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Fortescue will link bonuses to climate targets

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Mining giant Fortescue Metals Group will tie executive bonuses directly to meeting emissions reduction targets as it pushes for decarbonization.

Addressing the company’s annual general meeting in Perth on Tuesday, billionaire 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 heated climate at the board table,” he told shareholders.

“Achieving world-leading emissions reduction targets will be a critical part of our leadership incentive structures.

The impact would be “very significant”

Dr Forrest later told reporters the details were still being worked out, but the impact would be “very significant” on the entire iron ore sector and Fortescue Future Industries.

He said Fortescue, bolstered by the addition of the Iron Bridge project near Port Hedland, was on track for another bumper year after shipping a record 189 million tonnes of ore last year.

But with the company’s transition to green energy and resources, Dr Forrest warned there would be a renewed focus on frugality.

“We’re slimming down to get stronger for the battles ahead… going beyond fossil fuels,” he said.

“We will not slavishly produce more and more tons like our competitors seem determined to do. We will improve the value of every ton.

Fortescue’s net profit down 40%

Fortescue’s earnings fell in the 12 months to June 30 amid global economic disruption and weak iron ore prices.

Its after-tax net profit fell 40% to $9 billion.

Australia’s third-largest miner will spend $6.2 billion ($9.4 billion) on decarbonisation by 2030, an investment that Dr Forrest says will ultimately pay off for shareholders.

He said leaders who don’t cut emissions either have a vested interest or are “just lazy”.

“They need shareholders to push them and hold them to account,” he said.

“We have attached a remuneration to the transition to green. They all have to do it too.

Need more action from WA Government

He said there was also a need for more action from the Western Australian government, which has set interim targets for reducing its emissions, but not those of the broader economy.

The McGowan government has admitted it will likely have to import coal from NSW for years to come as it manages the impending closure of its own coal-fired power stations.

“I would say they really smoke high quality drugs and they should rethink that,” Dr. Forrest said.

Returning to the helm in May following the resignation of former chief executive Elizabeth Gaines, Dr Forrest said he was in no rush to install a new iron ore boss.

“I came back because we are going through this phenomenal transition period,” he said.

“We have some really great people… I can say we’re in no rush but I’m delighted with the level of the bid.”

-PAA