Double standards on climate risks – Government protects sophisticated investors, not taxpayers | RenewEconomy

Double standards on climate risks – Government protects sophisticated investors, not taxpayers

Aussie taxpayers are staring down the barrel of huge financial losses as a result of climate change risks.

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In Australia, corporations and their directors are facing increased scrutiny over investments with links to climate change as regulators clamp down on financial risks.

Yet government agencies putting taxpayer dollars on the line are immune. It is a blatant double standard.

The result is regulators protecting private investors from financial risk, while politicians and senior government officials can bet unlimited taxpayer funds on the Paris Agreement failing.

For the private sector, the benchmark for assessing investments is whether money goes to a world that holds global warming to well below 2°C. APRA has effectively demanded this since February 2017.

ASIC, the company regulator, is now demanding detailed disclosure of climate change risks.

It unequivocally agrees that company directors have legal obligations when it comes to climate risk. ASIC states there is no legal impediment to analysing business in accordance with a 2°C world. The regulator is pushing for greater consideration of non-financial risks.

These developments are very welcome. But they are limited in scope. They aim to protect shareholders and sophisticated investors. Not taxpayers, like you and me.

However, Aussie taxpayers are staring down the barrel of huge financial losses as a result of climate change risks.

The Australian government has a range of financial service providers. They can lend big dollars to risky projects. NAIF, an infrastructure fund for Northern Australia projects, has $5 billion to lend.

EFIC, an export credit agency, can be directed by Trade Minister Steven Ciobo to lend unlimited amounts to projects, here and overseas. No limits.

EFIC and NAIF have been in discussions with Adani about its Carmichael coal mine for years. The International Energy Agency, a conservative business-led analyst outfit, and the former UNFCCC secretary, Christina Figueres, both say Adani’s project in the Galilee Basin is not viable under a 2°C scenario.

Incredibly, Trade Minister Steve Ciobo has not been prepared to guarantee that EFIC will not fund Adani.

Perhaps more incredibly, there is no requirement that EFIC or NAIF only finance projects that are compatible with keeping global warming below two degrees.

It is inconceivable that the Federal Government will not be prepared to protect Australian taxpayers from financial risk caused by climate change.

It has so far been impossible to find out how climate change risks are being assessed.

When Environmental Justice Australia asked APRA to speak to NAIF about climate risk, APRA said it was beyond its jurisdiction. When we asked NAIF what climate change scenario it used to assess a Western Australian port expansion to service the fossil fuel industry, we did not receive a response.

When we asked EFIC to publish its board’s assessment of its decision to finance a company in Adani’s supply chain, as directed by the Trade Minister, it refused to do so. 

The lack of public accountability is astonishing, so we have asked the Commonwealth Ombudsman to investigate.

EFIC now says the Adani-related proposal is not proceeding. But nobody is prepared to say why, and nobody knows what standards this secretive agency uses to assess projects.

Beyond the financial risks taxpayers can bear in relation to climate change, many think it is outrageous the government is not doing all it can to protect citizens from the physical impacts of climate change. According to the Paris Agreement, those impacts become dangerous to human health if warming is not limited to well below 2°C.

By the Federal Government continuing to allow loose governance of government financiers, taxpayers’ money is put at risk.

Meanwhile the government is clamping down on companies to protect private investors. Is it fair investors are protected, when taxpayers are not?

The failure to standardise the approach is a failure of governance at the highest level. It flies in the face of legislation brought in by the Liberal government in 2013 that harmonised the obligations of government officials with company directors. Those company directors are under scrutiny for climate change risks by APRA and ASIC.

Meanwhile government officials are left without guidance or oversight.

This means while Australian banks and other financial institutions have woken up to the risks, taxpayer financing of Adani remains a real possibility.

David Barnden is a principal at not-for-profit legal practice Environmental Justice Australia
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10 Comments
  1. D. John Hunwick 2 years ago

    Is this really surprising given the present Turnbull Liberal (COALition) government? If ASIC really means something it has to push through whatever barrier is operating and produce the work for Australian voters aas to exactly what is going on – and what it is costing us. It would appear the only way forward is to vote the present Govt (Fed) out of office – but will Labor take enough bold steps to actually achieve a reduction in Australia’s CO2 emissions? Speak up Mr Shorten – I (and others) can’t hear you!

    • MaxG 2 years ago

      Why rely on Labour; they have started privatisation. Give your first vote to The Greens. As long as people vote for the same clowns nothing changes.

      • Joe 2 years ago

        Hi Max, loving you ‘Greens’ boosting work of late, they still have credibility.

    • Joe 2 years ago

      The punters / Aussie taxpayers can always be counted on to be ‘The ‘Underwriter of Last Resort’.

  2. Thylacine 2 years ago

    Sadly neither party will speak out as they can see no further than the political implications of power price increases of a few hundred dollars a year. What chance is there of addressing the increasing levels of co2 in the atmosphere?

    • MaxG 2 years ago

      Give your first vote to The Greens.
      Why continue voting for the two major who fill only their own coffers?

    • wideEyedPupil 2 years ago

      RE puts downward pressure on wholesale power prices, which should translate to cheaper power prices. THat’s because RE is cheaper than new build coal and gas and bids zero or less into the wholesale spot market, so it drags the market down when it is generating. The more we install the more it is generating (both amount and time of day).

  3. brucelee 2 years ago

    An excellent article

  4. Radbug 2 years ago

    When the pipeline spur from the Siberia to China gas pipeline to South Korea is operational, 10% of Australia’s thermal coal exports will be left stranded, as will 40% of Australia’s LNG exports. Deng’s China was built on the Export-led, Investment-led model, as a result,Trump’s tariffs will create policy chaos inside that nation. How this chaos will impact on Australia is anybody’s guess. I fear that Australia will end up like Ireland, with the taxpayers having to pay for a huge debt obligation entered into in a more debt-friendly era.

  5. DevMac 2 years ago

    It’s a very odd state of affairs when a Liberal government is doing the opposite of what the market is doing. The perfect example of reality being out of step with established power and investment.

    The interesting thing about it is how the majority of the population (assumed, based on voting history) have opinions in line with the established power and investment as opposed to reality. The power of power, propaganda works, even in the face of fairly obvious reality.

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