The pressure is on for SA business as ethically-aware shareholders amp up their demands for companies to acknowledge climate change, writes Legalbrief. Environmental and shareholder activists have claimed a victory even though the first climate change-related resolution in SA was voted down at Standard Bank last week, says a Business Day report. The resolution, the first of its kind to be tabled and voted on in SA, received support from a significant 38% of its shareholders. Although not passed, the amount of support indicated there could be more to come as pressure mounts for corporate SA to place climate change issues higher on the agenda. The resolution was proposed by the Raith Foundation and shareholder activist Theo Botha, with support from Just Share, a responsible investment nonprofit organisation, notes the report. If passed, Standard Bank would have been required to report to shareholders by the end of November on its exposure to climate risk. Tracey Davies, executive director of Just Share, said it was a victory in itself that 38% of shareholders had voted in favour of the resolution. ‘Around the world when these resolutions are first tabled, they get 2% or 5% of the vote,’ Davies said. ‘This shows there is a significant chunk of institutional investors and asset managers who are clearly prepared to do the right thing when it comes down to the wire.’
The outcome suggests that all other banks should consider this issue very carefully, said Judge Kathleen Satchwell of the Raith Foundation. ‘Change happens slowly, but it happens,’ she said. The same activists had attempted to table a climate risk-related resolution at Sasol’s AGM in November 2018, but the company refused to allow it after taking legal advice. The Standard Bank board allowed for the tabling of the resolution in the belief it was obliged to do so in terms of the Companies Act. It, however, recommended shareholders vote against it on the basis that it was not practical to implement.
Full Business Day report (subscription needed)
The Raith Foundation believes banks should stop financing coal mines and coal-fired power stations ‘because of the environmental degradation and the climate crisis it generates, and because as investors we see very little value in investing in a virtually moribund industry’, says Satchwell. According to theSunday Times, she says although jobs and energy are crucial for SA, coal-fired generation of power ‘may in the short term be providing employment, but many would argue that it is employment that is doomed, that it is not desirable, that is unhealthy and is in a dying area of production’. On when renewable energy will provide sufficient energy for the country, she says ‘that depends on the scale of investment in renewable energy’, and adds: & lsquo;As for jobs for coal miners, nobody is suggesting that renewable energy has an obligation to employ ex-coal miners. Why should it?’ Although she accepts thousands of people are dependent on coal mining and fossil fuel extraction she says ‘that’s no reason to continue doing something that destroys economies, destroys climates, destroys countries and is a danger to the world. You train people and find other employment for them.’ On the resolution tabled at Standard’s Bank’s AGM, she points out: ‘ We were asking them to assess and then disclose the financial risk to shareholders of financing fossil fuel ventures. We haven’t asked them to stop.’
So Many Questions in the Sunday Times (subscription needed)
Pressure is mounting on corporate SA to take environmental issues more seriously and annual general meetings have increasingly become a key platform for lobbyists to call companies to account, writes Lisa Steyn, business reporter, in a Daily Dispatch analysis. ‘The most recent example was last week at the AGM of ArcelorMittal SA, the country’s largest steelmaker and one of the top 10 emitters of greenhouse gases in SA. Although the environmental and social effect of the company’s operations was not on the list of items to be discussed, it took centre stage when the Centre for Environmental Rights (CER) and the Vaal Environmental Justice Alliance fired questions at company directors,’ she notes. ‘The company was asked to provide details on how it was reducing greenhouse gas emissions, rehabilitating areas affected by pollution, and implementing the recommendations of its own environmental master plan,’ explains Steyn. ‘An ArcelorMittal SA spokesperson said the company considers its effect on the environment one of the most important issues and continues to adapt its “robust environmental strategy” to ensure that it complies with and even exceeds the relevant legislative frameworks,’ she states.
However, Leanne Govindsamy, a CER attorney, said: ‘The CER and other stakeholders have engaged with AMSA (ArcelorMittal SA) for many years and we haven’t seen them take any positive steps or release details of plans to address environmental rehabilitation and their climate change impact.’ ‘According to Piet van der Merwe, environmental, social and governance analyst at Momentum Investments, there are a number of growing climate change activist organisations that want their messages to reach the public domain,’ she notes. ‘Buying a share in a listed company and asking questions at shareholder meetings is an excellent way to carry a message into the public domain,’ he said. ‘As many SA companies have overseas listings, they are bound to be watched by international activist organisations and the pressure relating to environmental, social and governance factors will no doubt intensify,’ she concludes.
Full analysis in the Daily Dispatch (subscription needed)
And overseas, pushy investors are making the heads of the world’s largest fossil-fuel companies finally take lower carbon emissions seriously. ABusiness Insider report notes that Climate Action 100+ is a coalition of investors led by the California Public Employees’ Retirement System (CalPERS) and sustainability nonprofits. Together, the group has more than $33trn in assets under management. CA100+ is pushing the corporations that are the largest greenhouse-gas emitters to agree to plans that will lower these emissions, and to be transparent throughout. Since launching at the end of 2017, it has had success with energy giants Shell, BP, Glencore, and Equinor, and shipping-industry leader Maersk. ‘Investors are an important part of this discussion,’ Ceres CEO Mindy Lubber said. Ceres is a sustainability nonprofit that helped develop CA100+, and Lubber sits on its board. ‘They’re not the only part, but they’re owners of the company; they’re not campaigners. They don’t want to see the company die – they own the company. They want to see them make smart changes,’ she said. The CA100+ will last for five years, but Lubber said that the investors won’t suddenly abandon their goals. The idea was to use the coalition to make a big impression together and let that momentum carry forward. ‘Whether it’s easy or not is not the question,’ Lubber said. ‘It’s very hard to get there. But it’s a lot harder to imagine the consequences.’
Full Business Insider report