups.

“I think it’s very good steps in the right direction,” Gray said.

BHP pressured by investors to suspend membership of groups including Minerals Council Read more

In its report, Climate Action 100+ said 77% of companies clearly assigned responsibility for climate to the board of directors, but less than 8% ensured their positions were consistent with those of industry associations.

“It’s important that industry associations of which companies are a member have consistent positions with their members,” Gray said. “If that’s not the case that represents a business risk for us.”

This was because any inconsistency was “potentially undermining the company’s position”, he said.

“Generally speaking the climate policy positions of industry associations aren’t where they need to be, they’re not as strong as they need to be,” he said. “The Minerals Council, I think, is a good example.”

The Minerals Council’s chief executive, Tania Constable, said it “welcomes AustralianSuper’s endorsement of our public policy position on climate change and agrees with them that there is more that the industry can do, and is doing, to improve environmental outcomes”.

She said the Australian minerals industry supported the Paris agreement and claimed the industry’s direct emissions “might have peaked already”.

“Australian mining businesses are working together to make our contribution to lowering emissions,” she said.

“This includes reducing the emissions from minerals extraction and processing, investment in low emission technology such as carbon capture and storage, energy-efficiency initiatives and increasing the use of renewable energy in operations.”

Gray said although AustralianSuper did not screen out companies based on their environmental performance, it was an issue that fed into how they valued potential investments.

“The size of ownership or whether we own it or not will be affected,” he said.

Companies had to deal with both the physical risk global heating posed to their businesses and with the risks associated with moving the world to a low-carbon future.

“I think it is inherently a difficult issue because we are dealing with a) the weather and b) a wholesale economic transition,” he said.

But this was not much different to working out the risks associated with other changes, such as technology, he said: “A lot of things investors have to forecast for the long term are inherently difficult.”