Forrest’s Fortescue vows carbon targets for customers in green shift
Mining giant Fortescue has vowed to unveil a target next
month to lower the greenhouse gases of its customers, insisting it will come
with a concrete plan setting it apart from rivals trying to “green-wash” their
polluting activities.
The world’s fourth-largest iron ore miner has until now
resisted pressure to follow others in the industry including BHP and Rio Tinto
in taking responsibility for “Scope 3” emissions – the greenhouse gases
released when customers burn or process the raw materials the miners sell.
But in a reversal of its stance on Monday, Fortescue
chairman and top shareholder Andrew “Twiggy” Forrest said the board was
developing the framework for a Scope 3 target and would announce one by
September.
Dr Forrest said Fortescue had not wanted to set such a
target until it had a firm plan in place on how it would be achieved. “Setting
Scope 3 targets without a strategy on how you are going to help your customers
decarbonise is pretty vapid and pointless – it ticks boxes, it gets people pats
on backs, all of that, but it doesn’t actually do anything,” he said.
“As we have become confident in a plan, a strategy, that can
be executed, now we can become confident that we will not join the queues of
the vapid, the meaningless, and those who are green-rinsing their careers or
green-washing their customers through announcing Scope 3 emissions [goals] when
they have no idea whatsoever how to get their customers to go green.”
His pledge comes as Fortescue delivered a record-breaking
full-year profit of $US10.3 billion ($14 billion) on the back of a stunning
rally in iron ore prices, and announced it would double its dividends for the
year to a total of $3.48.
Dr Forrest, who owns 36 per cent of the company, stands to
receive nearly $4 billion in dividends across the year.
The bumper profit result was largely in line with
expectations as iron ore reached as high as $US230 a tonne thanks to a Chinese
infrastructure-building blitz fuelling demand for steel, while global iron ore
supply was constrained due to disruptions dragging on output at iron ore mines
in Brazil.
“Fortescue maintained a very strong balance sheet,” Moody’s
Investors Service analyst David Xu said. “We consider the company can fund
potentially higher capital spending ... and possible investment opportunities
in renewable energy and green hydrogen projects.”
While most miners are responding to rising investor climate
pressure by setting targets for carbon neutrality by 2050, Fortescue has vowed
to neutralise the emissions from its direct operations by 2030 and has also
mapped ambitions to diversify into green technologies in Australia and around
the world via its clean-energy venture, Fortescue Future Industries (FFI).
One of its priorities is “green” hydrogen, which is created
using a process powered by renewable energy, and is considered a growth industry
that could eventually substitute coal in steel-making furnaces.
Scope 3 initiatives set by other mining companies such as
BHP and Rio Tinto have so far fallen short of some investor and climate
advocates’ expectations because they focus on investing in new technology to
drive down customers’ emissions “intensity” – the amount of carbon emitted for
each of steel produced – rather than absolute emissions.
“The only major miner to have set targets for its Scope 3
emissions is Glencore [40 per cent by 2035], which Fortescue would do well to
improve on,” said Dan Gocher of the Australasian Centre for Corporate
Responsibility, a shareholder activism group.
“While Fortescue’s ambition is encouraging, we do remain
sceptical of its plans, given its operational emissions have increased 32 per
cent since 2018, while production increased just 7 per cent over the same
period.”
Fortescue chief executive Elizabeth Gaines said FFI – funded
by 10 per cent of Fortescue’s yearly profits – would be a key enabler of Fortescue
reaching its soon-to-be-unveiled Scope 3 target.
“With a range of heavy-industry decarbonisation initiatives
underway to eliminate our reliance on fossil fuels, FFI will position Fortescue
at the forefront of the renewable-hydrogen industry,” Ms Gaines said.
Comments
Post a Comment