Mining giant Fortescue Metals Group will tie executive bonuses directly to meeting emissions reduction targets as it strives for decarbonization.
Speaking at the company’s annual general meeting in Perth on Tuesday, the billionaire’s executive chairman Andrew Forrest said the bonus scheme would bolster Fortescue’s ambitious plan to reach zero emissions by 2030.
“We will not ignore the heating climate at the board table,” he told shareholders.
“Achieving world-leading emissions reduction targets will be a critical part of our executive incentive structures.”
Impact would be ‘very meaningful’
Dr. Forrest later told reporters that the details were still being worked out, but that the impact would be “very meaningful” to the iron ore business and Fortescue Future Industries.
He said Fortescue, bolstered by the addition of the Iron Bridge project near Port Hedland, is on track for another super year after shipping a record 189 million tonnes of ore last fiscal year.
But as the company moves to green energy and resources, Dr. Forrest warned there would be a renewed focus on frugality.
“We are slimming down to get stronger for the battle ahead… we are moving beyond fossil fuels,” he said.
“We will not slavishly produce more and more tons, as our competitors seem to want. We will improve the value of every ton.”
Fortescue’s net profit fell by 40 percent
Fortescue’s revenues declined in the 12 months ended June 30 due to global economic disruption and weak iron ore prices.
After-tax net profit fell 40 percent to $9 billion.
Australia’s third-largest miner will spend $6.2 billion ($9.4 billion) on decarbonisation by 2030, an investment Dr. Forrest would eventually yield the shareholders.
He said executives who fail to reduce emissions had a vested interest or were “just lazy”.
“They need shareholders to push them and hold them accountable,” he said.
“We have a fee associated with going green. They all have to do it too.”
Need more action from the WA government
He said there was also a need for more action from the Western Australian government, which has set interim reduction targets for its emissions, but not those of the wider economy.
The McGowan government has admitted it will likely have to import coal from NSW in coming years as it manages the impending closure of its own coal-fired power stations.
“I’d say they’re smoking really high-quality drugs and they should think about that,” said Dr. Forrest.
After returning to the helm in May after former CEO Elizabeth Gaines stepped down as director, Dr. Forrest that he was in no rush to install a new iron ore boss.
“I’ve come back because we’re going through this phenomenal transition period,” he said.
“We’ve got some really great people there…I can say we’re in no rush, but I’m really happy with the quality of the candidacy.”