Pester power

Shareholder activist groups have discovered that pestering boards is more productive than hugging trees. By Nick Cater.

It has been a tough year for bankers too, apparently. ANZ’s profit was a slim $3.6bn in 2019-20 and chief executive Shayne Elliott took a pay cut of more than half a million dollars compared with the previous year, reducing his remuneration to $7.25m.

These straitened circumstances have not dampened the bank’s commitment to a global transition to net zero carbon emissions. Elliott assures us in his annual message to shareholders that he and his team “have been working hard to make a meaningful difference”.

In October, ANZ announced it would stop lending money to thermal coalminers and in February withdrew funding from the Port of Newcastle, Australia’s largest coal port.

These decisions will delight the bank’s largest shareholder, BlackRock, the world’s largest asset company, and a recent convert to climate catastrophism. In 2019, shareholder activists stepped up their campaign against BlackRock, whose chief executive Larry Fink insisted his decisions “were driven solely by our fiduciary duty to our clients”.

That was before a bunch of screeching zealots glued themselves to the doors of BlackRock’s London headquarters while others staged a mock dinner party with rolled-up banknotes on their plates.

In January, Fink declared that BlackRock was pulling out of investments in coal, oil and gas. “No issue ranks higher than climate change on our clients’ lists of priorities,” he said.

In an era when global capital has never been more interconnected, the capitulation of international financiers to the millennialist environmental cult is bad news for Australia.

National Australia Bank, Westpac and the Commonwealth Bank have followed ANZ’s lead and announced moratoriums on new lending to thermal coal projects and have pledged to pull out of coal altogether by 2030.

If they thought this would calm the rabble, the bankers were mistaken. Metallurgical coal and iron ore are the latest targets, and agriculture will be next. Animal rights organisations have been inspired by the success of the climate change movement and are considering how they too might starve a hated industry of capital.

Animals Australia is seeking to prohibit access to financial services to red meat and livestock business while the radical UK-based organisation Feedback is putting pressure on global investors and pension funds.

Environmental, social and corporate governance, or ESG, is a self-regulatory fad that has spawned countless made-up jobs and swamped annual reports with dispiriting mumbo-jumbo.

ANZ conducts what it calls “an annual materiality statement”, engaging with internal and external stakeholders to set ESG goals.

Few have such a large stake in the future of coal than the people of the Mackay region in central Queensland, where 97,000 full-time jobs are supported by the resources sector. The actions of the big four banks makes the regional prospects uncertain.

The woke-induced capital drought has spilt over into insurance. QBE, Zurich, Suncorp and IAG have all announced plans to stop underwriting companies that derive significant revenue from fossil fuels.

Small and medium businesses in the Mackay and Whitsunday region are hurting.

One reports a 300 per cent increase on professional indemnity insurance. “We spend more on insurance than we do on diesel,” the company told the Resource Energy Network. Another pleaded: “Please stop discriminating against our business. We have been in business for over 25 years in a legitimate occupation, and we are treated differently to every other business I know. It’s un-Australian.”

Most of the 44 coalmines in the Mackay region produce high-quality metallurgical coal, not thermal coal. Australia exports about $40bn worth of the stuff a year, generating thousands of jobs in regional and rural communities as well as royalties that benefit the entire community.

Yet corporate social responsibility does not extend to these people, or to the exporters who kept our economy afloat when the nation went into lockdown. Their jobs and livelihoods are the casualties of an intense ideological war fought by global activist movements, aided and abetted by supine corporations.

Australian banks and insurance companies are complicit in a campaign that will send livelihoods offshore and lead to increased demand for coal from jurisdictions with less-stringent environmental regulations. Net emissions will increase, at least in the short term, as buyers in Asia are forced to use lower-quality coal from dirtier supply chains.

Financiers mouth platitudes about the Paris Agreement, but this is mere cant. The federal government is the signatory on the Paris Agreement, not the banks. It alone has the responsibility for delivering the promised reductions in the fairest and most efficient way. It is on track to meet its target comfortably.

Pseudo-prudential explanations about exposure to risk from stranded assets are window-dressing. Global demand for coal will remain strong into the second half of the century, driven by newly industrial economies to our north.

Insurance companies highlight the risk of claims from extreme weather driven by climate change, yet the links between atmospheric carbon levels, storms, flooding and bushfires remain matters of conjecture since human understanding of what influences the climate is far less perfect than some like to think.

Climate zealotry is a professional business these days, led by shareholder activist groups who have discovered that pestering boards is more productive than hugging trees.

Market Forces, a division of Friends of the Earth, was created in 2013 and has been at the forefront of the campaign against banks and insurance companies. Their crusade is subsidised by the taxpayer. Donations and grants are processed through Friends of the Earth’s bank account, making them tax-deductible, a loophole the federal government might like to think about closing.

The willingness of our big four banks to roll over and have their tummies tickled by these unaccountable zealots attests to the power of what we might call the fifth estate, professional agitators who have developed sophisticated ways to bend our economy to their seemingly irresistible will.

Judicial and shareholder activism is accomplishing what could never be achieved through the ballot box, fast-tracking the decarbonisation of the economy at the expense of economic growth and jobs.

It bears testimony, too, to the fickleness of banks and the hollowness of their claims of social responsibility as they sacrifice national prosperity on a bonfire of vanities.