Chief executives are being held accountable for inaction on climate change

Even as Joe Kaeser of Siemens has said it was a mistake to be involved in an Australian coal mining project, other companies are feeling the weight of investor expectations

BERLIN, GERMANY - JANUARY 13: Activists from the Fridays for Future climate change movement protest outside the gas turbine factory of German engineering conglomerate Siemens AG on January 13, 2019 in Berlin, Germany. The protest follows an announcement by Siemens head Joe Kaeser that the company will adhere to its contract to participate in the Adani Carmichael coal mine project in Australia, despite protests across Germany last week. (Photo by Sean Gallup/Getty Images)

It has been a pretty big week for champions of sustainability around the world as investors and companies were tested on their proclamations about being more climate conscious.

This was illustrated most effectively by the German industrial titan Siemens admitting that its involvement in an Australian coal mining project had been a mistake. A public mea culpa came from the chief executive Joe Kaeser for taking on the $30 million rail signalling contract in the wake of furious criticism from climate activists.

The criticism of Siemens is related to the pushback against more investment in fossil fuels at a time when bushfires, blamed on climate change, rage on in Australia. Land the size of Belgium has been destroyed in the fires. There has been loss of human life and of millions of animals.

The Australian government of Prime Minister Scott Morrison is known for its support of the coal industry. However, Mr Morrison's administration is facing up to the reality that public sentiment is turning. They seem to have got the message that ignoring fears over the climate disaster will no longer be tolerated – and this is true of not just Australia.

To quote from The National's exclusive interview with Mr Kaeser, he said, about the Adani Carmichael mine contract: "It was a mistake to do that. We needed to look into our financial and fiduciary duty. If it was my company and I owned it 100 per cent, I probably would have decided differently".

Mr Kaeser did his best to quell the anger of climate activists. Still, this line in his fuller public statement is telling: “even though we do not have clear evidence that the wildfires and this project are directly connected … Siemens fundamentally shares the goal of making fossil fuels redundant to our economies over time”.

That statement offers insight into why not enough has been done to curb the effects of climate change. Despite decades of study and mounting protests, too many people approach the climate crisis as an issue of faith.

Nowhere is this more evident than in the US, which disappointed so many by rowing back on its commitment to the 2015 Paris agreement to limit global warming. The current government simply does not believe in the dire warnings.

On the other hand, Democrats are showing that they are believers. The party’s leaders have introduced legislation aimed at making the country net-zero on greenhouse gas emissions within 30 years. However, much of this could end up being symbolic because the Republican administration of US President Donald Trump is unlikely to allow it to become law. Climate policy is such a polarising issue that by the time US elections come around in November, both Republicans and Democrats will be loudly telling voters that it was them and not their rivals that did everything possible "on the right side" of climate change.

There is hope however that we can move past paralysis of debate and the decision to act more sustainably is likely to be driven by the capital markets.

BlackRock, the world's largest manager of assets, has joined Climate Action 100+, an initiative pushing companies to do more. And even as the company faces scepticism amid its management of energy sector assets, in his annual letter to BlackRock clients, chief executive Larry Fink wrote: "climate change has become a defining factor in companies' long-term prospects. The evidence on climate risk is compelling investors to reassess core assumptions about modern finance." Mr Fink expects capital to be quickly reallocated away from companies and assets considered most at risk of contributing to climate change.

BlackRock, he wrote, will also exit investments “that present a high sustainability-related risk, such as thermal coal producers” and promised to hold company directors accountable for failing to address the risk of climate change properly at their businesses.

As the website Axios reported, Climate Action 100+ now represents $41 trillion in assets, and although "it is hard to pinpoint what percentage that is compared to the world's overall assets, no matter how you slice it, it's a substantial" share.

It is also a powerful motivator and deterrent for any executive thinking their business can opt out on climate change action.

Make no mistake, where the markets are concerned, the climate activists and protesters have won the debate. This is a tipping point.

Mustafa Alrawi is an assistant editor-in-chief at The National

Mustafa Alrawi

Mustafa Alrawi

Mustafa is an assistant editor in chief at The National, and an accomplished journalist and broadcaster, with over 18-years' experience working in the UK, the UAE and the wider Middle East.