By Ben Potter
Whitehaven Coal has buckled to activist shareholders and agreed to look at further disclosure of its climate related risks after the Australian Securities and Investments Commission warned ASX-listed companies to shape up.
Whitehaven, whose annual reports focus on benign scenarios for thermal coal demand in Asia that would support a growing coal export business, told the ASX late on Friday that it will consider the more rigorous Paris climate agreement scenarios in its 2019 reporting.
ASIC issued a report last month which found that disclosure of carbon-related risks by ASX-listed companies fell well short of the required standard and advised that companies with heavy exposures to carbon in their businesses should consider implementing global Taskforce on Carbon-related Financial Risk Disclosure (TCFD) guidelines.
TCFD guidelines require companies to assess the business risks in all plausible scenarios – including one in which the world takes tough action under the Paris climate agreement to limit global temperature increases to less than 2 degrees Celsius.
Whitehaven said on Friday that is is now reviewing the TCFD “recommendations for voluntary reporting on climate related financial risks with a view to incorporating these into the Company’s reporting in 2019”. Under the Paris “two degrees scenario” global coal exports fall sharply.
Legal action threatened
A spokesman said Whitehaven was not acting on the basis of new legal advice because the TCFD is a “voluntary framework”.
Previously Whitehaven and other pure coal exporters such as Yancoal and New Hope Group maintained they did not need to follow the TCFD recommendations and Whitehaven has advised shareholders to vote against a motion put on the annual meeting agenda by activist shareholders that would require TCFD-compliant disclosure.
Environmental Justice Australia wrote to Whitehaven late last month threatening legal action on behalf of the shareholders and principal lawyer David Barnden claimed victory on the weekend, saying Whitehaven had “backflipped”, although he said the company should have amended its annual meeting notice rather than just notifying the ASX.
“The $5 billion ASX listed pure-play coal company now views TCFD reporting being in the interests of shareholders,” Mr Barnden said.
“Two weeks ago Whitehaven’s directors recommended shareholders vote against TCFD reporting at the upcoming AGM. To comply with the law we think the company must re-state the directors’ views in the Notice of AGM, and send the revised notice to all shareholders before the AGM.”
‘Coal vital to Paris’
Even so, Whitehaven stuck to its guns on the outlook for thermal coal in the announcement, saying that under the International Energy Agency’s benign, central “New Policies Scenario” coal demand will increase steadily until 2040 globally with demand in “Whitehaven’s major emerging market” of Southeast Asia more than doubling to 390 million tonnes, roughly equivalent to current total exports.
New efficient coal power stations using high quality Australian coal are integral to major Asia countries’ “plans to meet their Paris Agreement targets”, the company says.
The paradox for coal exporters such as Whitehaven Coal, Yancoal and New Hope Corporation is that they are currently riding a boom in Asian demand for thermal coal and prices which is propelling their profits and share prices higher.
This story was published by the Australian Financial Review on 7 October 2018.