Global asset owners representing $65bn (€53bn) are targeting influential coal lobbyists with a resolution filed today at Anglo-Australian mining giant Rio Tinto, as investors increasingly turn their attention to trade bodies impeding climate action.
The resolution – co-filed by Swedish pension fund AP7, the Church of England Pensions Board and Australian superannuation fund Local Government Super – calls on Rio Tinto to review and fully disclose its relationships, and their associated costs, with industry bodies such as the Minerals Council of Australia (MCA).
It follows a similar resolution filed in late 2017 with Rio Tinto’s rival, BHP Billiton.
Both resolutions were coordinated by activist shareholder NGO, the Australasian Centre for Corporate Responsibility (ACCR).
ACCR argues mining firms should not be using shareholders’ money to pay expensive memberships to organisations like the MCA, whose positions and lobbying on climate change “undermine” their long-term interests.
Richard Gröttheim, CEO of AP7, said: “I find it unacceptable that companies directly or through their industry associations are lobbying against effective climate policy and thereby jeopardising the long-term value growth of our pension portfolios.”
BHP Billiton revealed that in 2016 it paid A$1.8m (€1.1m) to the MCA for its membership. RI was told by London-based think tank InfluenceMap that Rio Tinto’s membership fee to MCA is likely to be in the region of A$2m.
Rio Tinto states on its website that it supports the “intent” of the Paris Agreement to limit global warming to less than 2°C above pre-industrial levels, and that it is “taking steps to manage risk, build resilience to climate change, and develop our role in a low-carbon future”.
The latest investor resolution requests that Rio Tinto’s board:
• Discloses industry memberships and amounts paid since 2012
• Evaluates whether industry association advocacy positions are consistent with the company’s policy and financial interests; and
• Discloses to shareholders the triggers for exit of industry associations where the company’s interests are not served.The resolution is expected to be heard at the mining firm’s UK annual meeting on 11 April and its Australian annual meeting on 2 May.
Following the 2017 resolution at BHP, the mining giant conducted a review into “material differences” in its “climate and energy policy” with that of the 21 industry associations it was a member of.
It subsequently resolved to leave the World Coal Association, review its relationship with the US Chamber of Commerce, and give the MCA a year to refrain from hard-line coal policy activity or advocacy, or face its high-profile withdrawal.
BHP was also instrumental in forcing Brendan Pearson, CEO of the MCA, from his position due to his staunch pro-coal advocacy, which had become “increasingly antithetical” to BHP’s policy aims, according to Brynn O’Brien, Executive Director at the ACCR.
In 2016, Australian energy firm AGL also opted to not renew its membership to the MCA and the Australian Petroleum Production and Exploration Association as its “position on climate change and renewable energy differed”.
Investor and corporate action against industry bodies is not restricted to Australia.
In December 2017, RI reported that conservative lobby group the American Legislative Exchange Council’s (ALEC) attempt to pass a resolution targeting the US Environmental Protection Agency’s (EPA) Endangerment Finding were partly thwarted by corporate interference from, among others, ExxonMobil, Pfizer and UPS. The EPA’s Endangerment Finding allows it to regulate greenhouse gases as dangerous pollutants under Obama’s Clean Air Act.
Tim Smith of Walden Asset Management told RI at the time that it was actively engaging on the issue with companies, urging them “look at the entirety of the legislative agenda that ALEC is putting forward”.
ALEC’s waning influence has resulted in more than 100 companies and non-profit organisations, including Microsoft, Google, General Motors, and Ford leaving it over the last couple of years, citing misalignment of views.