Guest essay by Eric Worrall
Climate policy is rapidly becoming a test bed, for how much control international bankers can exert over the policy decisions of elected governments, through boycotting the purchase of government bonds.
A $213 Billion Investor Targets Whole Nation Over Climate Change
By Matthew Burgess17 June 2021, 02:05 GMT+10
- Robeco wants Australia to phase out coal, pivot to low carbon
- Fund manager push adds to campaigns against Brazil, Indonesia
Robeco Institutional Asset Management BV will soon start pressuring Australia to phase out its reliance on coal and other natural resources, as money managers slowly begin targeting governments over climate change.
Australia has a “particularly high-risk profile” when it comes to climate performance, said Peter van der Werf, the Dutch firm’s senior manager of engagement and active ownership. As global investors implement plans to decarbonize portfolios by mid-century, Australia’s lawmakers must follow suit, he said in an interview.
Cutting back on natural resources “are very hard decisions because these are obviously very important sources of revenue for the Australian economy,” Rotterdam-based Van der Werf said. “That’s where in those conversations, institutional investors can also provide a perspective how they would foresee such a transition to take place.”
Australia is unlikely to be receptive to Robeco. Prime Minister Scott Morrison, who famously brandished a lump of coal in parliament, has steadfastly refused to commit to a deadline for net-zero emissions in support of politically sensitive industries like coal and gas. The nation instead is hoping technology such as carbon capture and storage will help meet its Paris Agreement obligations.
Australia may be a much harder nut to crack than Brazil. At around 70% debt to GDP, And a rising trade surplus from mineral and coal exports, Australia can afford to laugh at banker efforts to boycott Australian bonds – even when the banker in question controls $213 billion. In these uncertain times there are trillions of dollars worth of private cash chasing safe havens. It doesn’t get much safer than Australia.
So why attempt such an apparently futile exercise?
There is always a possibility that someone in the Australian government will crack. It is possible bankers have spotted a financial weakness which I am not aware of. There is no real downside for the banks who participate in this exercise, even if they lose. And attacking Australia will provide valuable insights, for when bankers come after the country they really want to control.