Climate Change Resilience Engagement
In September 2013 Regnan significantly expanded its engagement with S&P/ASX200-listed companies identified as being most likely to be impacted by climatic change. Typically these companies have vulnerable operations concentrated in geographies where climate change impacts are predicted to be greatest or with climate data gaps; and where current management practices and/or disclosures were assessed to be insufficient.
Companies were identified via a combination of our detailed knowledge of their operations (from in-house research and previous engagements) and analysis of the history of extreme weather impacts on company operations, products, markets, and supply chains, expected to become more material as climate change advances.
Regnan has engaged with 9 priority stocks on 18 separate occasions. Early meetings revealed that whilst a number of companies acknowledged the risks and had begun work to manage them, others had low awareness levels or actively denied there was an issue, but were unable to provide substantiation for their views. Since then, five of the nine companies have demonstrated progress consistent with Regnan’s objectives under this thematic.
This has included:
- enhancements to risk management practices to more specifically address climate resilience
- evidence of the adoption of the leading operational measures, beyond those required under current building and engineering standards, to future proof key infrastructure assets
- greater strategic integration of climate change risks into product and service strategies, providing scope for the company to better manage risks, while realising market differentiation benefits
- changed pricing structures to allow for increased prevalence of weather related outages
- detailed investor reporting of the business risks associated with a changing climate
- greater willingness from senior executives to publicly discuss the impacts of climate change
Regnan’s engagement has been effective in raising investor concerns on climate adaptation with boards and executives of the most exposed stocks in Australia as well as promoting awareness of the need to manage for uncertainty. Engagement is continuing with stocks in the agricultural, extractive and infrastructure sectors in addition to relevant financial stocks, including banks and insurers.