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Climate activist bid thwarted at Commonwealth bank AGM

Lewis Jackson  |  19 Oct 2021Text size  Decrease  Increase  |  
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Climate activists were delivered a major blow last Wednesday as major Commonwealth bank shareholders rejected a motion calling for the bank to exit fossil fuel lending.

The overwhelming majority of shareholder (81%) voted against a resolution from climate finance group Market Forces calling for Australia’s largest bank to halt all fossil fuel financing and begin reducing its fossil fuel loan book.

CBA’s largest shareholder BlackRock voted with management saying that it believed the bank (ASX: CBA) had made good progress accounting for climate risk and that continued engagement with polluters was an important part of the energy transition.

The asset manager described the resolution as "overly prescriptive" and said that it "risks unduly constraining management's ability to make business decision."

"BIS [BlackRock Investment Stewardship] took into account the progress the company has already made in integrating climate and sustainability-related risks into its long-term value proposition and believes it sufficiently articulates a plan to align its business model with the global aspiration to reach a net zero economy by 2050," BlackRock said in a statement posted to its website.

BlackRock added that carbon-intensive companies and financial services companies which fund their activities have "a critical role to play in unlocking the value of the energy transition."

Market Forces brought the resolution to the Commonwealth Bank Annual General Meeting on Wednesday last week, arguing that the bank’s current policy on climate lending leaves the door open for non-project finance while also allowing lending to adjacent industries, such as pipelines.

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The group accused the bank of failing to live up to its commitment to achieve net zero by 2050, claiming the bank’s plans are instead consistent with a net-zero by 2070 scenario.

Market Forces has filed similar motions at ANZ, NAB and Westpac, whose AGMs fall between 15 and 17 December.

In response to shareholder questions regarding the bank’s lending to fossil fuel companies, CBA chairman Catherine Livingstone reiterated that CBA would provide project finance for new oil and gas projects only if they are consistent with the Paris Climate Accords.

Speaking at the against the resolution, Livingstone told shareholders that while overall exposure to fossil fuels had been declining, the bank intended to support its customers as they make the transition to net zero.

“Our policy is clear that we will not provide project finance to new oil and gas extraction projects unless they are Paris-aligned,” said Livingstone.

BlackRock is one of the largest fund managers in the world with more than $9 trillion under management. Last year, chief executive Larry Fink called sustainability “the new standard for investing”.

Its vote against the resolution comes despite the asset manager vocal stance on companies in its portfolio taking stronger action on climate.

Shareholders tussle over climate at BHP and AGL

The tussle at CBA comes as several other major Australian companies are targeted by activist groups.

Climate activist ambitions were scuttled at BHP’s London AGM last Thursday, when 83% of shareholders voted to support the miner’s climate change roadmap despite accusations it was underpowered.

Shareholder groups including the Australasian Centre for Corporate Responsibility (ACCR) had urged shareholders to vote against the miner’s climate transition plan.

The ACCR argued the miner’s climate plans were not Paris-aligned and excluded emissions caused by the company’s products, known as scope 3 emissions. These make up 96% of BHP’s emissions.

The world's oldest miner says it is working with customers to reduce their emissions but has yet to set a net-zero target.

Among those voting against were the UK’s Local Authority Pension Fund Forum, whose members manage about £300 billion in assets, and proxy adviser Glass Lewis.

The final verdict for BHP won’t be delivered until 11 November when Australian shareholders vote on the plans. Collectively they make up 58% of the combined share register.

In September, shareholder succesfully upbraided the board of energy provider AGL over a similar failure to set Paris aligned targets.

More than half of AGL (ASX: AGL) shareholders (55%) voted for a motion from activist shareholder ACCR asking the company to set Paris-aligned targets for emissions reductions.

The resolutions at Australia’s corporate giants reflect growing pressure for climate action ahead of the UN’s November climate summit in Glasgow, COP 26. World leaders and corporate heads will meet for two weeks to hammer out responses to climate change.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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