Antinuclear

Australian news, and some related international items

Australia’s super funds are backing exploration for fossil fuels

fossil-fuel-industryDigging Deeper: How energy company executives are remunerated to expand fossil fuel reserves, and how Australia’s major super funds support them, http://apo.org.au/resource/digging-deeper-how-energy-company-executives-are-remunerated-expand-fossil-fuel-reserves Market Forces 29 September 2016 Australian-listed fossil fuel companies are continuing to search for more unburnable carbon, with $12.69 billion spent on fossil fuel exploration by just fifteen companies since July 2012. Another $14.62 billion has been spent by just ten foreign companies on fossil fuel exploration in Australia between 2013-2015.

In many cases, exploration is encouraged through executive remuneration packages. Seven companies in the S&P ASX300 explicitly refer to reserve replacement or exploration targets in their executives’ bonus structures, as do six international companies with major Australian fossil fuel operations.

Senior executives at the seven Australian companies stand to make a combined $2.02 million in additional bonuses each year if their reserve targets are met.

Australia’s super funds are failing to effectively challenge this business model, despite their stated belief in engagement as a strategy for changing the behaviour of companies. In the last year, only three Australian energy companies incurred a significant vote against their remuneration packages, none of which were an explicit protest against reserves-based incentives.

Only eighteen of Australia’s 50 largest super funds disclose their complete proxy voting record, making it difficult to determine which funds are genuine ‘active owners.’ Our analysis of twelve funds’ voting records shows only three voted against any Australian-listed energy company’s remuneration package in the last year. Major funds including AustralianSuper, First State Super, MLC and ANZ OnePath supported the remuneration packages of every Australian energy company they held shares in.

Australia’s super funds must have effective engagement policies and practices, and demonstrate how these are being implemented to ensure companies they invest in are  compatible with a low carbon future. An obvious step to demonstrate alignment with the goals agreed to in Paris is for funds to reject fossil fuel exploration incentives.

September 30, 2016 - Posted by | AUSTRALIA - NATIONAL, business, climate change - global warming

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