ACCR Shareholder Resolution to South32 Ltd on climate-related lobbying.
The Australasian Centre for Corporate Responsibility (ACCR) has filed a Shareholder Resolution to South32 Ltd (ASX: S32) on industry association memberships and climate-related lobbying.
This page contains the resolution and its supporting statement, and will be updated with links to news and additional briefings about this engagement.
Ordinary resolution on climate-related lobbying
Shareholders request that our company strengthen its review of industry associations to ensure that it identifies areas of inconsistency with the Paris Agreement.
Where an industry association’s record of advocacy is, on balance, inconsistent with the Paris Agreement’s goals, shareholders recommend that our company suspend membership, for a period deemed suitable by the Board.
Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.
Supporting statement to Resolution 1 (982 words including footnotes)
ACCR supports our company’s commitment to the Paris Agreement and its recently updated target to reduce operational emissions by 50% by 2035 (on FY2021 levels). ACCR also welcomes our company’s commitment to disclose the resilience of its portfolio under a 1.5°C scenario.
The International Energy Agency’s recently published report, ‘Net zero by 2050’ concluded that no new coal, gas or oil developments could proceed beyond this year, in order to limit global warming to 1.5°C.
This resolution seeks to ensure that the advocacy of our company’s industry associations is consistent with its commitment to limit global warming to 1.5°C and the long-term interests of shareholders.
Our company’s approach to industry associations
Our company published its second review of its industry associations within its 2020 Sustainable Development Report. Additionally, our company has explained its approach to industry associations on its website.
The 2020 review identified “potential misalignment” with only one group—the Queensland Resources Council (QRC)—due to its failure to explicitly support the Paris Agreement. Despite stating that it assessed industry associations’ “formal policies, website content, advocacy activity and media articles”, our company failed to assess its industry associations’ advocacy during the COVID-19 pandemic, and the repeated lobbying for new and expanded coal and gas developments.
While our company states that it will “advocate an alternative view” where it cannot reach agreement with an industry association, there is little evidence that our company has ever taken such action.
An annual review of industry associations is not enough. If our company is genuinely committed to limiting warming to 1.5°C, it must curtail advocacy that promotes fossil fuel expansion.
According to Fiona Reynolds, the CEO of Principles for Responsible Investment (PRI):
“It’s time to confront negative climate lobbying from every link in the chain, from the funding by corporates to the lobbying organisation and ultimately to the closed-door undermining of climate action.”
In March 2021, the Climate Action 100+ initiative published its first Net-Zero Company Benchmark. Our company only partially met its assessment of climate policy engagement, as it has not made an explicit commitment that it (and its industry associations) “conduct all of its lobbying in line with the goals of the Paris Agreement”.
Australia’s lack of climate policy
In February 2021, Bloomberg ranked Australia’s climate policies as the weakest of the largest developed economies. In June 2021, Australia received the lowest score awarded to any of the 193 UN member states for climate action. Australia’s commitment to reduce emissions by 26-28% by 2030 (from 2005 levels) has been deemed inadequate by a range of experts. Australian government forecasts suggest that emissions will decline by just 22% by 2030.
ACCR has engaged our company on the issue of climate-related lobbying for three years. Despite improved transparency of our company’s governance of industry associations, UK think tank InfluenceMap rates our company’s climate policy footprint ‘D’ (scale A-F), making it one of the most oppositional companies on climate and energy policy in Australia.
Our company remains a member of at least two industry associations with climate lobbying practices that are misaligned with the Paris Agreement (ranked D or below) and two with strongly misaligned climate lobbying practices (ranked F).
On balance, the impact of our company’s industry associations on Australia’s climate and energy policy has been overwhelmingly negative, and there has been little improvement in recent years.
Recent industry association advocacy
Despite our company’s commitment to the Paris Agreement, its industry associations continue to advocate for new and expanded coal and gas extraction, to prolong the use of coal-fired power in electricity generation and do not support more ambitious 2030 targets or net zero by 2050.
NSW Minerals Council (NSWMC)
InfluenceMap score: F
- Throughout 2020, the NSWMC advocated for fast-tracking the approval of 21 new or expanded coal mining projects, claiming they were necessary for recovery from the pandemic;
- In recent months, the NSWMC has lobbied the NSW State Government and the NSW Deputy Premier in particular, on our company’s behalf, seeking to overturn the Independent Planning Commission’s (IPC) rejection of the Dendrobium coal mine. The IPC rejected the mine due to the risks it would pose to Sydney’s drinking water catchment.
- Campaigned during the Upper Hunter by-election in NSW, claiming that demand for Australia’s thermal coal would continue for “decades to come”.
Queensland Resources Council (QRC)
InfluenceMap score: F
- Throughout 2020, the QRC advocated for further coal and gas exploration and the fast-tracking of new and expanded coal and gas projects, framed as a “recovery agenda”;
- During the Queensland State election campaign in late 2020, the QRC ran an advertising campaign targeting a single party, resulting in BHP Group and Origin Energy suspending their memberships;
- Following the election, the QRC continued to press for further coal and gas expansion;
- In April 2021, the Queensland Government launched its ‘Resources Industry Development Plan’, delivering many of the QRC’s demands.
Chamber of Minerals and Energy of Western Australia (CME)
InfluenceMap score: E+
- Supports the expansion of the gas industry in Western Australia;
- Opposed state-based regulation that would have required new emissions intensive projects to offset their emissions;
- Supports the Australian government’s “gas-fired recovery” from the pandemic.
The Minerals Council of South Africa (InfluenceMap score: E) has also advocated to prolong the life of coal-fired power generation.
Unlike its peers BHP Group, Origin Energy and Rio Tinto, our company’s governance of industry associations and record of climate advocacy has not been previously subject to scrutiny by shareholders at an annual general meeting.
Our company has had several years to affect change within its industry associations with limited success. It can and must do more to ensure that its industry associations advocate consistently with the Paris Agreement.
ACCR urges shareholders to vote for this proposal.