This article was first published in the Financial Mail on 14 April 2022.
“It’s now or never” is the message from the authors of the April 2022 report from the Intergovernmental Panel on Climate Change. The 2913-page tome sets out the latest science proving that limiting global warming to 1.5°C requires “rapid and deep and in most cases immediate” cuts to carbon emissions in all sectors.
Decades of mounting evidence and grave warnings haven’t spurred governments to act with anything like the urgency required. As for the financial sector, which has the power and capital to fill the yawning policy gap, it seems there is no threshold of climate science that can get in the way of it making a quick and hefty buck.
Here in SA, coal miner Thungela Resources and its shareholders are providing a sickening illustration of the corporate hypocrisy which provides such rich fodder for ESG-sceptics.
Thungela, the spin-off of Anglo American’s thermal coal export business, has seen its share price skyrocket since it was listed in June 2021, as the company rides the commodity boom driven by Covid recovery and the war in Ukraine.
Anglo’s pre-merger promises that the deal would contribute to the just transition to a low-carbon economy, and Thungela CEO July Ndlovu’s assertions that he was committed to winding down the company’s assets responsibly, are a distant memory. Thungela instead plans to expand its operations. Market commentators gleefully contemplate how long the bonanza might last. Ndlovu gave a triumphant address at a recent conference, exhorting the coal industry to “find its voice”.
In all this jubilation, the business media has failed even to mention a catastrophic 14 February toxic acid mine water spill from one of Thungela’s Mpumalanga mines, which spread for almost 60km along the province’s waterways, poisoning rivers and wiping out aquatic life. Scientists assessing the damage have warned that rehabilitation will take years, and is a “challenging, if not impossible task”.
Thungela claims to be committed to “responsible environmental stewardship”. Not that responsible, as it turns out. The company doesn’t appear to have taken any action to address the spill until it was issued with a directive by the Department of Water and Sanitation for “failure to take all reasonable measures to contain and minimise the effects of the incident”.
The irony of the spill taking place in the midst of a heady upward climb in the share price is profound: here we have a poster child for an industry defined by the way it offloads social and environmental costs onto society, shelling out dividends to smug shareholders – all of which claim to care about ESG impacts, while toxic pollution destroys swathes of natural resources.
The spill came from an old mine shaft, sealed in 2019 but, like most mines in the country, poorly rehabilitated. As I wrote last year, in demerging Thungela, Anglo deftly jettisoned a raft of lurking environmental and social liabilities. Some Anglo shareholders appeared to appreciate the risk of this approach, the most vocal being Coronation Fund Managers, which told Citywire in an interview in August 2021 that it held no shares in Thungela and would be “very unlikely to invest in new coal or oil assets”; but that this would depend on the “opportunity”.
Opportunity indeed. Coronation is now one of Thungela’s biggest shareholders. As is the Public Investment Corporation, which manages trillions of rand for hundreds of thousands of ordinary South Africans, many of whom are directly affected by the negative impacts of the coal industry, and BlackRock, which pledged in 2020 not to invest directly in any companies that generate more than 25% of revenue from thermal coal. The headline-grabbing commitment did not extend, however, to investments in passive funds, which make up the lion’s share of BlackRock’s portfolio.
There is no sign that these self-proclaimed “responsible investors” are engaging deeply with the company about its serious environmental and social impacts, and no indication of how they square their purported commitments to climate action with their investments in a thermal coal mining company with expansion plans.
Perhaps those crucial conversations are happening “behind closed doors”. But for now, it all seems more like a 2014 video parody (Australians for Coal: what is your investment dollar doing?) in which the company’s CEO says, “I am proud to announce the company’s new climate policy, in which we are able to straddle the dichotomy between what we know is true, and how we can benefit from ignoring that truth”.
IMAGE: 123RF / nordroden
