Shareholder Activism

Ethinvest is committed to promoting and upholding responsible environmental, social and corporate governance practices and see our shareholder advocacy as a powerful way to effect positive changes. 

Shareholder Activism FY2018

This page lists companies Ethinvest engaged with throughout FY2018, both in cooperation with and on behalf of clients and associated organisations. ​

AGL Ltd

Ethinvest and our clients participated in a shareholder resolution at AGL's AGM in September 2017. The Market Forces resolution, backed by 126 shareholders collectively holding $5.4 million in company shares, called on AGL to reaffirm its commitment to close the Liddell coal power station in 2022. AGL's CEO, Andy Vesey and Chairperson, Jeremy Maycock, reaffirmed the company's plan. However, AGL also confirmed it would not close the Loy Yang A coal power plant until 2048, according to its current plans. Ethinvest will continue to engage with AGL and encourage the company to commit to the Paris Accord targets. 

You can find the Market Forces article here

BHP Billiton Ltd

Ethinvest and our clients participated in a shareholder resolution at BHP's AGM in November 2017. The resolution, organised by the Australasian Council for Corporate Responsibility (ACCR) was backed by investors holding $7 billion in shares, called for BHP to reconsider its membership of the Minerals Council of Australia, an organisation which has lobbied against climate action. BHP announced it would exit another council, the World Coal Association; however it will remain in other minerals organisations, including the US Chamber of Commerce. 

You can find the ACCR article here

Commonwealth Bank of Australia

Ethinvest and our clients participated in a shareholder resolution at CBA's AGM in November 2017. The Market Forces' resolution asked CBA directors to "act in a manner consistent with holding global warming below 2 degrees". Somewhat positively, the Chairperson, Catherine Livingstone, showed a willingness to divest from coal over time. 

You can find the Market Forces article here

Origin Energy Ltd

Ethinvest and our clients participated in a shareholder resolution at Origin Energy's AGM in October 2017. Market Forces' resolution was backed by 13.77% of shareholders (approximately $1.8 billion in shares) despite the board's opposition. The resolution called for Origin to improve its climate risk disclosure in line with recommendations made by the Taskforce on Climate-realated Financial Disclosures (TCFD) in June 2017. Origin published a scenario analysis report immediately before the AGM but failed to endorse the resolution. 

You can find the Market Forces article here

QBE Ltd

Ethinvest and our clients participated in a shareholder resolution at QBE's AGM in May 2018. The resolution put forward by Market Forces and 350.org asked QBE to disclose its climate risk and was backed by 18.6% of shareholders, making it one of the largest votes for climate action at an Australian AGM in history. In August 2018, QBE announced a plan to implement the Taskforce on Climate-related Financial Disclosure (TCFD) recommendations.

You can find the Market Forces article here

Rio Tinto Ltd

Ethinvest and our clients participated in a shareholder resolution at Rio Tinto's AGM in May 2018. The resolution, proposed by the Australasian Council for Corporate Responsibility (ACCR) are backed by shareholders worth $84 billion in shares, called on Rio Tinto to publish payments made to groups lobbying on energy and climate policy, and to review memberships in those groups. Company executives agreed to disclose additional information and in August 2018 published that information on their website

You can read a Guardian article about the resolution here

Santos Ltd

Ethinvest and our clients participated in a shareholder resolution at Santos' AGM in May 2018. The resolution called on Santos to disclose its fugitive methane emissions and was backed by shareholders worth approximately $1.2 billion in shares. Positively, the Chairperson stated, "we can't ignore what we are hearing from shareholders" and committed to disclose its methane emissions more comprehensively in the 2019 Climate Change Report. 

You can find the Market Forces article here

Proxies

Ethinvest facilitates the appointment of proxies to campaigners who would like to be able to directly question the board at an AGM. The list below includes the different companies that we were able to do this for throughout FY2018.

Shareholders asked the board of Armour Energy to address the recommendations made by the Taskforce on Climate-related Financial Disclosures (TCFD) in June 2017, including calculating climate change as a material business risk. The board did not accept the shareholder requests and refused to make further comments. 

Armour Energy Ltd

Shareholders questioned Aurizon in October 2017 on its plan to build a railway in Queensland that would open the Galilee Basin to coal mining. Adani requires this railway for transportation between its proposed Carmichael coal mine and the Abbott Point Port. 

Aurizon Ltd

Shareholders asked the board of BlueScope Steel to address the recommendations made by the TCFD in June 2017, including calculating climate change as a material business risk.The board did not commit to adopt the TCFD recommendations but affirmed the company's view of climate change as a business risk. 

BlueScope Steel Ltd

Shareholders asked the board of Cooper Energy to address the recommendations made by the TCFD in June 2017, including calculating climate change as a material business risk. The Chairperson could not provide details of the company's policies and failed to commit to the recommendations. 

Cooper Energy Ltd

In June 2018, shareholders asked FAR executives if they were concerned about the legal ramifications of classifying climate change as a risk. The Chairperson, Nicholas Limb, accepted the importance of climate change as a business risk but made no further commitments. 

FAR Ltd

Shareholders asked the board of Fortescue Metals to address the recommendations made by the TCFD in June 2017, including calculating climate change as a material business risk. The Chairperson could not provide details of the company's policies and failed to commit to the recommendations. 

Fortescue Metals Group

Shareholders asked LNG in November 2017 to define climate change as a material business risk for the company. Auditors for the company stated they did not define climate change as a material risk. 

LNG Ltd

In May 2017, the Queensland Land Court recommended the plans for New Hope's expansion of the Acland coal mine should be abandoned, because the risks posed to groundwater were too high. Shareholders questioned New Hope on the subject, but the board refused to answer questions. 

New Hope Group

Shareholders questioned Senex Energy in November 2017 on its plans to transition to lower carbon emitting activities in line with the two-degree scenario outlined by the COP21 Paris Agreement and requested the company complete a two-degree scenario analysis. Company executives were not able to answer the shareholder's question and were unaware of what the TCFD was. 

Senex Energy Ltd

In November 2017, shareholders asked whether external auditor had considered climate risks when assessing the company's financial statements. The Chairperson, Kerry Stokes, claimed Seven Group did not define climate change as a risk and the auditor, Deloitte, stated Seven Group did not disclose significant environmental liabilities in its financial statements. 

Seven Group Holdings

Shareholders questioned the company on the risk level of the Maules Creek coal mine in October 2017. The Environmental Protection Authority upgraded the mine's environmental risk to the highest category, level three. Unfortunately, shareholders did not receive an adequate response from Whitehaven executives. Mark Vaile, the Chairperson, ignored a shareholder's question regarding why they risk level was elevated. 

Whitehaven Coal Ltd

Letters and Direct Communication

Ethinvest regularly corresponds with companies and other entities to request information on ours or our clients' ethical concerns. The list below includes the entities that we engaged with throughout FY2018.

In September 2017, Ethinvest wrote to the Bank of Queensland inquiring as to why the institution was not a signatory of the United Nations Principles for Responsible Investing (UNPRI). The Bank responded stating that as their primary activities involve deposits and lending, they "do not invest in companies as such, therefore we do not believe the Principles for Responsible Investing are applicable to our activities". Ethinvest will continue to monitor the Bank's adherence to its ESG policies.

Bank of Queensland

In July 2017, Ethinvest wrote to Duxton Capital and TNC in relation to the ABC Four Corners documentary about water theft in the Barwon-Darling Area. Duxton informed us the company did not trade in the area and had not connection to water entitlements in that part of the Murray Darling Basin. A webinar for clients was facilitated by Kilter Rural and TNC, detailing that the Murray Darling Basin Balanced Water Fund, which many clients are invested in, traded in entitlements in the Southern Basin only and had no exposure to entitlements in the Barwon-Darling Area. The webinar provided clients with good insights on the regulatory environment governing water entitlements and rights. 

Duxton Capital, The Nature Conservancy (TNC) and Kilter Rural

In March 2018, Ethinvest wrote to the Queensland premier, as we were concerned about the impact of the Adani coal mine on native title rights of the Wangan and Jagalingou People. In response, the Office of the Premier stated, "If the Carmichael mine project proceeds, the Queensland Government expects Adani to meet all of its obligations under the ILUA, to company with all state and federal environmental conditions and for it to be economically viable. That is why the Premier wrote to the Prime Minister, the Honourable Malcolm Turnbull MP, on 12 December 2017 advising that Queensland will exercise its veto rights on financial assistance to Adani for the North Galilee Basin Rail Project, in accordance with Section 13(4) of the Northern Australia Infastructure Facility Investment Mandate Direction 2016."

Queensland Premier

In July 2017, Ethinvest enquired into the governance and operation of the Northern Australia Infrastructure Facility (NAIF). Specifically, we questioned the lack of environmental sustainability and social impact as terms of the NAIF's cost-benefit assessment and expressed our concern over Adani's potential financial crimes in India. 

Senate Economics Legislation Committee

In August 2017, Ethinvest inquired into Siemens' exposure to revenue derived from the exploitation of fossil fuel reserves. Siemens responded with information on the breakdown of the revenue by energy source but would not disclose the proportion of FY16 revenue derived from the mining and oil and gas industries. 

Siemens AG

Petitions

The Labor Party's proposed changes to the dividend imputation system before the Batman by-election caused much confusion and division across the country. Wilson Asset Management and its Chairperson, Geoff Wilson, have been vocal in their opposition to the plans. So much so, they have organised a petition calling on the Liberal and Labor Parties to guarantee they will not change the current dividend imputation system. This is an interesting example of shareholder activism in practice and we suggest  taking a look at the arguments on both sides. There is definitely a strong case for major tax-reform in Australia, and targeting one element, such as refunding imputation credits, in our view is inferior to revisiting the full range of recommendations from the Henry Tax Review. (We also think the proposed change to the rules will be pretty easy to get around). You can view the petition here

Wilson Asset Management Petition (Example)

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