AustralianSuper, the biggest super fund in the country, worth some $140billion worth of investments, is slowly establishing itself as one of the leading voices for climate action as it calls on some of the companies with the dirtiest polluting habits to begin faster diversification.
With climate change becoming one of the hottest topics when it comes to the future of investments, it seems clear that fossil fuels can no longer be seen as a safe long-term investment strategy if there are no efforts to diversify the rest of the business. With AustralianSuper having notable pulling power owing to their size, it remains to be seen quite what effect they can have on shaking up the market.
They have already been credited as one of the leading reasons for Glencore to submit to investor wishes and announce a cap on annual coal productions, and now they are calling on other companies to follow suit.
This comes as part of their role with Climate Action 100+, an investor group set up to try and bring emissions under control and lead the way towards a cleaner economy with capital flowing into green finance initiatives.
With Glencore now saying they will turn their attention to lower-emission technologies, and the commodities that can help fuel it, many are describing the current situation as one with the potential to become a tipping point for the worldwide energy market.
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Not every investor has been so keen to acquiesce, and some, such as billionaire Robert Millner, have said that this move will deny developing economies a chance to benefit from what he terms cleaner coal sources in Australia compared to elsewhere. Despite ongoing pressure from lobbyists and environmental activists, Millner has confirmed he will be directing more capital to coal in the future.
Millner said that his opposition return ‘home to air conditioning and turn the lights on’ when countries with smaller economies and less disposable income were not able to have access to such luxuries.
Other companies on the hit list for Climate Action 100+ include the mining giants BHP and Rio Tinto, while plenty of energy businesses and the likes of Qantas also came under fire for the amount of carbon intrinsically linked to their businesses.
Australian coal already finds itself in a tricky situation because of fears that China is set to use Australian commodities as a political football to try and coerce them to go along with Chinese wishes on the geopolitical front.
With Australia being a key ally of the US in the region against an increasing influence from China in the Asia Pacific, five of the key harbors for Australian coal exports in China have banned any more of the commodity from being imported. The northern sites, all controlled by Dalian Ports Group, have put an instant moratorium on the resource, which has been playing havoc with the markets as a result.
Analysts are unsure as to Glencore’s adamant stance that they will still benefit from a cap on coal production, as Prakash Sharma, the research director of Wood Mackenzie said the company was ‘chasing value over volume.’ If supplies drop, the price of coal is likely to bump up, which could well help to raise profits in the short term.
Although it is likely that dirtier fuels such as coal will be phased out in the long-term, the battle rages on for its short-term future.