“I don’t believe those two positions are irreconcilable,” he said, speaking at an event presented by The Australian Financial Review and BHP.
Two weeks after Australia’s biggest coal miner, Glencore, said it would cap global coal output, Mr Henry said a “balanced” approach was needed to gradually move towards different sources of energy.
He pointed to steps BHP was taking to improve energy efficiency, improve its own emissions, and investing in “long-term solutions” to climate change. He added that the company understood that “over time the world needs to transition its energy mix” but there were also “realities of today”.
“It’s not just going about and turning off one industry, that’s impractical, it would have drastically negative impacts on the tens of thousands of people employed in the industry, all the thousands of businesses that supply it, and in many regional communities,” said Mr Henry, a BHP veteran mooted as a potential successor to current CEO Andrew Mackenzie.
The role of coal, a massive export earner and the main source of electricity, has been thrown into the spotlight by Glencore’s move last month, alongside reports of Chinese restrictions on Australian coal shipments through one of its ports. The high price of electricity further adds to the political sensitivity surrounding the coal sector.
Future Fund chairman Peter Costello told the same conference Australia’s politicians had failed to deal with the “trade-off” in moving away from fossil fuels to renewable electricity.
“I don’t think Australia has really been very honest with itself in this debate. The public’s been promised over and over again that you can have it all, you can switch to renewable green power, and it’ll be cheaper. Well if that’s true, problem’s over. We’ve reduced our carbon emissions and we’ve reduced our electricity. It’s just that it hasn’t been our experience, has it?” Mr Costello said.
Big businesses are also facing mounting pressure over their handling of climate change risks from institutional investors including superannuation funds.
Listed companies including BHP, Rio Tinto, AGL Energy, Origin Energy, the major banks, and QBE are expected to face shareholder resolutions from climate activist group Market Forces this year, with some paperwork already lodged. While some of the resolutions may be resolved with companies before going to a shareholder vote, the resolutions are likely to increase scrutiny of companies’ plans for dealing with climate change.
“What we are trying to get to is a point where we are talking about climate risk management, rather than just disclosure,” Market Forces executive director Julien Vincent said.
Asked about industry super funds pressuring companies on issues including climate change, Business Council of Australia chief executive Jennifer Westacott said the funds’ main responsibility should be to create value for members.
“If I have my superannuation with a superannuation fund, I imagine their purpose, ethically, just to make sure we’re all clear here, is to get my superannuation to make sure I can pay for my retirement,” she said.
Clancy Yeates is a business reporter.