Whitehaven shareholders will meet next week as concern grows that energy companies with no diversification streams outside of fossil fuels are set to struggle as the debate around climate change intensifies.
Like so many other countries, Australia is struggling to come to terms with some of the revelations in last week’s IPCC report last, which brought the issue to a worldwide audience. With previous attempts to align the country with the Paris climate change agreement set back in 2015 having claimed the leadership of former Prime Minister Malcolm Turnbull, it is decidedly dodgy ground for people to tread on.
Despite all the pressure from the outside, no one is quite sure where the Australian government plans to turn in response to a warming planet and the effects associated with it. Other former leaders have also met their end trying to deliver an energy policy.
A similar situation befalls some of the big energy companies with little or no asset diversification outside of fossil fuels as they try to find a satisfying direction.
Current shareholders are worried that the need to reduce reliance on coal could see a monumental shift away from the resource, which is particularly carbon-intensive. In theory, this could see a shift away from coal plants in a very short space of time, which leaves companies such as Whitehaven in a precarious position.
Given that Whitehaven is listed on the ASX100, the outcome of this potential rebellion will attract interest should it turn out to be a landmark decision that shapes how major companies react to climate change developments.
Investors want to immediately determine the risk planning that is already in place, including any steps for Whitehaven to mitigate climate change. This is a two-way question that examines the effects on the company and the planet itself.
In total, 100 shareholders will be present next week in a resolution effort led by Market Forces. They have already stipulated that Whitehaven should be aligning its strategy with the IPCC aim of keeping global warming to 1.5 degrees Celsius compared to pre-industrial levels. The report warned that there is a lack of time to make changes globally before this target passes, which could have catastrophic and untold consequences, according to many experts in the field.
Despite this, Whitehaven has made it clear that it will continue to produce and mine more coal, even though it did admit that it may disclose its risk strategy.
The core of Whitehaven’s argument is that many companies in South East Asia are using coal, so it does not see why it should be acting differently. However, the paper that it cites as a source from the International Energy Agency implies that this direction would see an incredible 2.7 degrees Celsius of warming by 2100, which overshoots necessary targets by a long way.
The IPCC is clear in its stance that it must phase coal out entirely before the middle of the century and needs its use to be at two-thirds of current levels in just 12 years. With many Asian investment vehicles now confirming that they are divesting from coal, Whitehaven might start finding that its allies are in shorter supply.