If the pundits are to be believed, the march of ESG through Australian boardrooms is an unstoppable force, so said Moody’s Head of Sustainability at their conference recently in Sydney.
What started as a push to ensure environment, social and governance perspectives were given due weight in assessing companies and securities, is now shorthand for declaring certain forms of value-creation verboten.
However, it is this very zealotry that is undermining the credibility of ESG to be a reliable and sustainable source of truth.
The recent Financial Times Moral Money Summit, yet another ESG talkfest, made global headlines because – shock horror – one of their own, HSBC’s Stuart Kirk, took up the challenge of assessing the “climate risk” company directors and investors are supposed to have top of mind.
Kirk did the sums on climate risk in valuations and declared it not very large at all. He found the scary numbers produced by climate catastrophists could only be produced by dubious assumptions.
Almost immediately, Kirk was stood down by HSBC.
To the extent that the current global and Australia energy crisis factored into the considerations back at Moody’s ESG talkfest, it is little wonder no brave participant dared buck the prevailing ESG orthodoxy.
AGL’s Mike Cannon-Brookes, seemed to suggest to those assembled that all that was needed to fix Australia’s broken energy system was a good dose of ESG purity.
“We have to move faster onto renewables – which, yes, is renewables … and transmission. That’s not a particularly complicated equation,” he said. It seems little, if any, consideration has gone into how the shunning of coal and gas, while promoting subsidised renewables, may have actuallycontributed to soaring energy prices and diminished reliability.
Nor either, the massive renewables bill set to be handed to Australian -taxpayers. While it is true wind and sunshine are free, the associated -infrastructure, transmission lines and backup systems are most definitely not.
Compare Cannon-Brookes’ sunny determination to recent comments by the chair of the Energy Security Board, Anna Collyer, in Nine Newspapers: “We need to build eight times as much renewable energy than we have right now … and just in the next 10 years we need $14bn of investment in the transmission network, which is two-thirds again of the system we have right now.”
Added to this, it is Ms Collyer who is spearheading an emergency plan to force retailers to pay generators to supply energy, including generated by fossil fuels when, as she says, “the wind isn’t blowing and the sun isn’t shining”.
The Albanese government has already indicated the challenge may be far greater, having pledged $20 billion to its “Rewiring the Nation” plan.
And, as with all grand government infrastructure projects, few would doubt it will cost much more than that.
Worse still, the subsidised spread of renewables has dramatically reduced the incentive to maintain ageing baseload generators and stopped us from building more efficient replacements. Energy shortages are now guaranteed, along with out-of-control bills.
As usual, it will be industry and Australian families who will pay for this, certainly not the elites in the political class and the inner-city suburbs. The real social impact is on Australian families now making choices between heating or putting food on the table.
You can bet your bottom dollar too that ESG enthusiasts won’t want to hear from communities objecting to all these new windfarms and transmission lines, someone else’s amenity is just another small price to pay for net zero and ESG purity.
Fossil fuels will remain the dominant global energy source for decades – just ask the International Energy Agency, or China, India, or any other developing country.
Our political class will soon be scrambling to walk away without losing face.
Perhaps Moody’s ESG summit was more like a final supper, something the participants can look back upon the high point while capital barons pursue treasure the old-fashioned way.