ESG Aus and NZ Update

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Australian and New Zealand

Australian Ethical divests Marsh & McLennan due to insuring mining conglomerate

The $5 million shareholding that Australian Ethical had in Marsh & McLennan has been pulled due to Marsh & McLennan providing insurance services to a mining conglomerate. Marsh & McLennan is the parent company to Mercer and insurance broking firm Marsh, reinsurance company Guy Carpenter, and strategy consultant Oliver Wyman. Australian Ethical continues to have a relationship with Mercer, providing administration services for the investment manager’s superannuation fund.

BlackRock coal divestment update

Since it said it was going to dump thermal coal from its active portfolios, we’ve not heard from BlackRock. The latest update is that voting efforts have gone up this year, with:

  • Company engagements up 47 per cent compared to the previous financial year

  • BlackRock engaged 289 per cent more frequently on environmental issues, an increase from 316 to 1230 in the most recent financial year

  • Social engagements are up 146 per cent

  • Governance engagement is up 47 per cent

  • During the 2020 proxy season, voting action was taken against 53 companies for failing to make sufficient progress regarding climate risk disclosure or management

  • BlackRock identified 244 companies in the last year that were, in their view, not making sufficient progress on climate change

  • Out of those 244 companies, 191 were put ‘on watch’, where they are expected to make changes or BlackRock will take voting action

First State Super divesting $40m thermal coal stocks

The equity portfolio of First State is losing $40 million in thermal coal holdings from October onwards, reducing greenhouse gas emissions in its listed equities exposures by at least 30 per cent by 2023. First State Super has current holdings in BHP, Rio Tinto, Newcrest Mining and Woodside Petroleum, accounting for around 10 per cent of the Australian equity portfolio. BHP makes up the largest portion at 5.8 per cent.

Any company deriving over 10 per cent of revenue from thermal coal mining is to be excluded from the industry fund’s portfolios over the coming months.

NSW set for fastest and biggest transition to renewables from coal

The NSW government is seeking a huge 8,000MW of wind, solar and storage projects - the biggest in Australia - to set itself up for the fastest and biggest coal-to-renewables possibly in the world. The first response to the state’s first renewable energy zone (REZ) saw a whopping 27,000MW of wind, solar and storage projects for an area with the capacity of 3,000MW.

The level of interest in Central-West Orana REZ was huge, so the plan is to go bigger with the New England REZ. The New England REZ able to power 3.5 million homes, and with the Central-West Orana REZ, the state will become the renewable energy investment capital of Australia.

NSW doesn’t currently have a stated renewable energy target, however, its transition to renewables will be fast since most of its ageing coal generators will be retired in the coming decade.