Did Rio Tinto spot this major change coming from the US Securities and Exchange Commission that will force every energy company in the world to take climate change issues far more seriously?
Media reports at the weekend revealed that the powerful US Securities and Exchange Commission has directed two of America’s biggest oil companies to hold shareholder votes on far-reaching new emissions targets.
It came two days after Rio revealed that it will back shareholder resolutions on climate issues at its annual meetings in two months’ time.
The SEC move is unprecedented as the world’s toughest corporate regulator takes a tougher approach to climate change issues than previously.
The Financial Times reported that the SEC denied requests from both ConocoPhillips and Occidental Petroleum to reject shareholder motions that would force the two companies to lay out detailed plans for cutting their so-called “Scope 3” emissions — those from the burning of their products by customers.
It’s a fallback issue most energy companies have taken in the face of rising pressure for action on emissions.
All major energy companies, one way or another, have revealed plans to cut their own emissions and to reduce either the emissions generated in producing and selling their products, or to move gradually from fossil-based fuels to cleaner products (such as moving from oil based products to renewables).
But they have resisted dealing with how their customers use their products and their emission cutting measures and targets.
Rio Tinto’s prescience – if it can be labelled that – emerged late Friday with a statement from the mining giant that revealed it would back a shareholder push that would require the company to set emissions targets consistent with the Paris agreement and suspend membership of industry associations that lobby against action on the climate crisis.
In a statement to the ASX Rio recommended shareholders endorse two resolutions brought by activist groups, the Australasian Centre for Corporate Responsibility (ACCR) and Market Forces, ahead of Rio’s annual general meetings in London and Australia in May (Rio is a dual listed company, like BHP).
But it is easy for Rio to make a decision like this – it has sold off most of its energy products – thermal and some met coal – and has energy consuming businesses in aluminium, alumina and bauxite production. The alumina and aluminium assets though are significant direct and indirect emitters.
The SEC decision though is a major change in policy. Every major energy company is involved in the US economy – either selling or trading energy products in some way, through financial (fund raising) links with US-based investors, or investors who in turn are linked to US financial activities.
US regulators are not backward in extending their reach beyond America’s physical borders to the rest of the world, so Australian energy companies such as BHP, Woodside, Whitehaven Coal, New Hope, Santos, Oil Search and Beach Energy could very well find themselves pressure from regulators or activist investors.
And having seen the SEC take this very activist stance, will ASIC here be far behind?
