Several large-scale company’s boards, including Woolworths’, have been targeted in the Investor Group of Climate Change’s new report as lacking the skills and experience to lead a transition to net-zero emissions by 2050.
The report studies 15 of Australia’s most carbon intensive companies, and provides guidance of what outcomes shareholders and investors want from net-zero ambitions.
“Climate change risk is still being seen by companies as a reputational or environmental risk, and not as a significant business or investment risk,” said the report’s lead author and researcher Ian Woods.
“[In our research], we found that many companies identified the need for climate skills on their board, but few identified broader transition and disruption expertise, and none were comprehensively disclosing on board skill sets.”
The fifteen focus companies reviewed are Adbri, AGL Energy, BHP, Bluescope Steel, Boral, Incitec Pivot, Oil Search, Orica, Origin Energy, Qantas Airways, Rio Tinto, Santos Limited, South32, Woodside Energy and Woolworths Group.
According to Woods, its hard for investors to form a complete view on how prepared these boards, and by extension these companies, are for the transition they are moving toward.
What investors want on a board, according to the report, are proven examples of leading through disruption and transitions, the ability to challenge existing business models, knowledge of climate change, and an ability to change management skills.
In addition, climate change needs to be fully integrated into the company’s strategies, executive remuneration needs to be tied to climate change targets and competing incentives must be removed, and lobbying, messaging and action need to be cohesive.
“We’re not seeing the progress we need from companies to instill investor confidence,” said IGCC’s director of corporate engagement Laura Hillis.
“We’re at a tipping point for the transition to net-zero emissions, [and] while promisingly many of the companies assessed for this report have set net-zero targets, it’s unclear… how prepared the boards of these companies are to lead the transition.”