Suncorp has implemented a plan to phase out its exposure to thermal coal by 2025, facing a resolution from shareholders at its upcoming annual meeting demanding further divestment from fossil fuels.
As a result of its Responsible Investment Policy and its Responsible Banking and Insurance Policy implemented earlier this year, the bank said it is not directly investing in, financing or underwriting new thermal coal mining extraction projects, or new thermal coal electricity generation.
Suncorp is the second Australian insurer to exit from thermal coal this year, after QBE committed to phase out its exposure to the fossil fuel by 2030. According to activist shareholder group Market Forces, there are now no Australian providers giving insurance for new thermal coal projects.
Despite Suncorp’s new commitment, Market Forces has lodged a resolution on behalf of 100 shareholders, asking that the bank sets targets to phase out all fossil fuels – coal, oil and gas – in its investments and underwritings. The resolution will be up for consideration in the company's annual general meeting later this year.
Suncorp noted the resolution which will be up for consideration at its AGM, which asked the targets be “consistent with the goal of the Paris Agreement to pursue efforts to limit the temperature increase of global warming to 1.5 degrees Celsius above pre-industrial levels.”
The resolution also asks that the company disclose its plans and progress on the short, medium and long targets annually, starting with the 2019-20 annual report.
“Suncorp’s exposure to the fossil fuels industry is not material, being less than 0.5 per cent in the insurance business and investment portfolio, and a negligible proportion of our commercial lending portfolio,” a spokesperson for Suncorp said.
“Suncorp doesn’t finance fossil fuel projects as it doesn’t have an institutional bank.”
Through the responsible investment and banking policies, both parts within a greater alignment of the business with the Paris Agreement, Suncorp applies an annually reviewed shadow carbon price to reduce financial risk, the spokesperson added.
Pablo Brait, campaigner, Market Forces noted the thermal coal action only partially addressed shareholders’ concerns.
“While Suncorp’s progress on thermal coal is exciting, the fossil fuel sector is far broader and without action on oil and gas, there is a risk that Suncorp ends up trading one massive climate risk for another over time,” Mr Brait said.
“The impacts of climate change pose severe risks to humanity and those risks are already showing up on the balance sheets of insurance companies. Shareholders and investors need assurance that Suncorp is doing everything possible to minimise the risks of climate change.”
Activist shareholder group Market Forces had teamed up with Australian Ethical in the QBE resolution, as part of a broader campaign urging shareholders to put forward resolutions at companies’ annual general meetings.
Research earlier this year revealed that more than 100 major financial institutions globally were restricting coal funding.
The company is still investing in the sector, reasoning that emerging markets need the resources to develop their economies, but it will bar companies that make more than 10 per cent of their revenue from a number of fossil fuels including thermal coal. Previously the threshold was 20 per cent.
A report from Market Forces in January found that three of the big four banks had increased their exposure to fossil fuels in the past year. Westpac had invested the most at $1.4 billion, increasing its exposure to coal mining by 140 per cent.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
Former CEO of ING Direct Vaughn Richtor will assume the role of chairman at MyState following the retirement of Miles Hampton, the compan...