Back in September, I blogged about the release of the latest Carbon Disclosure Project - an attempt by major institutional investors to get major companies to disclose information about their greenhouse gas emissions, the risks they faced from climate change, and what steps they were taking to manage those risks and keep their shareholder's money safe. At the time, I noted that New Zealand companies didn't want to talk about climate change - very few had bothered to respond, and only one had made their response public. Also surprising was the fact that government-owned companies such as Air New Zealand had refused to participate, and that the New Zealand Superannuation Fund was not on the list of signatories, and was not using its weight in the New Zealand market to encourage greater disclosure (if only for its own purposes).
So, I wrote to Michael Cullen asking him to use his power as shareholding Minister in Air New Zealand to force that company to participate in future, and to direct the Cullen Fund to sign up for the CDP. Both of these would help send a message to the market that climate change mattered, and that it would affect investment decisions. Today, I received his response:
Thankyou for your letter of 20 September 2006 about the Carbon Disclosure Project (CDP). I appreciate you bringing this initiative to my attention. I agree that the responses of public companies, especially large emitters, to the challenges of addressing climate change will be of increasing importance to many investors. The CDP is anticipating this trend, and I welcome the initiative.
You suggest that I should issue a direction to Air New Zealand and the Guardians of the New Zealand Superannuation Fund to take part in the CDP. I am reluctant to give such directions. The government has important roles in promulgating an increased awareness of climate change in New Zealand, and in developing clear and sustainable climate change policies. Companies and investors that operate in New Zealand should be able to make investment and production decisions that take account of such policies. You will be aware that the government is in the process of consulting the public on refinements and enhancements to New Zealand's climate change policy.
Some companies and investors will be attracted to the information that can be generated through the CDP. However, I would prefer to leave decisions about whether and when companies should participate in such a scheme to the companies themselves. They are best placed to assess the net benefits of such participation. If more transparent disclosure of carbon information proves to be important in attracting capital, no doubt that will be a factor in those decisions.
So, in short, he recognises that the CDP is a valuable exercise in helping investors make long-term decisions, but he is unwilling to use the government's power as an investor either to encourage this trend, or to help ensure our money is kept safe. Instead, he seems to think the market will just magically sort the whole problem out, without any need for the government to show any leadership.
Sometimes, I really do despair...