ESG Aus and NZ Update

Innovative start-up: Lord of the Trees, drone tree planting

A new Australian start-up, Lord of the Trees, is developing drone solutions to plant trees, and is looking for investors. The United Nations said that 1.2 trillion trees need to be planted to combat climate change. The pilot forestry project has been operating in Western Australia for the past 18 years, the AURIA Forestry Project, testing and refining companion planting. The project has been very successful in planting trees in arid and highly degraded environments.

The drones offer a high-tech non-intrusive planting solution to land and ocean habitats, facilitating rehabilitation. Drones can plant over 1 million trees in 48 hours with an 85 per cent reduction in planting costs.

MarketForces criticises AustralianSuper’s net-zero commitment

AustralianSuper recently said it would target net-zero carbon emissions by 2050 to do its bit to protect against climate change on its portfolio, however, MarketForces, a climate activist group, has said it has failed to ‘match, let alone improve on’ what other Australian superannuation funds are doing.

MarketForces said that there are some positives to AustralianSuper’s new policy, it doesn’t rule out coal mining or coal power investments, it doesn’t set any paths to exit for oil or gas sector companies it invests in, and it doesn’t set any decarbonisation targets.

AustralianSuper has committed to $1 billion of its total $180 billion in assets invested in renewables by the end of 2022, with its equities portfolios apparently emitting 44 per cent less carbon than the indices after it started measuring carbon intensity in 2013. AustralianSuper does not have any current active investments in thermal coal companies.

Protein producer index finds global and Aussie meat, fish and dairy producers undermining climate efforts

The Coller FAIRR Protein Producer Index has found that the world’s biggest protein producers - fish, meat and dairy - are undermining international efforts to mitigate climate change. Fund managers should be aware of supply chain issues here.

The Index looked into 60 publicly listed animal protein producers globally and assessed their ESG criteria, from greenhouse gas emissions, deforestation, antibiotic use and working conditions, and found that nearly 80 per cent had no declared set of meaningful greenhouse gas reduction targets. Meat and dairy, when taken alone, brought that to 86 per cent. In fact, 35 per cent of the companies reported an annual increase in emissions.

McDonald’s and Nestle, for example, are supplied by companies within the index such as Fujian Sunner, Seaboard Corporation and Cherkizovo, none of which have declared emissions targets or reduction plans. More than 50 per cent of the companies in the 2020 Index are classified as high risk in the working conditions category, with 70 per cent high risk in the antibiotics use category, says the index report.

Over 70 per cent of the companies on the index were graded high risk on the pandemic criteria, which attempts to prevent future zoonotic (animal-originating) pandemics by looking into worker safety, food safety, animal welfare and antibiotic stewardship.

Many high-risk companies are in China, but Australian companies didn’t score very well either. Tassal Group, Australian Agriculture Co and Inghams Group were all ranked in the high-risk category, with no Australian companies in the medium or low-risk categories.

Rest agrees with McVeigh’s requests, case dismissed

The Federal Court case brought by Mark McVeigh against Rest superannuation has been dismissed, with both parties to pay their own legal costs. McVeigh was not after compensation but wanted Rest to make climate commitments. Rest has apparently agreed to the requests, making a trial unnecessary.

Rest acknowledged in a statement that climate change could lead to catastrophic economic and social consequences, and is of concern to its members, while also acknowledging that climate change is a direct, material and current financial risk.

"Rest agrees with Mr McVeigh to continue to develop its management processes for dealing with the financial risks of climate change on behalf of its members," the fund said.

Rest has agreed to achieve net-zero carbon emissions by 2050 and other actions. The fund will measure and report on climate-related outcomes in line with the Task Force on Climate-related Financial Disclosures and encourage those companies it invests in to do the same. Rest will publicly disclose the fund’s portfolio holdings while enhancing climate change risk when setting investment strategy positions. Rest will actively consider climate-change-related shareholder resolutions of investee companies, conduct due diligence and monitor investment managers’ approaches to climate risk. The super fund has stated it will develop a climate change policy and internal risk framework.