Canadian Manufacturing

Investment firms now evaluating climate risks in big resource plays

The shift to "strategic resilience" to climate change could be a game-changer in financing for major projects

OTTAWA—The Canada Pension Plan Investment Board and Quebec’s Caisse de depot are among institutional investors seeking greater transparency from three of the world’s biggest mining conglomerates on how they’re dealing with climate change.

The “strategic resilience” resolutions put forward by a coalition of international investors ask giants Rio Tinto, Glencore and Anglo American to provide investors with more information on the risks and business opportunities from a changing climate, starting in 2017.

The resolutions follow a similar move last year that targeted oil giants BP and Shell.

Four of the 10 biggest pension funds in the world are part of the British-based “Aiming for A” investor coalition, including the Canada Pension Plan and its $272.9 billion in assets.

“We’re supportive of the work ‘Aiming for A’ does on transparency,” said Dan Madge, a spokesman for the CPP investment board. “We see this as an important thing for companies to do, which is why we’re lending our name and our influence.”

Investors say a new international climate deal brokered in Paris in December puts added pressure on companies to assess their long-term strategic resilience in a carbon-constrained world.

Last week, the Liberal government announced that all major resource project applications in Canada are now required to include an assessment of their upstream climate impacts, including the emissions created in the extraction and processing of oil and gas destined for pipelines.

Mark Carney, the Canadian governor of the Bank of England, warned the investment and insurance communities last fall about the potential for stranded assets _ unburnable reserves of coal, oil and gas _ on a warming planet limited by future carbon budgets.

The shareholder resolutions filed by the “Aiming for A” coalition are not shaming exercises or publicity stunts, but rather investor efforts to ensure companies come to grips with the long-term business impacts of climate change.

The coalition bills the resolutions as “supportive but stretching” of the targeted companies. Helen Wildsmith, a charity fund manager and founder of the group, described the latest resolutions in December as a means for companies to show investors “that their evolving asset portfolios are resilient across future scenarios.”

Almost 200 countries agreed in Paris in December to limit global warming to less than two degrees Celsius above pre-industrial levels.

ClientEarth, an environmental law non-governmental organization which works with the investor coalition, says the ambitious Paris agenda has global investment implications.

“The Paris agreement was a game-changer for carbon-intensive industries and company reporting,” Alice Garton, a lawyer with ClientEarth, said in a release Monday.

“These resolutions, which we expect will become binding on management after the AGM (annual general meeting) votes, are an excellent example of investors’ desire for more complete information post-Paris.”

Some companies aren’t waiting for shareholders to vote on transparency resolutions. Mining giant BHP Billiton published an investor report, “Climate Change: Portfolio Analysis,” last September.

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