Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle speaks at a panel of regulators in Sydney, Australia, September 8, 2017. REUTERS/Jason Reed//File PhotoMELBOURNE, Oct 15 (Reuters Breakingviews) – Australian Prime Minister Scott Morrison must be wondering which climate criticism to tackle first. Queen Elizabeth II was caught on tape on Thursday calling political leaders uncommitted to attending the COP26 summit in Glasgow irritating. Closer to home, Guy Debelle, second-in-command at the Reserve Bank of Australia, warned on the same day of a growing risk that carbon-conscious investors would dump assets in the country.

The mounting pressure from multiple fronts could have the desired effect, but money often speaks loudest. Debelles comments in particular suggest the green clouds that are prompting companies to bow to shareholder concerns are blowing more forcefully into Canberra.

Just this week miner South32 (S32.AX) said it was paying more than $1.5 billion to buy 45% of a Chilean mine. The deal means a fifth of its underlying EBITDA will come from copper, a metal integral to the energy transition, up from zero. Boss Graham Kerr characterised it as actively reshaping our portfolio for a low carbon world. BHP (BHP.AX), (BHPB.L), the $140 bln giant that spun out South32 in 2015, is selling read more its oil-and-gas division to Woodside Petroleum (WPL.AX) for similar reasons.

Morrisons right-wing coalition government, though, has until recently rejected the idea of both setting a net-zero emissions target for 2050 and increasing an earlier carbon-reduction goal for 2030. Both are now being debated by the two coalition parties, which may unveil a plan next week. Theres danger of greenwashing read more , however.

Debelles warning might inject a bit of realism, reinforcing Treasurer Josh Frydenbergs recent comments about Australias reliance on overseas capital. So far, according to Debelle, Swedens Riksbank is one of the few to take climate-related action Down Under. In 2019, it dumped bonds issued by emissions-heavy states Queensland and Western Australia. Almost half the countrys A$800 billion ($594 billion) or so of federally issued debt is held abroad.

If more follow the Swedish central banks lead, it would at the very least drive up borrowing costs, and could make it hard for some to tap markets at all. With the next federal election coming soon, financiers may prove to be a pivotal constituency that casts the deciding vote.

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CONTEXT NEWS

– Reserve Bank of Australia Deputy Governor Guy Debelle warned in a speech on Oct. 14 that the likelihood of more significant divestment [from Australian assets because of climate risk] is increasing.

– He described climate change as a first-order risk for the financial system and outlined the work the countrys regulators are undertaking to improve the scope and comparability of data on the issue.

Editing by Jeffrey Goldfarb and Katrina Hamlin

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