The Rio Tinto Limited (ASX: RIO) share price has drifted lower in recent times. This comes following tough trading conditions for the mining giant, particularly with the plunge in iron ore prices.

At Friday’s closing bell, Rio Tinto shares finished the day 0.83% higher at $90.25. Despite the uplift, its shares have sunk close to 10% since this time last month.

What’s dragging Rio Tinto shares through the mud?

Investors have been selling off Rio Tinto shares following the mining giant’s third-quarter results released in mid-October.

Rio Tinto advised it had another difficult 3-month period as it struggled to deal with COVID-19 challenges.

Operationally, Pilbara iron ore shipments grew just 2% to 83.4 million tonnes over the prior corresponding period (Q3 FY20). Other commodities such as bauxite, aluminium, mined copper, titanium dioxide slag, and iron ore pellets and concentrate all dropped production targets.

Most notably, iron ore – the primary force fuelling Rio Tinto’s growth — saw its price recede in the second half of 2021.

In May, the steel-making ingredient reached an all-time high of US$229.50 per tonne. The Rio Tinto share price accelerated on the back of bumper revenues over the period.

However, a slowdown in Chinese demand amid political pressure has led iron ore prices to tumble. Currently, iron ore is fetching US$92.01, a drop of 43% since the start of the calendar year.

Chinese lawmakers introduced new rules for its steel producers in an effort to curb reliance on Australian iron ore. Steel mills were instructed to limit 2021 output to no more than 2020 levels, or face penalties. This is seen as an effort to curb reliance on Australian iron ore, and boost domestic supply and demand.

China wants its steel industry to halt iron ore production at roughly 1 billion tonnes for 2021. Consequently, Chinese crude steel production has dropped 13% in August, 12% in September, and 21% in October – the biggest amount since March 2018.

China has also increased its efforts to close down some domestic factories to achieve carbon reduction targets. In addition, the country is seeking alternative resources to maintain production.

What do the brokers think?

A number of brokers weighed in on the Rio Tinto share price after the release of its latest performance report.

Analysts at Goldman Sachs cut its price target by 1.1% to $121.00. UBS had a more bearish tone, reducing its outlook by a sizeable 6% to $79.00.

International investment firm Credit Suisse dropped its rating by 3.6% to $106.00. Based on the current share price, this implies an upside of around 17%.

Rio Tinto share price snapshot

A challenging 12 months has led the Rio Tinto share price to fall almost 10% and this year to date it’s down by more than 20%. Its shares have steeply declined since the release of its FY21 half-year results in late July

On valuation grounds, Rio Tinto commands a market capitalisation of roughly $33.50 billion, and has approximately 371.22 million shares outstanding.

The post Why has the Rio Tinto (ASX:RIO) share price fallen in a hole over the past month? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Why China’s property sector had a huge impact on ASX iron ore miners: expert
• Which ASX sector is the biggest dividend payer so far this year?
• Own Rio Tinto (ASX:RIO) shares? Here’s why the miner just bought into this battery maker
• Could the Rio Tinto (ASX:RIO) share price be set to leap 25%?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Next week will be a big week for the Webjet Limited (ASX: WEB) share price.

The online travel agent is scheduled to hand in its highly anticipated half year results on Wednesday 24 November.

Ahead of the release, I thought I would look to see what the market is expecting from Webjet.

What should you expect from Webjet’s results?

Webjet is widely expected to release a much-improved result for the six months ended 30 September. However, it is likely to be far too soon for a return to profit.

For example, Goldman Sachs is forecasting a 611% increase in total transaction value (TTV) to $668.6 million, revenue of $52.5 million, an EBITDA loss of $13.4 million, and a net loss after tax of $35.5 million.

The broker, which has a buy rating and $7.00 price target on Webjet’s shares, also expects the company to finish the period in a strong financial position despite its loss. Goldman expects the company’s net cash position to be at $117 million.

What else is being said?

The team at Citi are a little more cautious and have warned investors that Webjet’s costs could negatively surprise.

Citi commented: “Webjet reports 1H22 results on the 24th of November. The key areas of interest for us in the result are: Near term costs — We estimate the market is underestimating B2B costs in 1H22. The market is implying ~$40 million for the half which implies zero growth in cost base from FY21 despite the elevated activity.”

Its analysts have a neutral (high risk) rating and $6.35 price target on the Webjet share price.

Is the Webjet share price a buy?

Opinion remains extremely divided. While Goldman clearly sees a lot of value in the Webjet share price, Citi continues to sit on the fence with its neutral rating.

It is also worth noting that Webjet is one of the most heavily shorted shares on the Australian share market. This appears to be an indication that there is a group of investors out there that are convinced the company’s result will disappoint. Though, it is worth acknowledging that if they are wrong and Webjet impresses, they could quite easily get caught up in a short squeeze.

Time will tell what happens, but it certainly will be worth watching Webjet’s shares very closely next week.

The post Why all eyes will be on the Webjet (ASX:WEB) share price next week appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Is the Webjet (ASX:WEB) share price a buy ahead of its half year results?
• Why are Webjet (ASX:WEB) shares still being shorted in November?
• These are the 10 most shorted ASX shares
• 2 ASX shares that may be too good to ignore

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Lovisa Holdings Ltd (ASX: LOV)

According to a note out of Macquarie, its analysts have upgraded this fashion jewellery retailer’s shares to an outperform rating with an improved price target of $25.00. The broker notes that Lovisa has appointed a very experienced CEO. Macquarie feels this will help with its expansion into China and India, where it sees potential for a significant store network. The Lovisa share price ended the week at $22.82.

Rio Tinto Limited (ASX: RIO)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $133.00 price target on this mining giant’s shares. The broker notes that Rio Tinto has taken a number of steps that improve its ESG credentials. This includes a new start-up called Resolve and low-carbon aluminium production in Canada. Outside this, the broker believes the miner is generating strong free cash flows despite the weakness in iron ore prices. The Rio Tinto share price was fetching $90.25 at Friday’s close.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Morgans have retained their add rating and lifted their price target on this wine giant’s shares to $14.06. This follows news that the company is acquiring Frank Family Vineyards for $432 million. Morgans notes that this acquisition will fill a key cap in its portfolio. The broker also expects the deal to support Treasury Wine’s margin expansion plans. The Treasury Wine share price ended the week at $12.01.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• The Treasury Wine (ASX:TWE) share price popped some corks to a new 5-week high today
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• Why Crown, Mineral Resources, Sonic, and Treasury Wine are charging higher
• Which ASX sector is the biggest dividend payer so far this year?
• Why Altium, Evolution, Sonic, and Treasury Wine shares are storming higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in financial services giant AMP Ltd (ASX: AMP) edged 1.73% lower today to finish trading in the red at $1.14.

That continues an extended run into the red for AMP, having lost 3% this past week, and a further 27% this year to date.

The question on everyone’s mind is whether or not AMP shares can recover to their 2018 highs of over $5 a share. So – is there still hope for the AMP share price?

What are the experts saying?

Analysts at investment bank JP Morgan reckon the funds from the sale of AMP’s 19% stake in Resolution Life may be actually needed to separate AMP from AMP Capital.

Whilst it acknowledges this isn’t a poor use of the funds, the firm is worried there may be leakages and inefficient use of capital, especially given AMP’s current legal troubles.

The firm says that “[its] concern is some capital may disappear to service other needs, for example class actions”.

It also states that the prospects for AMP rest in “being able to stabilise AMP AWM, successfully split Private markets without too many dis-synergies, grow the bank and resolve class actions / regulatory issues without much additional cost”.

Jarden Securities agrees with its fellow broker and also cautions investors about betting on AMP’s return to glory in the short term.

The broker also acknowledges that the sale of Resolution will beef up AMP’s balance sheet. In fact, it will probably boost its liquidity to $911 million, according to Jarden.

However, “with the transaction not due to settle until next year at least”, plus “an AMP capital demerger still ahead and strategic growth plans under its new CEO to be unveiled”, the firm says, “we believe capital management is unlikely to feature before August 2022, resulting in an FY22 EPS drag ahead of potential outer year offsets”.

Both Jarden and JP Morgan retain a neutral rating and $1.20 price target on the AMP share price. This is hardly inspiring, considering it implies an upside potential of just 6 cents per share.

Macquarie recently upped its valuation on AMP to $1.12 per share after restarting coverage on the company back in October at $1.10. The average price target on the group of analysts covering AMP is $1.26.

AMP Share price history

It’s been a long-winded roll downwards for AMP investors and their shareholdings since 2018. In that time, the company has lost over $5 per share or 77% in value.

AMP’s implication in the Royal Commission into Financial Services, where it admitted to reprehensible conduct, first started the steady decline in its share price.

In the Royal Commission, AMP was scolded for a number issues, including its poor financial advice practices. APRA imposed various conditions on the company from 2019 in response to the findings. However, AMP have also self-reported a number of issues since the hearing as well.

Since then it has also been embroiled in a number of follow-up and separate investigations which have only added more pressure from the top.

Most recently it settled $40 million in rectification and remediation costs after finalising a set of matters with APRA in regards to its superannuation business.

Over the past 12 months, the AMP share price is down 35%. However, it has regained some steam this past month and is slightly ahead of the S&P/ASX 200 Index (ASX: XJO), up 0.89% in comparison to the benchmark’s 0.21%.

The post Is there still hope for the AMP (ASX:AMP) share price? appeared first on The Motley Fool Australia.

More reading

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• Why AMP (ASX:AMP) shares might be in the spotlight next week
• Can AMP (ASX:AMP) maintain control of its $7 billion office fund?
• How to get more women trading ASX shares for a living
• AMP (ASX:AMP) share price climbs despite ratings downgrade

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and cut their price target on this banking giant’s shares to $81.74. This follows the release of Commonwealth Bank’s first-quarter update, which fell short of Goldman’s expectations. The broker notes that while CBA is the preeminent retail banking franchise, its update shows that it is not immune from profitability pressure. In light of this, it doesn’t believe its shares deserve to trade at such a premium. The CBA share price ended the week at $97.81.

Mineral Resources Limited (ASX: MIN)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $38.70 price target on this mining and mining services company’s shares. The broker remains bearish on Mineral Resources following an annual general meeting update which suggested that its margins could come under pressure due to iron ore price weakness. The Mineral Resources share price was fetching $41.38 at Friday’s close.

Xero Limited (ASX: XRO)

Analysts at UBS have retained their sell rating but lifted their price target on this cloud accounting platform provider’s shares to $88.00 following its half year results. While UBS was pleased with Xero’s performance during the half and expects its growth to accelerate in the second half, it isn’t enough for a change of rating. UBS continues to believe Xero’s shares are expensive in comparison to peers. The Xero share price ended the week at $151.00.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• Top broker says forget CBA (ASX:CBA) and buy Westpac (ASX:WBC) shares
• These were the worst performing ASX 200 shares last week
• Why Crown, Mineral Resources, Sonic, and Treasury Wine are charging higher
• What’s happening with the CBA (ASX:CBA) share price this week?
• Brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking to boost your income portfolio with some dividend shares, then you may want to look at the ones listed below.

Here’s why these ASX 200 dividend shares are rated as buys:

Coles Group Ltd (ASX: COL)

The first ASX 200 dividend share to look at is Coles. Over a century after opening its first store in Collingwood, Coles has grown to become one of the big two supermarket operators with over 800 supermarkets. In addition, it has over 900 liquor retail stores and over 700 Coles express stores.

But it isn’t resting on its laurels. As well as growing its network further, the company is aiming to make its operations more efficient. This is through cost cutting and its focus on automation with Ocado.

Citi is a fan of the company and recently upgraded its shares to a buy rating with a $19.60 price target. It is also forecasting fully franked dividends per share of 64.5 cents in FY 2022 and 71.5 cents in FY 2023.

Based on the current Coles share price of $18.01, this implies yields of 3.6% and 4%, respectively.

National Australia Bank Ltd (ASX: NAB)

Another ASX 200 dividend share for income investors to consider is NAB. While this banking giant’s shares may not have pulled back this month like some of the other big four banks’ shares have, they are still being tipped to provide strong total returns for investors in the coming years.

For example, the team at Bell Potter currently has a buy rating and $32.00 price target on the bank’s shares. Bell Potter was impressed with the company’s performance in FY 2021 and expects further growth in the next couple of financial years.

For example, the broker has pencilled in dividends per share of 132.5 cents in FY 2022 and then 134.5 cents in FY 2023. Based on the current NAB share price of $28.57, this equates to fully franked yields of 4.6% and 4.7%, respectively.

The post 2 ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares Goldman Sachs rates as conviction buys
• Why is the NAB (ASX:NAB) share price outperforming the other big banks over the past month?
• What’s going wrong for ASX 200 bank shares on Wednesday?
• Macquarie warns the next ASX market downturn could come as soon as February
• ASX 200 (ASX:XJO) midday update: Incitec Pivot and Mesoblast jump, NAB drops

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you want to build a balanced portfolio, having a few blue chip ASX 200 shares could be a smart move. But with so many to choose from, it can be hard to decide which ones to buy.

To narrow things down for you, I have picked out two ASX blue chip shares that are highly rated:

Goodman Group (ASX: GMG)

The first blue chip ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with operations across the world. Among its portfolio are warehouses, data centres, large scale logistics facilities, and business and office parks.

Goodman currently has $62 billion of total assets under management and over 1,600 customers globally. Among the latter are the likes of Amazon, Coles Group Ltd (ASX: COL), DHL, Showpo, and Walmart.

Demand for its properties has been strong and has underpinned sky high occupancy rates and stellar earnings growth over the last decade.

This demand is being driven by the success of Goodman’s strategy. That strategy has seen the company develop modern, high quality properties in key gateway cities around the world. It notes that this has shortened the distance between businesses and consumers and put its customers ahead of the market.

Morgan Stanley has been impressed with Goodman’s performance and appears confident its positive form can continue. It has an overweight rating and $26.50 price target on Goodman’s shares.

Sonic Healthcare Limited (ASX: SHL)

Another ASX 200 blue chip share to consider is Sonic. It is one of the world’s leading healthcare providers with operations in Australasia, Europe and North America.

Sonic currently employs more than 1,500 pathologists and radiologists, and more than 10,000 medical scientists, radiographers, sonographers, technicians, and nurses.

This strong network, and particularly its pathology business, has allowed the company to thrive during the last two years while many other healthcare companies have struggled. This has been due to its exposure to COVID testing and the resilient performance of its non-COVID testing businesses.

One broker that has been very impressed is Morgans. It remains confident on its outlook and currently has an add rating and $45.98 price target on Sonic’s shares.

The post 2 excellent blue chip ASX 200 shares to buy now appeared first on The Motley Fool Australia.

More reading

• Can the e-commerce boom keep helping the Goodman (ASX:GMG) share price?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Brickworks Limited (ASX: BKW) share price is underperforming the S&P/ASX 200 Index (ASX: XJO).

Brickworks shares are down 1.5% in November 2021, whilst the ASX 200 has gone up by 1.9%. Whilst 3.4% underperformance is not that much, it is a noticeable for just a two-week period.

What may be influencing the Brickworks share price?

Brickworks is a large shareholder of the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Changes of the share price of Soul Patts then changes the underlying net asset value of Brickworks.

Soul Patts shares have declined 3% since the start of November 2021 and it’s down 10% in the last month. The investment conglomerate has declined more than 20% from 28 September 2021.

Brickworks recently gave a presentation at the ASX CEO Connect on 12 October 2021. It noted how much of the overall inferred asset backing the Soul Patts shares were. Of the total Brickworks net value of $4.84 billion, the Soul Patts market value was $3.41 billion.

For completeness, other assets made up the rest of the value. Its 50% share of the industrial property trust had a net asset value of $911 million. Its building product operations have net tangible assets of more than $1 billion. The business also has $519 million of net debt.

Brickworks also noted that its building product asset value includes land, both operational and surplus, with a market value that is “significantly higher” than book value.

Do analysts think the Brickworks share price is good value?

Analysts are somewhat mixed on the business. There are a few neutral/hold ratings on the business.

For example, Morgans currently rates Brickworks as a hold with a price target of $25.72. The broker thinks that Brickworks’ property division is going to have a good FY22 and that building products can continue to go through a recovery.

However, there are others that are more positive. One of the most bullish is Citi, with a price target on the Brickworks share price of $30. Analysts at Citi are also positive on the building product markets in both Australia’s key markets and the US. Property is also a positive for Citi.

Expectations of property growth

Brickworks says that it’s currently undergoing a period of unprecedented development within the property trust, fuelled by structural tailwinds that are driving “strong demand” for prime industrial property.

The completion of pre-committed developments over the next two years will result in an uplift of around 60% in rent and leased asset value, from the current level.

Management said that the new property developments are increasingly sophisticated, incorporating features such as robotics, automation and multi-storey warehousing. The development of these advanced facilities has become a critical competitive advantage for many businesses in the new economy and “will continue to support the increasing value of the property trust”.

One of the current large projects is the new, huge Amazon facility in Sydney at its Oakdale West estate.

When Brickworks released its FY21 result, it said that in addition to the pre-committed developments, a further 227,900 square metres of gross lettable area (GLA) is available for development within the trust, and this provides further opportunity for growth in the years ahead. This may be able to assist the Brickworks share price in the future.

The post Why is the Brickworks (ASX:BKW) share price having such a lousy month? appeared first on The Motley Fool Australia.

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• Lockdowns are easing, but are CSL (ASX:CSL) shares out of the woods yet?
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Xero Limited (ASX: XRO) share price was undeterred by a less than positive broker note from Macquarie today.

By the end of the session, shares in the cloud-based accounting software provider were up 2.5% to $145.84. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained 0.28% today. Following the move, the Xero share price is now only 7.6% away from its 52-week high of $157.99.

So, what did Macquarie have to say about one of the largest listed tech companies in Australia?

US market, hard to get Intuit

Four days after Xero released its half-year results, Macquarie analysts have painted a bearish view of the Australian accounting platform.

Although the company posted year-on-year revenue growth of 23% to NZ$505.7 million, the broker retained its underperform rating on the Xero share price.

The negative viewpoint mirrors that of the market upon the release of Xero’s results on Thursday last week. On that day, shares in the company sank 6.2%. This was largely due to reality not being on par with expectations.

For Macquarie’s analysts, the problem revolves around the company being too focused on its North American market, according to the broker note. Simultaneously, there are concerns about the Australian and New Zealand market becoming saturated.

While Xero’s management is prioritising growth in the North American market, analysts at Macquarie believe the established competition might be too much to combat. The competition in question is US-based QuickBooks owner Intuit Inc (NASDAQ: INTU).

Here’s what Macquarie analysts had to say:

Given their size, capital and penetration of the US market, we think Xero will have limited success competing against QuickBooks in the US,

For these reasons, the broker tagged the Xero share price with a price target of $130. This would suggest a potential downside of nearly 11%.

What do other analysts think of the Xero share price?

On Friday, my Fool colleague James shared a different take on the Xero share price from another analyst. The team at Citi felt that the weakness in Xero shares presented a buying opportunity.

Although Citi expected stronger numbers from the ASX-listed tech company, it still went ahead and upgraded Xero to a buy. Alongside the rating upgrade, Citi set a price target of $160 per share on the software provider.

The post Xero (ASX:XRO) share price shrugs off Macquarie warnings of ‘limited success’ in US appeared first on The Motley Fool Australia.

More reading

• Xero (ASX:XRO) share price sinks: Citi says buy the dip
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• Why Liontown, Nearmap, Ramsay, and Xero shares are sinking today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The COP26 Summit on climate change action has been a source of enlightenment for many investors around the world, lifting the veil on how the world intends to tackle the contentious issue.

Whilst many nations have secured their “phasing down” of coal use from the summit, a report from the Investor Group on Climate Change (IGCC) has slammed the boards of several ASX-listed companies for their lack of climate action.

The IGCC is a collaboration of Australian and New Zealand institutional investors focused on the impact of climate change on investments.

Board’s of 15 companies such as Qantas Airways Limited (ASX: QAN), Woodside Petroleum Limited (ASX: WPL) and South 32 Ltd (ASX: S32) are said to “lack the skills and experience to lead the corporate transition to net zero emissions by 2050, and it is unclear how they are addressing this gap”, according to the IGCC.

The report, titled “‘A Changing Climate: what investors expect from company directors on climate” studies 15 of Australia’s most carbon intensive companies. It sets out investor expectations regarding climate change risk.

Whilst not price-sensitive, shares in South32 took a hit today and edged lower to finish 1.4% in the red amid the release of IGCC’s analysis.

Here are the details.

What does the IGCC report mean for South32?

The report comes as investors are becoming more and more aware of the role companies are set to play in the climate risk transition.

Even the big guns are joining the cause. A recent push sees some of the world’s top asset managers sign up to the “net zero asset managers initiative” that now has over 220 signatories and $57 trillion in assets under management.

Suffice to say, there is a huge wave of steam gathering behind climate change initiatives from the finance world.

It, therefore, comes as no surprise that several shareholder meetings have advocated board members be removed this year due to their failure in acknowledging climate change risks.

For instance, the IGCC refers to ExxonMobil which “lost two board seats due to growing concern by investors over the risk of failing to adjust its business strategy to address global efforts to combat climate change”.

Not only that, the IGCC submits that these 15 companies don’t see climate change as a material risk, instead viewing it as “a separate risk issue and not integrated into the overall company strategy”.

The group doesn’t name the company in isolation, but calls on companies such as South32 to “ensure investment confidence” by adopting a range of measures that would see its board “reflect the climate change challenges ahead”.

These include ensuring board representatives have expertise in:

• Skills in disruption and transition
• Ability to challenge existing business models
• Knowledge of climate change
• Change management skills

It also advocates for the company and its colleagues to integrate climate change fully into company strategy, including capital allocation decisions and risk management.

The IGCC also reckons remuneration should be reflective of the company’s climate change targets, and for companies to put their money with their mouth is when issuing public statements.

With regards to its analysis, IGCC’s director of corporate engagement Laura Hillis stated:

We are at a tipping point for the transition to net zero emissions in Australia as evidenced by recent announcements from the federal government. While promisingly, many of the companies assessed for this report have set net zero targets, it is unclear based on the findings of this report how prepared the boards of these companies are to lead the transition to net zero.

Hillis continued:

Boards that fail to recognise the risk of climate change and their role in driving the company transition to a low carbon business, will leave the company and investors exposed to unacceptable financial, strategic and market risks. Not to mention they will miss out on the opportunities on the decarbonisation pathway, including jobs for regional communities

Investors are sure to keep a close eye on this space as pressure mounts on ASX-listed entities to recognise the risks outlined by the COP26 summit and align with the principles set out there.

South32 share price snapshot

The South32 share price has soared over 58% in the past 12 months, after rallying as much as 42% this year to date.

These returns are ahead of the benchmark S&P/ASX 200 index (ASX: XJO)’s gain of around 17% in that time.

The post South 32 (ASX:S32) share price sinks amid increased climate risk scrutiny appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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