• 25.85% of BP shareholders voted in support of shareholder-proposed resolution 24, requesting disclosures on capital discipline on oil and gas investments, filed by Nest, Greater Manchester Pension Fund, Merseyside Pension Fund, London CIV, Wales Pension Partnership, and PUBLICA, together with ACCR.

  • This is the highest ever vote of support for a management-opposed resolution at BP.

• 52.53% of shareholders voted against management-proposed resolution 23 to revoke previous climate-related reporting, which failed to reach the required 75% threshold to pass

• 52.88% voted against management-proposed resolution 22 to permit virtual-only AGMs, which failed to reach the required 75% threshold to pass

• 18.23% voted against resolution 4, the election of the Chair, Albert Manifold

Commenting on the results, Nick Mazan, Oil and Gas Strategy Lead, ACCR, said:

“Today’s result is unprecedented and demonstrates that investors are fed up with BP’s lack of capital discipline and its approach to shareholder rights.

“This collective show of force puts the new BP leadership team on notice: the company must show its planned surge in upstream investment can deliver shareholder value.

“Investors have seen the numbers – and the numbers don’t lie. It’s encouraging to see over a quarter of shareholders challenging management on upstream spending given the low returns on investment to date, coupled with the uncertain demand outlook for high-cost oil and gas as the world electrifies at speed. BP and other oil and gas companies would do well to take note of today's result and to reconsider their default to volume growth.

“In our view it was a mistake for BP to expect to push through measures to undercut shareholder rights without resistance. Investors have communicated loud and clear to the company that brushing shareholders aside is unacceptable in public markets.”

Diandra Soobiah, Director of Responsible Investment at Nest, said:

“This level of support signals that investors want firmer assurances on BP’s oil and gas capital discipline—and clearer evidence of how it safeguards long-term shareholder value.
We want BP to reflect on how it can reassure investors, through clear, practical and comparable disclosures, that increased oil and gas expenditure will improve performance and deliver value for shareholders.”

Cllr Doug McMurdo, Chair of LAPFF, said:

“We look forward to BP’s plan to satisfy investors who voted in droves for quality information on how its new oil and gas investments will deliver long-term value for shareholders. We are disappointed at the recent behaviours of the company - namely, weakening governance, reducing transparency, and rolling back climate commitments - and hoped that a change in leadership would have put a stop to the “BP reset” mantra pushed throughout 2025.”

Background

Under the UK Corporate Governance Code, where there has been a vote of 20% or above against management, the company should set how it will consult shareholders to understand the reasons behind the result. It should also report back on its consultations 6 months after the AGM, and again in the annual report, where it should explain the impact that shareholder feedback has had on board decisions or proposed actions.

At the same time, Legal & General Investment Management, a top-ten shareholder in BP, has announced its intention to vote for the same resolution, along with its intention to vote against management in relation to number of other resolutions on the company’s AGM ballot.

Commenting on this, Nick Mazan, Oil and Gas Strategy Lead, ACCR, said:

“Glass Lewis' recommendation to vote for our co-filed investor resolution, which L&G is now backing, will likely send alarm signals across the BP boardroom. There is now clear and growing evidence that investors want to see BP apply a disciplined approach to its upstream business and justify how its new oil and gas spending will deliver returns for shareholders.

"Given that the two major proxy advisors have now recommended a vote against management across multiple items on the ballot, BP’s board has serious questions to answer about how it manages shareholder dissent. A more productive approach to governance and shareholder engagement is required as we approach a monumental AGM for the oil and gas major.”

Background:

• Glass Lewis recommended voting against management on resolution 23 (to revoke previous climate reporting requirements introduced by majority-supported shareholder resolutions), resolution 24 (the institutional investor-filed resolution coordinated by ACCR), and resolution 4 (the election of Chair Albert Manifold.)
• L&G has made public its intention to vote against management on resolutions 22,23, 24 and 4.
• ISS, the other major proxy advisor, recommended voting against management on resolutions 22 (to move to virtual-only AGMs) and 23.

The Japanese Ministry of Justice’s Legislative Council met on 18 March to agree options for changes to the Companies Act that would make it harder for shareholders to file proposals at company AGMs. Options reportedly include abolishing the “300 voting rights” threshold, a key right of shareholders.

Last week at the Council for Japan’s Growth Strategy meeting, hosted at the Prime Minister's Office, Nippon Steel’s CEO Mr Eiji Hashimoto also advocated to remove this right. He called it “unreasonable, forcing unnecessary responses to proposals that are almost never passed,” saying “it should be abolished promptly.”

ACCR is concerned that scrapping the 300 voting rights threshold will significantly constrain the ability of even large institutional investors to file proposals. Very few investors have holdings in Nippon Steel over 1% and foreign investors filing proposals via the 1% threshold, individually or as a group, must make complex submissions under the Foreign Exchange and Foreign Trade Act prior to making a proposal.

Commenting on the statements by Nippon Steel, Martin Norman, Head of Stewardship, Global, ACCR, said:

“Large institutional investors have a mandate to invest over the long term. It is counterproductive to restrict their rights to file proposals on issues that are highly relevant to shareholders. This also goes against the spirit of Japan’s Corporate Governance Code, which prioritises ‘securing the rights and equal treatment of shareholders, and dialogue with shareholders.’

“Rules for filing shareholder proposals in Japan should align with international best practice, as was intended when they were designed. Other jurisdictions have developed effective checks and balances to ensure that shareholder proposals are appropriate while protecting shareholders’ rights.

“ACCR has filed and co-filed shareholder proposals in Japan, including with Nippon Steel, facilitating sincere and productive dialogue between companies and shareholders, for the benefit of all parties involved.

“Given ACCR’s recent history of engagement with Nippon Steel, we are concerned to see these comments from the company’s CEO, which create unnecessary friction between shareholders and Nippon Steel when investors in Japanese equities are seeking certainty during significant domestic and global upheaval. We believe Nippon Steel could use its privileged position, as one of only eight committee members at the Cabinet-level meeting, to advocate for matters which more clearly contribute to Japan’s growth strategy.”

Background

On the changes to the Companies Act

The Japanese Ministry of Justice’s Legislative Council is currently considering multiple proposed changes to the Companies Act which may negatively impact shareholder rights in Japan. A meeting to approve an interim draft of proposed changes to the Companies Act was held on 18 March. The interim draft is likely to be available for public comment from late March to early May. For further information on proposed changes to shareholder rights in Japan, please refer to Client Earth’s briefing.

On the “300 voting rights” threshold

300 voting rights equate to 30,000 shares at JPX-listed companies, including Nippon Steel. One unit of 100 shares equals one voting right. Under the Companies Act, shareholders may currently file a proposal if they continuously hold at least 1% of the total voting rights or at least 300 voting rights in the preceding six months.

On Nippon Steel’s recent advocacy regarding changes to shareholder rights in Japan

Nippon Steel also advocated in July 2025 for the same voting rights to be abolished, and for changes which could permit companies to limit discussion of shareholder proposals at AGMs based on the results of prior electronic voting or for procedural reasons.

Alex Hillman, Lead Analyst at ACCR said:

“Liz Westcott as CEO has an opportunity to stamp her own mark on Woodside and shape a company that adds value to shareholders as opposed to eroding value.

“Our analysis has shown that Woodside’s aggressive growth strategy has not translated into improved shareholder value. Like much of the oil and gas sector, Woodside demonstrates that more barrels do not automatically mean more value.

“Over the past five years, Woodside has doubled down on growth. Since 2020, the company has invested in around five billion barrels of new oil and gas supply, a strategy that is expected to lift production by roughly 370 per cent through the 2030s. Yet despite this, Woodside has consistently underperformed the sector, the Australian market and global equity markets, including over one-, three- and five-year periods.

“This includes during periods of global oil spikes such as with Ukraine.

“The evidence is clear: exploring for and developing conventional upstream projects has eroded shareholder value at Woodside.^[1] Continuing with this strategy is unlikely to deliver the shareholder returns that investors prioritise.

“Investors will be hoping that Westcott can be a circuit breaker on Woodside’s habit of pursuing high-capex, marginal fossil fuel projects. While an internal successor, she has an opportunity to start focusing on better capital returns.

“Woodside has an opportunity to move beyond rhetoric with capital discipline and genuinely prioritise its shareholders. The board and the new CEO can now rethink the value destructive Browse project, which is more expensive than 70% of competing potential new gas supplies around the world, as well as the expansion of Louisiana LNG.”

Total shareholder return of Woodside has consistently underperformed the local market, global market and global sector

In 2021, ACCR commenced landmark proceedings in the Federal Court alleging that Santos Ltd breached provisions of the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

Last month the Federal Court dismissed those claims.

Commenting on ACCR’s decision to appeal, Brynn O’Brien, Co-CEO of ACCR said:

“This case concerns fundamental legal standards that apply to all businesses in Australia responding to climate change, and which are central to the integrity of market disclosures. The legal issues raised in the judgment warrant clarification by an appellate court.

“In our view, the judgment sets the bar for corporate communication about climate commitments well below market and investor expectations. We think it increases the burden on investors to interrogate the full context in which claims are made, and the assumptions, uncertainties, and emerging technologies that may underpin them.

“Businesses doing hard, evidence-driven work in the energy transition need clear guidance on the standards governing climate disclosures.

“ACCR has engaged the specialist corporate and consumer law team at Webb Henderson on appeal, and will continue to be represented by our counsel team Noel Hutley SC, Sebastian Hartford-Davis, Jerome Entwisle and Zoe Bush. We thank the Environmental Defenders Office (EDO) for their professionalism, dedication and effort in the case at first instance.”

Background

Court file access: To request a copy of the Notice of Appeal please contact the NSW Registry of the Federal Court by email at nswreg@fedcourt.gov.au or by phone on 1300 720 980, providing the proceeding reference (Matter No NSD414/2026 ACCR v Santos Ltd) and follow the Registry’s instructions.

The resolution asked Shell to justify the assumptions behind its LNG growth strategy and explain how it’s consistent with the company’s climate commitments.

It was filed by Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, which have combined assets under management of US$86 billion.

Nick Mazan, Oil & Gas Strategy Lead, ACCR, said:

“While Shell has produced a more sophisticated document than its previous LNG Outlooks and also made some important concessions, including that LNG utilisation may fall during periods of low price, it continues with fundamental flaws that we’ve seen in Shell’s previous LNG disclosures.

“It does not explain how LNG will outcompete other sources of energy – like renewables – which are cheaper and faster growing. For example, outcompeting renewables for electricity would require gas to be priced below $5/MBtu, but all of Shell's new projects cost more than that.

“Industrial demand remains a central component to Shell’s view of natural gas demand growth. Despite this being an area of engagement for investors, it's disappointing not to see a stronger focus on this apparent driver of demand, and instead a focus on more marginal demand drivers such as buildings and transport.

“In terms of financial resilience, Shell invests in infrastructure that will produce LNG for decades. Yet it is only disclosing LNG contracting information to 2029. Its most aggressive low-cost sensitivity still only applies low costs from 2036 - leaving a gap from 2030 to 2035 where Shell says little about the resilience of its portfolio.

“Shell fails to see that LNG is a risk to energy security. There have been two major geopolitical crises this decade that have caused LNG price spikes and exposed LNG as an unreliable energy source in consumers’ eyes. Shell has not explained how LNG’s reputation as an expensive fuel can be rehabilitated.

“Shell continues to see LNG as its largest contribution to the energy transition, however, given the relative emissions of LNG, it remains unclear how this is compatible with its 2050 net zero ambition.”

The case contended that Santos Ltd had engaged in misleading or deceptive conduct in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

Commenting on the Court’s reasons for dismissing the case, Brynn O’Brien, Co-CEO of ACCR said:

“This case was always about market integrity and ensuring rigour in disclosures.

“Santos is immensely capable of long-term planning and analysis, and investors expect that expertise to be applied to climate risk and mitigation.

“This was the first court case in the world to test a company’s net zero claims, and it has helped drive significant improvements in climate reporting in the Australian market and internationally. It is disappointing that, in our view, the Court’s decision has not reinforced these advancements.

“Santos argued, and the Judge accepted, that it was not misleading in the circumstances for Santos to say:

• ‘clean fuel’ in relation to gas to convey that gas is ‘cleaner than coal and diesel’ on consumption;
• ‘zero emissions hydrogen’ to convey ‘hydrogen produced from natural gas with CCS and offsets’;
• it had ‘a realistic roadmap, real activities and a plan to achieve net zero by 2040’ in the context of announcing a ‘long-term target that predicts what Santos can do if markets, technologies and regulatory regimes emerge as anticipated’.

“While we respect the judgment of the Court on this matter, and accept the findings that Santos did not engage in wrongdoing, our view is that the nature of this clarification of Australian consumer and corporations law puts an enormous burden on investors to interrogate the true meaning of corporate disclosures, including ambiguous language and assumptions.

“This was an important case. Whether the ruling ultimately helps or hinders companies trying to convince investors of their climate strategies remains to be seen. We will take time to review it carefully before considering next steps and our options.”

Background

In 2021, the Australasian Centre for Corporate Responsibility (ACCR) represented by the Environmental Defenders Office along with Noel Hutley SC, Sebastian Hartford-Davis, Jerome Entwisle and Zoe Bush, commenced landmark proceedings in the Federal Court alleging that Santos Ltd breached provisions of the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

This was the first court case in the world to challenge the veracity of a company’s ‘clean energy’ claims and its pathway to net zero.

The key allegations of misleading and deceptive conduct concerned three major areas:

• representations that Santos is a producer of “clean energy” and that natural gas is a “clean fuel”.
• representations that hydrogen produced by Santos from natural gas with carbon capture and storage (blue hydrogen) is “clean hydrogen” and “zero emissions hydrogen”.
• representations that Santos had a clear and credible pathway to ‘net zero’ by 2040.

The Court heard the matter over three weeks in October, November and December 2024.

The ruling can be found at : https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/2026fca0096

Where: Court Room 18C, Federal Court of Australia, 184 Phillip Street, Sydney NSW 2000.

When: 9.30am, Tuesday 17 February 2026.

Video streaming: If you wish to observe the delivery of judgment, we recommend making a request via email to the Federal Court nswreg@fedcourt.gov.au and include reference to the proceeding number (NSD858/2021).

Court file access: To request a copy of court documents contact the NSW Registry of the Federal Court by email at nswreg@fedcourt.gov.au or by phone on 1300 720 980, providing the proceeding reference (Matter No NSD858/2021 ACCR v Santos Ltd) and follow the Registry’s instructions.

Background

In 2021, the Australasian Centre for Corporate Responsibility (ACCR) commenced landmark proceedings in the Federal Court of Australia alleging that Santos Ltd breached provisions of the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

This was the first court case in the world to challenge the veracity of a company’s ‘clean energy’ claims and its pathway to net zero.

The key allegations of misleading and deceptive conduct concern three major areas:

• representations that Santos is a producer of “clean energy” and that natural gas is a “clean fuel”.
• representations that hydrogen produced by Santos from natural gas with carbon capture and storage (blue hydrogen) is “clean hydrogen” and “zero emissions hydrogen”.
• representations that Santos had a clear and credible pathway to ‘net zero’ by 2040.

The Court heard the matter over three weeks in October, November and December 2024.

Media contact:
Kate Sieper (AU) - M +61 466 745 615

Fork in the road examines Woodside’s pursuit of an aggressive growth strategy across its FID projects since 2020, finding that while the company has increased production, it has not delivered value for shareholders. As Woodside searches for a new CEO following Meg O’Neill’s departure, the report recommends that shareholders engage with Woodside’s board on a refreshed capital allocation strategy that emphasises greater returns.

Key findings include:

• At this point in time, ceasing oil and gas exploration and development would generate almost $3 billion more NPV than a business-as-usual strategy for Woodside.
• Woodside’s four major oil and gas projects – Sangomar, Scarborough, Trion and Louisiana LNG – that reached FID since 2020 have eroded $3.5 billion of value (NPV), despite the projects collectively increasing scope 3 emissions by 2.5 GtCO2e (Woodside’s share of these emissions is 1.4 GtCO2e).
• Woodside has consistently underperformed the ASX100, MSCI World and MSCI World Energy indices across a three-, five-, ten- and 15-year period.
• Woodside has not made a material exploration discovery in 20 years, since Pluto (2005/06).
• Woodside has significantly increased its exposure to LNG at a time when there are risks of oversupply and uncertain demand, which may affect the financial performance of the Scarborough and Louisiana LNG projects.

Commenting on the research, Alex Hillman, Lead Oil and Gas Analyst, ACCR, said:

“Under Meg O’Neill’s leadership, Woodside succeeded in increasing production, but it failed on delivering strong shareholder returns.

“Woodside’s recent projects have eroded value and its upcoming projects look even more underwhelming. Its LNG projects are high cost, its gas projects are uncompetitive and its largest oil project is immaterial. Despite spending half a billion dollars each year exploring for new oil and gas, Woodside hasn’t made a meaningful new discovery in 20 years.

“Woodside has shown that more oil and gas production does not equal more value. With the search for a new CEO underway, now is the time for investors to engage with Woodside’s board on a strategy that increases returns.

“Now is a good time for investors to ask Woodside to recalibrate its investment assumptions and dramatically pull back on its exploration program. Woodside should also stop rewarding executives for production growth that doesn’t also improve shareholder value.

“Investors can drive an honest conversation about Woodside’s sustained underperformance and help prevent Woodside investing in more unattractive projects.”

Nick Mazan, Oil & Gas Sector Strategy Lead, ACCR, said:

“By cutting its shareholder distributions while continuing to funnel capex into the upstream business, BP doesn’t appear to have shareholder interests at heart.

“Shareholders want to see returns from oil and gas companies, particularly when the longer-term outlook for oil and gas is so uncertain. Axing the share buyback programme could be sign that BP doesn’t have confidence in the market outlook or its operating assets.

“While the pivot back to oil and gas has been justified by scapegoating the low carbon business, our analysis shows that the upstream business has been the source of 75% of disposal losses and impairments since 2020.

“BP’s upstream capital allocation is a cause for concern. Over the past 5 years the company has invested $22bn in the upstream business, which will deliver less than $1bn under forward prices. For example, last year, BP made a final investment decision on Tiber, a $5 billion oil project, despite data from Rystad Energy showing that it’s more expensive than 81% of competing oil projects. Looking forward does not offer much promise for shareholders either, with BP’s pre-FID portfolio not having a competitive advantage.

“Long-term investors want to see BP taking a genuinely disciplined approach to capital allocation to protect shareholder value.”

The note comes ahead of BP’s Q4 2025 earnings tomorrow, where the oil and gas major is expected to report impairments of $4-5 billion in its transition business. While these impairments are material, this represents less than 10% of BP’s disposal losses and impairments since 2020.

Most of the impairments since 2020 relate to either project cost overruns and delays, or the company’s exit from its Russian oil business, the research finds. Effective project execution is critical for projects to be delivered on budget.

Last week, institutional investors filed a shareholder resolution calling on the company to demonstrate how its surge in upstream spending, announced last year in its strategic reset, will deliver value for shareholders. Part of the resolution asks BP to disclose how it accounts for cost overruns and delays in project schedules, and how they are integrated into the investment framework, given the poor historical track record across the industry.

Today’s note is consistent with past ACCR research showing that value in the oil and gas sector has been materially eroded by its upstream investments. For example, BP’s $22 billion investment in new conventional oil and gas projects over the past six years has only created $0.9 billion in shareholder value under forward prices.

The note can be viewed in full here.

Nick Mazan, Oil & Gas Sector Strategy Lead, ACCR, said:

“BP seems to be pointing to a cracked window while the foundation of the house is quietly sinking. The attention given to the recent impairments in BP's transition business is misdirected, when the upstream business deserves just as much discredit. Increasing capex in an underperforming business like oil and gas makes little sense to investors who would benefit more from the company showing capital discipline across its whole business, not just renewables, especially at a time when the demand outlook for oil and gas is so uncertain, and supply is expected to outstrip demand over the coming few years.”

This page contains the resolution and supporting statement.

Special Resolution

Shareholders direct the Company to disclose how it promotes a disciplined approach to capital expenditure in order to generate an acceptable return on capital for each new material oil and/or gas project of the Company (‘Project’).

Such disclosures shall include an explanation of whether and how the Company:

1. assesses the relative cost competitiveness of each Project;
2. accounts for cost overruns and delays in project schedules; and
3. demonstrates how continued exploration capex creates value for shareholders.

These disclosures shall be made, to all Shareholders, by no later than the 2027 Annual General Meeting and shall include the principal criteria, data sources, methodologies and assumptions used to underpin these claims with reasonable detail, but without disclosing any specific matters which are commercially sensitive.

Supporting Statement to Special Resolution

This proposal seeks enhanced disclosure for BP shareholders, allowing them to better assess whether and how the company’s investment decision-making promotes disciplined capital allocation.

Shareholders have legitimate reason to question BP’s approach to capital allocation due to its long-term relative underperformance, even within a materially underperforming sector. The MSCI World Energy Index has delivered 116% lower returns than the MSCI World Index over the last ten years and lower returns than all bar one other MSCI sector. BP has further underperformed the MSCI World Energy Index over three, five, ten, 15 and 20 years.^[1]

Against this backdrop, it is further cause for concern to shareholders that the Company now plans to grow its upstream investment. From 2022 to 2024, BP allocated $9 billion^[2] p.a. of capex to its upstream business, which is about 60% of its total capex.^[3] Following the strategic reset announced at the 2025 Capital Markets Day (CMD), this is due to increase to around $10.5 billion p.a., or 75% of all capex.^[4]

A disciplined approach to capital expenditure is critical to ensuring that the Company limits its investment to projects that provide adequate returns to shareholders in the future. While the Company acknowledges the importance of capital discipline, it is unclear how this is being integrated into upstream investment decision-making. The disclosures sought by this shareholder proposal therefore aim to provide greater clarity.

There is no one way to ensure a disciplined approach to capital expenditure, rather it is important that the Company demonstrates to shareholders how, across a broad range of approaches, profitability is prioritised. Currently, the Company primarily relies on commodity price assumptions and hurdle rates to demonstrate its resilience. However, the prices currently applied in the investment framework are 16% above the forward market price.^[5] As such, this proposal seeks to improve disclosure of the company’s approach to capital discipline with particular reference to three key elements of the investment framework.

Cost-competitiveness

A pre-FID project’s position on the cost curve is an important measure of its resilience and competitiveness in a global, liquid market. Projects higher on the cost curve are at higher risk of value erosion under a lower price environment. BP’s current disclosures do not indicate how the Company’s capex decisions account for a project’s relative cost-competitiveness. This is despite a shareholder proposal supported by BP and over 99% of its shareholders in 2019,^[6] which stated in the supporting statement that the Company should consider the “potential return on investment and consideration of their competitive positioning” when making FID on new material oil and gas projects.^[7]

ACCR research finds that BP’s gas assets are, on average, more expensive than 76% of global pre-FID supply, and its pre-FID oil assets are more expensive than 53% of global pre-FID supply.^[8] This indicates a significant risk of value erosion for shareholders by BP sanctioning projects that are not competitively advantaged, suggesting a need for greater transparency from the company as to how it assesses project competitiveness when making FIDs. More recently, the sanctioning of the $5 billion Tiber project is a demonstration of the salience of this risk, with this project being more expensive than 81% of all unsanctioned oil projects, according to data from Rystad.^[9]

Project execution

Research consistently shows that poor project execution is prevalent in the oil and gas sector, with studies indicating that projects range from an average of 17% to 59% over budget.^[10] It is not clear from BP’s disclosures:
a) whether its track record of project execution is in line with its industry;
b) how project execution assumptions based on its track record are integrated into investment decision-making.

If BP’s investment framework does not use realistic assumptions about the prospects of its projects incurring cost and schedule overruns, this could cause it to systematically overvalue pre-FID projects. ACCR’s research shows that if BP is not integrating assumptions around project execution, such as cost overruns and project delays, then it could be overvaluing its conventional pre-FID assets by 40%.^[11]

Exploration

Over the past three years, BP has spent an average $1.4 billion per year on conventional exploration,^[12] and at its 2025 CMD it announced a plan to "reload the exploration hopper”.^[13] Yet BP's rationale for continued exploration capex is unclear when viewed against the long-term, global trends in oil and gas exploration; and against its own exploration track record.

It is more important than ever that shareholders have good oversight of exploration expenditure. Since 2000, the average dollar that the oil and gas industry has spent on conventional exploration has eroded 71 cents (ACCR analysis of Rystad Energy data).^[14] BP's conventional exploration has become less successful and more expensive over time, with ACCR research showing that the Company’s conventional exploration success rates have halved for licenses awarded since 2010, while its discovery costs have been growing.^[15]

It is not clear from BP’s disclosures whether the Company’s investments in exploration perform any better than the sector, or whether its exploration capex creates or erodes value for shareholders.

BP is under pressure from investors due to its long-term underperformance. ACCR research shows that BP’s total shareholder returns (TSR) have underperformed both the market and its peers over three, five, ten and 15 years.^[1] As part of a “reset” announced in 2025, BP is increasing spending on its upstream business by 17%. However, investors remain unconvinced this addresses the root cause of its underperformance and want to see evidence of greater capital discipline.

The shareholder resolution is co-filed by UK and European pension funds, along with ACCR, including: Nest, which serves a third of the UK workforce, London CIV, Wales Pension Partnership, Greater Manchester Pension Fund, Merseyside Pension Fund, and PUBLICA. Together the co-filing group manages £191 billion in assets.

The resolution asks BP to show how it takes a disciplined approach to capital expenditure, in order to generate an acceptable return on capital for each new oil and gas project. The requested disclosures are to include:

• The relative cost-competitiveness of each project;
• How the company accounts for cost overruns and delays in project schedules; and
• A demonstration of how continued spending on exploration creates value for shareholders.

The investors filed the resolution following unsuccessful attempts to engage with the company.

Enhanced disclosures will give BP’s investors the insights they need to assess whether the company’s plans to increase upstream investments is a value-accretive strategy for them.

The resolution represents an opportunity for incoming CEO Meg O’Neill to demonstrate to shareholders that the company’s stated commitment to capital discipline is reflected in its investment decisions and strategy.

ACCR research shows that BP’s US$22 billion investment in new conventional oil and gas projects over the past six years has only created US$0.9 billion in shareholder value under forward prices.^[2]

The resolution and supporting statement can be viewed here.

Nick Mazan, Company Strategy, UK Lead, ACCR, said:

“Investors need transparency to assess whether BP’s new spending will create value - or simply repeat past mistakes. Growing upstream exposure without demonstrating clear capital discipline is a red flag for shareholders.

“Our research shows that the $22 billion BP poured into conventional oil and gas projects over the past six years has delivered limited value to shareholders. This track record gives investors every reason to question why this strategy would deliver better results now, particularly as future demand conditions for oil and gas are highly uncertain.

“Investors would be concerned if the new CEO, Meg O’Neill, doesn’t take the opportunity to genuinely reflect on the numbers and poor returns from oil and gas growth projects and whether increasing upstream capex will create more shareholder value.

“The filing of this resolution demonstrates that investors are not willing to passively accept profligate oil and gas spending and are willing to use their stewardship rights assertively to hold BP to genuine capital discipline.”

Diandra Soobiah, Director of Responsible Investment at Nest, said:

“BP has underperformed for the past decade, including the period they were prioritising oil and gas production. Now they have dropped their renewables strategy, investors need to be reassured that any expansion to their upstream oil and gas portfolio will be governed by robust capital discipline and generate sustainable returns.

“Nest has engaged with BP since 2023. We view this resolution is an appropriate escalation of our engagement strategy, driven by our commitment to ensure the companies we invest in are appropriately managing transition risk

“Our ask is for BP to make practical disclosures on how they will deliver disciplined capital allocation and long-term performance. Clear evidence and comparable metrics will help Nest, and all shareholders, assess whether the company’s new oil and gas projects will truly create value into the future.”

Alison Lee, Responsible Investment Manager at London CIV, said:

“The appointment of a new Chair and CEO is an exciting development for BP shareholders. This leadership change brings an opportunity for fresh thinking and a clear, objective review of the best paths to long term value creation. As a shareholder, London CIV would especially like to see stronger disclosures to ensure investors can clearly identify whether BP’s plans to increase upstream investment represent a genuinely value accretive strategy.”

A spokesperson for Greater Manchester Pension Fund said:

“The world needs a managed decline in fossil fuels and spending more money on fresh oil or gas reserves without demonstrating clear capital discipline raises concerns for shareholders.”

Cllr Brenda Hall, Chair of Merseyside Pension Fund Pension Committee, said:

“The appointment of a new Chair and Chief Executive marks an important opportunity for BP shareholders. New ideas are clearly needed at the company, as is an objective investigation of the best pathways for creating shareholder value.”

Cllr Doug McMurdo, Chair, LAPFF, said:

“LAPFF would be seriously concerned if the new CEO, Meg O’Neill, doesn’t reflect on the poor returns from oil and gas growth projects and whether increasing upstream capex will create more shareholder value”

About Greater Manchester Pension Fund

Greater Manchester Pension Fund is the largest LGPS fund in the UK, managing over 30 billion pounds on behalf of approximately 400,000 members.

About London CIV

London LGPS CIV Ltd (‘London CIV’) is the investment pooling vehicle for London-based Local Government Pension Schemes (LGPS).

About PUBLICA

PUBLICA, the pension fund of the Swiss federal government and closely associated organisations, manages over 41 billion pounds on behalf of its 110’000 active members and pension recipients.

About Merseyside Pension Fund

Merseyside Pension Fund manages over 10 billion pounds on behalf of 153,000 active, deferred and pensioner members of the Local Government Pension Scheme (LGPS).

About Nest

Nest is the largest workplace pension scheme in the country, with more than 13 million members. That's one in three UK workers. By 2030, we expect that number to grow to half of the entire UK workforce. Nest invests £60 billion in assets on its members’ behalf.

About Wales Pension Partnership

The WPP is a collaboration of the eight Local Government Pension Scheme (LGPS) funds that cover the whole of Wales. Collectively, the WPP partner funds hold over £25 billion in assets under management, invested across a range of listed and private funds.

The decision follows Nippon Steel Corporation’s acquisition of U.S. Steel in 2025 and locks in approximately 90 MtCO₂ of emissions if the blast furnace operates for a full 20-year campaign life.^[1] In 2024, Nippon Steel committed approximately $US300 million to relining the No. 14 Blast Furnace ahead of acquiring U.S. Steel.^[2]

Commenting on the decision, Martin Norman, Investor Engagement Lead, ACCR said:

“With coal-free steelmaking an increasingly important factor in the American steel market, the decision to reline Blast Furnace No. 14 at Gary Works raises concerns for investors, who do not have clarity over U.S. Steel and Nippon Steel’s plans for managing the U.S. Steel blast furnaces imminently due for relining.

“Technology improvements from Japan that will increase efficiency are welcome, but decarbonisation targets from Japan also need to be brought to U.S. Steel. Decarbonisation targets for overseas assets should match domestic targets, with comprehensive transition plans outlining U.S Steel’s path to decarbonisation success.

“While Nippon Steel has expanded its decarbonisation ambitions by investing domestically in commercially ready solutions with significant emissions reduction potential, investors should engage constructively and critically with the company to ensure it applies a similar or greater level of ambition to the U.S. Steel assets.

“It is crucial that U.S. Steel secures its current and future competitiveness in an American steel market where low-carbon steel is already financially significant. Nippon Steel’s management of the U.S. Steel blast furnaces is a critical gauge of its ability to manage its whole portfolio’s emissions that investors need to watch closely.”

Brynn O’Brien, Executive Director of ACCR said:

“While BP has chronically underperformed the sector, Woodside has chronically underperformed BP.

“BP is right to be resetting its strategy and focusing on capital discipline to improve investor returns. However, Meg O’Neill is a curious choice in this context. Under O’Neill’s leadership Woodside has chased high-cost, marginal fossil fuel projects and not delivered satisfactory shareholder returns.

“The evidence is clear: exploring for and developing conventional upstream projects has eroded shareholder value at both BP and Woodside.[1] Continuing with this strategy will not deliver the shareholder returns that BP’s board says it is prioritising.

“At Woodside, O’Neill has overseen high-cost, high-emissions investments at a company that has delivered 1% p.a. total shareholder return (TSR) over 15 years and consistently underperformed its peers:

• sanctioned a high-cost oil project in the Gulf of Mexico. Its partner Pemex has faced a string of safety and financial challenges [2]
• acquired a high-cost, near-bankrupt LNG facility in Louisiana for over $1 billion.

“Woodside has been persistently unresponsive to shareholder concerns and under Ms O’Neill’s watch, has been the only company to suffer a majority vote against its climate plan. [3]

“At Woodside, O’Neill’s departure is an opportunity for a much-needed strategy refresh.

“Investors will be hoping that O’Neill’s departure is a circuit breaker on Woodside’s habit of pursuing high-capex, marginal fossil fuel projects, and is an opportunity to instead start focusing on better capital returns.

“Woodside has an opportunity to move beyond rhetoric with capital discipline and genuinely prioritise its shareholders. The board and the new CEO can now rethink the value destructive Browse project, which is more expensive than 70% of competing potential new gas supplies around the world, as well as the expansion of Louisiana LNG.”

Total Shareholder Return of BP, Woodside and the MSCI World Energy Index [4]

Background

[1]: ACCR, 2025, When growth no longer pays. In addition to this research, which addressed the value oil and gas companies can deliver by moving away from conventional exploration and upstream development, ACCR published research that addressed the need for greater capital discipline at BP (Moving BP from rhetoric to action on capital discipline) in late 2025.

[2]: Economist, 2023, Pemex is the world’s most indebted oil company.

[3]: In 2024, Woodside shareholders delivered the worst Say on Climate vote recorded against a company climate plan (58.4%), beating the previous record set by Woodside in 2022 (48.97%). In addition to a worsening Say on Climate vote, the company has also faced persistently poor votes from shareholders against the re-election of its Directors:

• 2023 – Ian Macfarlane receives the worst vote recorded against a Woodside Director (34.81%)
• 2024 – Chairman Richard Goyder receives the worst vote recorded against a Woodside Chair (16.61%)
• 2025 – Sustainability Chair Ann Pickard receives the worst vote recorded against a sitting Woodside Committee Chair (19.45%).

[4]: Total shareholder return for 3 and 5 years are the periods ending 30 September 2025. “O’Neill’s tenure” is from 16 August 2021 to 30 November 2025

“When growth no longer pays” assesses all the conventional oil and gas exploration and new projects the companies could invest in before 2035. It finds:

• ceasing exploration and development of new projects and returning cash to shareholders would create a collective US$78 billion uplift in net present value (NPV)
• across all ten companies, avoided exploration costs are the largest source of value
• all ten companies would be more valuable as a production company, than as an exploration and production company.

The financial case for exploration is weak and getting worse. On average, every $1 spent on global conventional exploration by the sector since 2000 has eroded $0.71c. Conventional exploration is five times more expensive and taking almost twice as long compared to three decades ago.

If all ten companies ceased developing new conventional projects, they would remain large oil and gas producers for decades, with cumulative production reducing by 10% to 2050, compared to continuing a business-as-usual strategy.

Commenting on the research, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“The clearest path to shareholder value for oil and gas companies today is not chasing new barrels – it’s getting out of the value erosive exploration business and curtailing new conventional projects.

“Exploration isn’t creating value - it’s destroying it and has been for 25 years.

“Every one of the ten oil and gas companies we assessed is more valuable as a production company, rather than an exploration and production company.

“If creating shareholder value is the aim then ceasing exploration should be considered.

“Even if these companies ceased developing new conventional projects they would remain large oil and gas producers for decades. Cumulative production would reduce by 10% to 2050. And $78 billion of shareholder value would be created.

“Many investors would prefer to see a company give cash back to shareholders, rather than reinvest it in value erosive projects, even if it meant production gradually decreased.

Commenting on the research, Nick Mazan, ACCR Oil and Gas Strategy Lead, said:

“The oil and gas sector is running out of road. Exploration is slower, costlier, and eroding value, while the market itself is shrinking as more sectors electrify.

“This industry has delivered half the returns of the rest of the market over the last 10 years and continuing to plough shareholder money into upstream exploration and new projects will not change that.

“Oil and gas companies continue to underestimate the speed of technological change. The current oversupply in the market can largely be attributed to this, with little hope of improving circumstances in the future.”

“Moving BP from rhetoric to action on capital discipline” finds BP could be US$11 billion more valuable if it stopped exploration and development relating to conventional oil and gas projects and focused on production only.

BP’s total shareholder returns (TSR) have underperformed both the market and its peers over three, five, ten and 15 years. At its 2025 Capital Markets Day, BP announced a “fundamental reset” of its strategy, pledging to grow long-term shareholder value. The company is reducing capex for its low-carbon energy business to less than $800 million per year, while simultaneously increasing upstream capex from $8.5 to $10 billion p.a and increasing exploration.

The research finds that BP’s conventional oil and gas portfolio awaiting Final Investment Decision (FID) is not cost competitive when compared to global supply. A change to BP’s upstream strategy – in particular, tightening its investment framework and ceasing conventional exploration – offers a more credible path to the value that shareholders expect.

Key Findings:

• BP's $22 billion of conventional greenfield capex sanctioned over the last six years has created limited value for shareholders. The estimated net present value (NPV) of these projects is $0.9 billion under forward prices.
• BP’s conventional pre-FID portfolio is not low on the cost curve. The company’s gas assets are, on average, more expensive than 76% of global pre-FID supply; and its oil assets are, on average, more expensive than 53% of global pre-FID supply.
• We modelled the impact of BP stopping exploration and the sanctioning of conventional projects, finding the company would be $11 billion more valuable and still be a major producer, with 400 million boe in 2050. This suggests BP is more valuable as a production company than as an exploration and production company.
• Globally, conventional exploration has been eroding value since the 1990s. BP's conventional exploration has become less successful, more expensive and less productive.
• BP’s investment framework risks misallocating capital into low value projects. Under BP’s price deck, and assuming no delays or cost overruns beyond Rystad’s estimates, the value of BP's conventional pre-FID portfolio is $6-8 billion. Under forward prices, and adjusting for typical cost and schedule slips, this same portfolio would be worth 80-85% less.

Commenting on the research, Nick Mazan, ACCR Oil and Gas Strategy Lead, said:

“BP has significantly underperformed the sector and market more broadly over the past three, five, 10 and 15 years. Increasing exploration and doubling down on upstream capex is not a turnaround plan, it’s a rerun.

“The $22 billion BP has poured into conventional oil and gas projects over the past six years has delivered limited value to shareholders. If BP was serious about a disciplined approach to capital expenditure, it would extend that discipline to its upstream business.

“Long-term investors want to see BP taking a genuinely disciplined approach to capital allocation to protect shareholder value through the energy transition.

“This research shows that growing upstream capex and expanding exploration is likely to be an irresponsible use of shareholder capital, the opposite of what is required from a 'fundamental reset'.

“BP’s pre-FID portfolio does not sit on the low end of the cost curve. The company’s high oil price assumptions, declining exploration success rates and rising discovery costs all increase the risk that sanctioning new projects could erode value.

“The rationale for continued exploration spending is increasingly unclear. BP’s exploration efforts have grown more expensive and less successful over time, raising serious questions about the value this can deliver for shareholders.”

Cllr Doug McMurdo, Chair of the Local Authority Pension Fund Forum (LAPFF) said:

“As long-term investors in BP, we want to see the company taking a genuinely disciplined approach to capital allocation to protect shareholder value through the energy transition. As part of the company’s ‘fundamental reset’, we expect bp to be able to explain how growing upstream capex and expanding exploration can truly be viewed through the lens of capital discipline.”

Harry Ashman, Senior Engagement Specialist, Robeco said:

“Investors are increasingly scrutinising the resilience of ongoing upstream and exploration spending as the energy transition marches on, and this report supports calls for further capital discipline in the oil and gas sector. It highlights an alternative path that could improve companies’ resilience, increase shareholder returns and reduce emissions. At Robeco, we remain committed to the net-zero transition to benefit our clients and create long-term value while balancing risk, return and sustainability; research like this demonstrates how these aims can be mutually reinforcing.”

Located in the Bowen Basin, Saraji East is a metallurgical coal mine awaiting Final Investment Decision from the BMA joint venture. The proposed mine is adjacent to BMA’s existing Saraji site and is expected to operate for around two decades and produce 110 million tonnes of coal.

The Queensland Government’s Environmental Impact Statement (EIS) indicates that the mine will generate around 18 million tonnes of direct emissions. The report estimates that 451 MtCO2e of scope 3 emissions^[1] will be generated from the project, primarily from use of the mine’s coal in steelmaking.

The recommendation is not final and the proposal for Saraji East will now go to the desk of Federal Environment Minister, Murray Watt, for further consideration.

Commenting on the announcement, ACCR Head of Engagement and Sector Strategy, Naomi Hogan said:

“Despite a state-level recommendation, there is no indication BHP will advance Saraji East toward development. Rising labour and energy costs, alongside the return of metallurgical coal prices to long-run averages, have squeezed BMA’s margins in Queensland. It is difficult to make the case that Saraji East would stack up financially.

“The recent decision to mothball Saraji South, among other mines, shows that Queensland coal operators are already facing significant economic challenges. Investors will rightly ask about Saraji East’s viability when nearby projects are being sunk by rising costs, tight margins and mounting transition risk.

“In a world where steelmakers are increasingly planning for low-carbon and coal-free technologies, greater scrutiny of any new potential coal investments is a must. BHP should clarify for investors how Saraji East aligns with its ambition to support lower-emissions steelmaking and reduce scope 3 emissions.

“Communities and workers in the region will require assurances from BHP that any future investment supports long-term economic resilience. Transition impacts are increasingly central to how investors assess project risk.”

Background

Earlier this year, BMA placed Saraji South into care-and-maintenance, due to economic challenges, raising further questions about long-term project economics in coal.

The world stands at a critical juncture. Current trajectories of global greenhouse gas emissions put us on a path toward temperatures that pose systemic risks. As an organisation dedicated to mitigating those risks - for investors, planetary systems, and people - our best work is collaborative, multi-jurisdictional, and focused on systems-level impact. A co-leadership model will enable us to achieve this more effectively.

Nick joined ACCR in July this year, leading ACCR’s multidisciplinary analytical and communications work. He brings experience at the intersection of climate, philanthropy, and legal strategy, with a background in legal practice, including as a barrister, in complex inquiries, public and environmental law, and public law teaching.

Howard Pender, Chair of ACCR, said:
“This change reflects ACCR’s commitment to strong, collaborative leadership as the organisation matures and tackles increasingly complex challenges. Brynn and Nick bring complementary skills and shared vision, and the board is confident this approach will position ACCR for even greater impact.”

Brynn O’Brien, Executive Director ACCR, said:
“I’m really excited about this next chapter of leadership with Nick. Co-leadership gives us the bandwidth and flexibility to take on more, stay connected across our work, and drive meaningful change in this crucial moment.”

Nick Kelly, incoming Co-CEO ACCR, said:
“I’ve been a huge fan of Brynn’s and ACCR’s work for years now. That view has been turbocharged since coming into the organisation earlier this year, so I couldn’t be more thrilled and humbled by the opportunity to work alongside Brynn to help ACCR have the impact the world needs in the second half of this critical decade.”

The sale appears to enable Malabar Resources to develop its Maxwell North coal mining project. Malabar Resources has announced future underground coal mining plans for the site acquired from BHP.

Commenting on the transfer, Naomi Hogan, Head of Engagement and Sector Strategy at the Australasian Centre for Corporate Responsibility (ACCR) said:

“BHP’s decision to sell land at Mt Arthur, and enable ongoing coal mining and burning post-2030, is a concerning backflip that will have impacts on investors, workers and the environment.

“We are concerned that investors have not received a proper level of transparency here, with BHP saying very little about the likely and significant additional emissions that will be created due to this transfer.

“The fanfare BHP brought to its 2022 announcement of a 2030 Mt Arthur closure – which demonstrated a balance between sound economic management, emissions reductions and fair workforce planning – now appears to have been hollow signalling.

“BHP gave the market the impression it had abandoned plans for coal divestment at the Mt Arthur site, but it is now revealed that the company has not given up on the proceeds from the remaining coal resources sitting underneath.

“Investors have long taken an interest in the site closure and emissions reductions at Mt Arthur, using it an important case study in just transition principles for workers, but today’s decision will test confidence in BHP’s strategy.

Commitment Issues: Shell's LNG lobbying risks undermining its Paris pledge identifies numerous instances of Shell lobbying in key emerging markets for higher, long-term gas and liquefied natural gas (LNG) use – activities that do not appear aligned with Paris pathways or the company’s commitment to lobby in support of the Paris goals.

While investor pressure led to Shell incrementally improving its lobbying disclosures over the past year, the research shows this has not delivered investors with adequate insight into the extent and impact of the company’s lobbying. Its disclosures do not address the tension between Shell’s ambitious LNG growth strategy, which does not appear Paris-aligned, and the company’s commitment to lobbying in line with the Paris Agreement.

Key findings:

• Investor pressure has seen Shell incrementally improve its disclosures and acknowledge its lobbying engagement in emerging markets. However, investors still do not have adequate insight into the impact or Paris alignment of Shell’s lobbying, or the extent to which its lobbying supports and shapes strategy.

• The report analyses Shell’s long-standing lobbying in four emerging markets which are material for Shell’s gas and LNG business, and where Shell has recently added climate-related lobbying disclosures:

  • China: Shell used its scenario modelling to promote Paris-misaligned gas use to policymakers for more than a decade. Its scenario modelling likely influenced China to pursue a more expansionary gas policy during its 13th Five Year Plan (2016-2020). Shell continues to advocate for elevated Chinese gas use in its scenarios, but it is unlikely to maintain its influence given policy and technology headwinds.
  • India: Shell used its scenario modelling to increase its access to policymakers and funded a study which appears to have influenced policy for developing a domestic LNG trucking market. This is despite LNG trucking not having clear greenhouse gas emissions benefits in India.
  • Malaysia: Shell lobbied for long-term gas use directly and via the Malaysian Gas Association (MGA), where it is a key member. The MGA helped shape Malaysia’s National Energy Transition Roadmap and endorses its plan to significantly increase gas use while targeting net zero by 2050. This contradicts Shell’s modelling of Malaysian decarbonisation, developed with a government climate agency, which contains much less gas and more renewables.
  • Nigeria: Shell is extensively involved in shaping the government’s Decade of Gas policy initiative, which aims to make Nigeria “gas-powered” by 2030. By targeting large increases in gas production and consumption, it risks pushing Nigeria’s rapidly growing economy onto a heavy-emitting development pathway.

Commenting on the research, Nick Mazan, ACCR Oil and Gas Strategy Lead, said:

“While strong investor pressure has driven some improvement in Shell’s lobbying disclosures, it seems that investors are still unable to properly assess the Paris alignment of the company’s lobbying and its relationship to Shell’s strategy.

“Shell’s improvements to its disclosures have not adequately addressed the friction between its advocacy for gas and LNG growth, and its pledge to lobby in line with Paris.

“Shell’s LNG growth strategy is a gamble on LNG playing a major role in the energy mix of emerging markets. As such, the company may have an incentive to lobby for increased gas and LNG use at the expense of its commitment to Paris-aligned lobbying.

“It may well be the case that Shell will not materially change its Paris-misaligned lobbying while its corporate strategy remains Paris-misaligned. Tackling the source of the inconsistency via ongoing scrutiny of Shell’s LNG growth strategy remains an important pathway for investors.”

Background

Over the last two years, ACCR has published extensive research and analysis that addresses Shell’s lobbying:

• Investor Bulletin: Shell expands lobbying disclosures, but picture still not clear
• Investor Bulletin: Shell’s lobbying disclosures make incremental improvements, but step-change is needed
• In the dark: gaps in Shell’s climate lobbying disclosures

Future-proofing Japanese utilities: The case for grid-scale battery investment shows that with price and technological barriers tumbling, the strategic deployment of grid-scale batteries also offers utilities a long-term revenue stream and supports a much-needed evolution of business models.

Japan’s regional electric power companies (EPCOs) and largest wholesale generator (J-POWER) appear increasingly misaligned with the country’s recent efforts to decarbonise its energy system. The utilities’ business models are built around centralised baseload demand, whereas renewables and decentralised supply have become progressively important to the grid.

With rising rates of curtailment – wasted renewable energy – in Japan, grid-scale batteries can provide more energy storage capacity and the flexibility to deploy it when needed.

The utilities covered in the research have a competitive advantage in the battery market, as they own most generation assets and grid infrastructure while having regional operational expertise. However, they need to act now to secure first-mover advantage.

Key findings

• Batteries are already capable of commercial viability in Japan – There are opportunities to earn above a 10% internal rate of return (IRR) via multiple revenue streams – capacity payments, energy arbitrage and ancillary services payments – supported by government subsidies.
• Battery costs are plummeting – The global levelised cost of electricity (LCOE) for battery storage dropped from US$300/MWh in 2018 to US$104/MWh in 2024. BloombergNEF (BNEF) analysis expects this to halve again by 2035. The cost of building and operating new batteries will soon be cheaper than the cost of running existing LNG plants in Japan.
• Deploying batteries will help Japan make the most of its growing wind and solar energy – Existing storage capacity, primarily provided by pumped hydro, is no longer sufficient as renewable generation grows. Market forecasts suggest a significant scale up of batteries, with BNEF estimating a tenfold increase in storage volume from 2023.

Commenting on the report, Martin Norman, Investor Engagement Lead, ACCR, said:

“Our report shows that an important window is now open for Japanese utilities on battery investment. The conditions for battery investment are favourable and with such a strong business case it is only a matter of time before there is broader commercial uptake.

“However, time is of the essence, making it crucial that investors engage with Japan’s electric utilities to ensure they are acting to guarantee a first-mover advantage.

“Electric utility companies in Japan, many of which are highly leveraged, remain focused on centralised baseload despite operating in a grid increasingly reliant on renewable energy supply. Investors are eager for more prudent capital allocation. The low cost of batteries, and their ability to contribute to Japan’s energy transition, offers big wins – if companies move now.

“Japan’s electricity utility companies must be considering grid-scale batteries in their decarbonisation and capital allocation decisions. If they aren’t, the question is, why not?”

Brynn O’Brien, ACCR’s Executive Director, said:

“NBIM is a clear leader in understanding and communicating the scale of climate-related risk. But there remains a widening gap between the systemic risk the fund itself describes and the scale of action it proposes in response.

“Much of the plan focuses on refining analytics, disclosure and engagement — all important tools. What’s missing is a shift from describing the risk to actively helping to reduce it. Managing exposure to risk is not enough when the risk itself threatens the long-term stability of markets.

“For a universal owner with a mandate to safeguard value for future generations, the fiduciary duty to manage climate related risk is inseparable from mitigation -- taking action to reduce the likelihood and severity of systemic climate risks. Fulfilling that duty means using influence to drive mitigation, not just monitor consequences.

“The fund’s commitment to increased scrutiny of corporate policy advocacy as it relates to climate change is new and very welcome, as is the explicit acknowledgement of voting against boards as an escalation tool. However, we continue to see critical gaps: the need for stronger and more transparent company stewardship, clearer thresholds for escalation where engagement fails, and a commitment to not finance new fossil fuel infrastructure. Leadership in this decade means using every available lever to help prevent the worst outcomes.”

Commenting on the vote, Brynn O’Brien, Executive Director at ACCR, said:

“A sizeable chunk of AGL’s shareholders have used their votes to keep the pressure on Australia’s largest corporate emitter over its climate strategy. Nearly 31% of shareholders voted against AGL’s Climate Transition Action Plan today, matching the vote against the plan the company presented in 2022.

“This sends an unambiguous signal to AGL’s board and executives that the company needs to do more to drive the energy transition. AGL must move quickly to deliver real emissions cuts and a more compelling strategy that seizes the opportunities of the energy transition.

“AGL is still not Paris-aligned and its slow pace risks holding back the entire country’s transition. The new CTAP leaves the company out of step with Australia’s newly announced 2035 emissions target.

“AGL’s plan, which proposes no further reductions in gas emissions for the next decade, gives little confidence that company leadership is up for making the hard choices surrounding gas and its increasingly unreliable coal assets.

“To benefit from the transition, AGL needs to make big structural changes to its business, but its plan has major gaps: it fails to accelerate renewable buildout, ignores emissions from gas supply, and the electrification strategy lacks credibility, while coal closure dates remain too late.

“Shareholders have sent a clear signal: AGL must stop hedging and start leading by delivering a timely decarbonisation strategy.”

Background

ACCR’s analysis of AGL’s 2025 Climate Transition Action Plan can be found here.

AGL’s previous CTAP received a 30.69% vote AGAINST – making it the third worst ‘Say on Climate’ vote on record at the time.

While risks to the economy are classed as "moderate" today, they escalate substantially to become "very high" by 2050.

Current impacts include:

• Insured losses from declared insurance catastrophes have grown from 0.2% of GDP (or $AUD2.1 billion) in 1995–2000 to 0.7% of GDP (or $AUD4.5 billion) in 2020–2024.
• In 2024, 15% of household insurance premiums could be priced at more than 4 weeks of gross household income, a 25% increase from 2023.

By 2050, the climate risk evaluation from the Australian government rises to “very high”, with:

• Losses in Australian property values are estimated to increase to $AUD611.0 billion by 2050 and could increase to $AUD770.0 billion by 2090
• Between 700,000 (+3.0°C) and 2.7 million (>+3.0°C) additional days of work are projected to be lost every year by 2061 due to the higher frequency and intensity of heatwaves, particularly affecting agriculture, construction, manufacturing and mining.
• It is estimated that labour productivity could decrease by 0.2% to 0.8% by 2063, which would reduce economic output by between $AUD135 billion and $AUD423 billion.
• Climate-driven events could result in cascading shocks to the financial system. Financial system shocks or volatility can be triggered by asset write-downs or loan defaults across a region, with potential ripple effects for households and businesses by reducing access to finance, the value of investments or superannuation.

Brynn O’Brien, ACCR’s Executive Director, said:

“The National Climate Risk Assessment lays bare a confronting and terrifying reality -- climate risk is here, now, and escalating across every part of our economy and society. It’s clear why the government delayed releasing this report. But delay doesn’t make the risks go away. It only makes them harder and more costly to manage.

“We expect long-term investors – especially investors who have to look out for the interests of their beneficiaries retiring in 30 or 40 years - to be deeply worried. Climate change will erode returns across sectors and geographies. Diversification won’t protect portfolios.

“Mitigation has to come first. Cutting emissions is the only way to reduce the scale of the risk. The most effective way investors can do this is by using their power to accelerate the phaseout of fossil fuels, by pushing companies in their portfolio and advocating with government to secure the right policy settings.”

“Following this Assessment, there can be absolutely no doubt: sanctioning new fossil fuel projects goes against the interests of investors and society.

“Ignoring these confronting warnings will simply be negligent.”

Dr Sophie Lewis, ACCR Chief Scientist, said:

“This Assessment is a stark acknowledgement that financial systems will not be immune from the physical impacts of climate change. Climate change will impact all parts of Australia, with no location spared from severe disruptions.

“Future extreme climate events will significantly differ from what we have experienced before, and will not occur gradually or predictably. Extreme climate hazards will occur in new locations, at new times of the year, for longer durations, at greater intensity and the spatial patterns of extremes will shift. Multiple concurrent or cascading extreme events will be more frequent and there will be a reduction in the time between severe events.

“There will be no business-as-usual in the climate or the financial system. A rapid reduction in greenhouse gas emissions is the only way to reduce our climate risks.”

• A new Scope 3 target for a 60% reduction by the end of FY35 based on the FY19 baseline, and ceasing operation of Loy Yang Mine by the end of FY35.
• Coal plant closures: Bayswater by 2033 (during FY34) and Loy Yang A by the end of FY35.
• Interim renewables and firming target for FY30 has been increased from 5GW to 6GW (with at least 3GW of grid-scale batteries)
• Commitments to positive advocacy including monitoring industry associations

The CTAP will be put to a shareholder vote at the company’s Annual General Meeting (AGM) on 3 October 2025.

Brynn O’Brien, ACCR’s Executive Director, said:

“AGL’s climate strategy is showing green shoots but overall, it continues to lack the ambition and pace that investors expect from Australia's largest energy generator and greenhouse gas emitter.

“As Australia’s largest electricity generator, AGL should be driving forwards the buildout of bulk renewable power. We have not seen a real increase in ambition in this climate plan - the 2035 target of a modest 12GW remains unchanged, with just an incremental increase of 1GW in the interim target by 2030, which is really just a commitment to build some of it sooner.

“While a range of barriers currently exist to rapid decarbonisation, investors need to see a company which is future-proofed for a faster transition and positioning to seize the full value of the transformation of the energy sector. This means wholeheartedly embracing electrification and consumer energy resources and increasing its targets for renewables.

“While it commendably remains firm on its coal closures, the company still seems wedded to fossil gas for much longer than necessary.

“AGL remains committed to supply fossil gas through its retail business indefinitely - which is incongruous with its net zero commitment.

“AGL has listened to investors on positive policy advocacy and we welcome its commitment to not support any organisations or groups that actively obstruct the energy transition.

“We look forward to seeing AGL using its substantial influence to secure policy settings that deliver solutions to transition barriers in the energy ecosystem.”

Background

2022 CTAP vs 2025 CTAP

Alongside a further US$1.76 billion (¥251.4 billion) of funding from the Japanese government, the investment will support:

• construction of one EAF in the Kyushu Works Yawata Area
• expansion of an existing EAF in the Setouchi Works Hirohata Area
• the modification and restart of an EAF at the Yamaguchi Works Area.

The EAFs will produce around 2.9 million tonnes of steel per year and are expected to be operating by 2029.

The announcement comes after more than two years of extensive investor engagement with the company. In 2023, engagement from a core investor group – including Man Group, Storebrand Asset Management, Corporate Action Japan and ACCR – led the company to commence studying EAF conversion at the Kyushu and Setouchi Works areas.

Commenting on the announcement, Martin Norman, Investor Engagement Lead, ACCR, said:

“Nippon Steel’s investment into critical electric arc furnace infrastructure is a welcome signal that its ambitions for low-carbon steel production are ratcheting upwards, adding further momentum towards the green steel transformation.

“Local media^[1] suggest the expected emissions ‘reduction effect’ of the new and upgraded coal-free furnaces, when operating, would be 3.7 million tonnes of CO2 per year – close to Iceland’s annual emissions. While Nippon Steel’s decarbonisation strategy has room to improve, the number is significant, and if achieved, will significantly benefit shareholders and the climate.

“For institutional investors, this is a clear demonstration that strategic and ambitious engagement works. Through critical and constructive dialogue, investors can help drive material outcomes that support the rapid, real-world emissions reduction required to secure sustained shareholder value.

“Coal-free steelmaking technology is crucial as the steel sector readies itself for a future where low-carbon steel will become necessary for producers to remain competitive. By investing in electric arc furnaces, Nippon Steel has shown it is willing to back proven, commercially ready solutions with significant emissions reduction potential.”

Commenting on the decision, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“The main reason Woodside wants the extension of the North West Shelf is to develop its Browse project. Something it has been trying, and failing, to do for over 50 years.

“Browse is the kind of project that should not go ahead. Browse does not make commercial or emissions sense.

“Woodside’s board has shown no ability to constrain its persistent and misguided pursuit of low-value fossil fuel projects, and this decision from government only serves to encourage it in the wrong direction.

“Investors will have to step up and play a vital role in restraining this company from making more poor decisions.

“Woodside and its partners have spent well over US$2.3 billion already on Browse. If Woodside was carefully stewarding its investors’ capital, it would have stopped working on this financial black hole of a project a long time ago.

“At full capacity, the North West Shelf would emit over 3 gigatonnes over its extended lifespan. Whilst there is major flooding in New South Wales and a major drought in South Australia, these are emissions that are going to cause Australians and investment portfolios further harm as the physical impacts of climate change increase.

“The International Energy Agency and Bloomberg New Energy Finance are projecting an LNG glut later this decade, meaning there is no commercial justification to add further LNG supply – and there is certainly no climate justification. Even if there was, Browse is more expensive than 70% of competing potential new gas supplies around the world.”

20.55% voted FOR a shareholder resolution asking Shell to justify the assumptions behind its LNG growth strategy and explain how it’s consistent with the company’s climate commitments.

The resolution was filed by Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, which have combined assets under management of US$86 billion.

ACCR is also a co-filer and UK-based responsible investment NGO, ShareAction, supported the filing along with more than 100 individual shareholders.

Commenting on the results, Nick Mazan, Company Strategy, UK Lead, ACCR, said:

“Shareholders have sent a strong signal to Shell that the quality of its disclosures is out of step with the size of the bet it is taking on LNG.

“This is a clear call from investors for better disclosure from Shell, so they can properly appraise the material risks of its LNG strategy. This includes the risk that the company won’t be able to meet its climate commitments, and the risk of value destruction if the LNG prices or demand are weaker than Shell is expecting.”

“This resolution has generated hard conversations and increased scrutiny over the company’s LNG strategy which will continue long after this proxy season has ended.

“It is essential investors continue to engage with Shell for greater transparency around its LNG strategy – which is not backed by energy market fundamentals or independent forecasts.”

Vaishnavi Ravishankar, Head of Stewardship, Brunel Pension Partnership, said:

“We continue to raise concerns about the lack of visibility around Shell's pathway to net zero post 2030. The assertion that they are Paris aligned while considerably expanding their LNG business does not add up. The resolution challenged the board to provide an honest discourse about their trajectory and next steps.

“We are pleased with the substantive conversations that this resolution has led to, between portfolio managers and the company around its ability to achieve its climate commitment alongside its ambitious LNG strategy. The fact that the company has conceded that further transparency is needed and made commitments is a positive development – however, it is important that disclosures are indeed enhanced as opposed to repackaged.”

“The quantum of support for this resolution in this difficult environment is promising. This resolution has provided an opportunity for investors to amplify dialogue and reinforce the challenge to the company that it needs to think deeply about its place in the energy transition and provide transparency to enable investors to appraise the risks to value generation.

“It's been really positive to see investor engagement around the asks of this resolution. It has provided an opportunity for investors to amplify dialogue and reinforce the challenge to the company that it needs to think deeply about its place in the energy transition and provide transparency to enable investors to appraise the risks to value generation.”

Peter Wallach, Director of Pensions, Merseyside Pension Fund said:

“By making a commitment to enhance its disclosures before the 2026 AGM, it is encouraging that Shell has recognised that these have been insufficient. Investors will be watching closely to make sure that these meet their expectations of assuaging the significant concerns with its bullish LNG strategy.”

Sandra Stewart, Chief Executive, Greater Manchester Pension Fund said:

“Shell is making investments in LNG today that will be operating in 25-plus years. It is crucial that it provides information which allows investors to evaluate whether the Company’s LNG strategy will deliver long-term value in the energy transition without undermining its climate commitments.

“This resolution has brought much needed attention to the overoptimistic forecasts for LNG demand across the sector. Other oil and gas companies should now be on notice for the increased need for greater rigor in the assumptions that underpin their LNG strategies.

“We remain concerned about Shell's ability to grow its LNG business while remaining credibly committed to its climate targets. Our intensive engagements with the company did not assuage these concerns, so we exercised our rights as shareholders to seek greater transparency for all by filing this resolution.”

Jackie Garton, Senior Corporate Climate Campaign Manager at ShareAction, said:

"This resolution clearly shows that both institutional and individual investors are concerned about Shell's climate plans and in particular the lack of transparency over the risks associated with its liquefied natural gas strategy.

"It's encouraging to see responsible investors use their shareholder rights to spotlight Shell's shortcomings. It's clear they want fossil fuel companies to do better on climate – not only to protect the resilience of their portfolios but to ensure we can all live in a safe and healthy world for generations to come."

Steelmakers face crunch-time on coal: critical risks in blast furnace relining decisions reviews the blast furnace (BF) infrastructure of 13 major steelmakers, finding that 62 BFs are due for a relining decision by the end of 2035, with 70% of those decisions due between 2026 and 2035.

Each of these decisions has lasting implications for asset viability and emissions trajectories, highlighting the urgent need for investor engagement with steelmakers to help prevent emissions lock-in, reduce stranded asset risk and support a shift towards green production models.

Key Findings include:

• Based on the current average emissions intensity of the coal-based blast furnace basic oxygen furnace process (BF-BOF), the ongoing operation of the 62 furnaces, if relined, would lock in up to 310 MtCO2/year - equivalent to Spain or Vietnam’s annual emissions.
• The steel sector is responsible for 7-9% of global greenhouse gas (GHG) emissions. The use of the BF-BOF process in global steel production is responsible for just under 90% of the steel sector’s emissions.
• The emissions intensity of BFs directly challenges company-specific pathways towards global net zero by 2050, increases exposure to regulatory mechanisms like the EU’s Carbon Border Adjustment Mechanism, and raises stranded asset risk for companies and investors.
• Alternative pathways to BF relining vary in technological readiness, emissions reduction potential and compatibility with different iron ore grades. Processes involving green hydrogen and direct reduced iron, paired with electric arc furnaces, offer the most immediate combination of significant emissions reductions and commercial readiness.

Commenting on the research, Dr Fiona Deutsch, Company Strategist and Lead Analyst at ACCR, said:

“Steelmakers are at a fork in the road where they need to start making decisions on relining coal-based blast furnaces or pursuing coal-free technologies to make steel.

“A decision to invest in relining a coal-based blast furnaces is a decision to lock in the single biggest impediment to a decarbonised and future-fit steel industry – which is coal.

“Relining coal-based blast furnaces has lasting implications for the emissions trajectories of steelmakers and brings with it stranded asset and transition risk, so it is essential investors have better visibility of each decision taken to reline a furnace.

“With multiple relining decisions due within the decade, investors have a time critical window for engagement. Many companies do not provide transparent and detailed disclosures on the status or timing of blast furnace plans. Without transparency, it becomes difficult for investors to assess whether companies are making future-fit investment decisions or simply deferring transition risks.

“When investors receive transparent, detailed disclosure from companies on their blast furnace plans, they are better equipped to assess the financial and emissions risks highlighted in the report. This further supports informed advocacy for effective capital allocation decisions and risk mitigation against emissions-intensive asset lock-in.

“The next decade will be decisive for the steel sector and blast furnace investment. Investors have a critical role to play in ensuring capital is aligned with credible transition pathways.”

At the AGM, the Norwegian Ministry of Trade, Industry and Fisheries used its controlling shareholding to block a shareholder proposal^[1] that asked the Board of Directors of Equinor for additional transparency on climate matters.

The proposal – filed by ACCR, Folksam and Sampension – asked Equinor’s Board to explain how it assesses the inconsistency between the company’s planned oil and gas production increase and the Norwegian State’s^[2] expectation that Equinor operate in line with the Paris Agreement’s goals.

• While the Ministry voted AGAINST the proposal, 19% of non-state shareholder votes were cast FOR the proposal.
• While the Ministry voted FOR Equinor’s 2025 Energy Transition Plan, 24% of non-state shareholder votes were cast AGAINST the Plan.

Commenting on the results, Brynn O’Brien, Executive Director, ACCR, said:

“Norway’s treatment of Equinor as an exception to global climate goals undermines those goals. If Norway wants the rules to apply, it has to apply them consistently, including and especially where this is challenging for Norway.

“This should be a wakeup call for Norwegians. Norway does not and will not have credibility as a climate leader while it uses its controlling stake in one of the world’s largest oil and gas companies to give that company’s Board a free pass on climate governance.

“Norway’s continued prosperity, via its massive sovereign wealth fund, is dependent on the long-term performance of global financial markets. The world is heading towards warming levels that mean permanent value destruction, across financial markets. Equinor’s strategy is fundamentally incompatible with Norway’s future wealth and security.”

Emilie Westholm, Head of Responsible Investments and Corporate Governance at Folksam, said:

“We are of course disappointed that the Majority shareholder is not supporting the resolution. However we are hoping to continue the dialogue with the Norwegian state - shareholder to shareholder - to further discuss Equinor's climate ambitions.”

Jacob Ehlerth Jørgensen, Head of ESG, Sampension said:

“It is discouraging and difficult to understand that Equinor’s majority shareholder, the Norwegian state, has blocked our request for more transparency on Equinor’s alignment with global climate goals. This is a very concerning step away from Norway’s ambition to pursue the transition, when Equinor is clearly moving in the wrong direction.

“Using its shareholding to change Equinor’s path is one most powerful actions Norway can take, in real emissions terms, to mitigate climate change.

“This is too important to step away. We will continue to engage with the Norwegian state as Equinor’s majority shareholder and encourage other shareholders in Equinor to come to the table as well.”

ABOUT FOLKSAM
Founded in 1908, Folksam is one of the largest insurance and pension providers in Sweden. We insure every second family home and person in Sweden and are also one of the largest asset owners in the country with EUR 59 billion in assets under management at the end of 2024. As a pioneer within responsible investments, Folksam has spent more than two decades engaging with our portfolio companies on issues related to climate change and the environment, human rights and anti-corruption. Folksam is headquartered in Stockholm, Sweden. For more details, please visit www.folksam.se.

ABOUT SAMPENSION
Sampension is one of Denmark’s largest pension providers, with total assets exceeding EUR 40 billion and approximately 355,000 customers and members. Sampension is customer-owned and manages occupational and corporate pension schemes for Sampension Livsforsikring, the Pension Fund for Architects & Designers, the Pension Fund for Agricultural Academics and Veterinary Surgeons, and ISP Pension.

• the company’s first-ever Industry Association Review
• a set of policy positions, including a commitment to positive lobbying in Japan for policies relating to climate change and energy in light of the Paris Agreement.

Earlier this year, Nippon Steel also published a systematic disclosure of its direct lobbying for the first time.

The increased transparency comes after investors in the world’s fourth largest steelmaker delivered the largest ever vote in support of a climate lobbying resolution in Japan at the company’s 2024 Annual General Meeting. 28% of shareholders voted in support of a proposal filed by Legal & General Investment Management (L&G) and ACCR, asking Nippon Steel for improved disclosure of its climate-related lobbying activities.

Commenting on the disclosures, Martin Norman, Investor Engagement Lead, ACCR, said:

“We welcome Nippon Steel’s increased lobbying reporting, which shows it has responded to investor expectations for the company to show greater transparency around its policy engagement.

“This is an important first step in Nippon Steel’s journey to enhance its lobbying transparency and integrate positive lobbying into its long-term strategy and decarbonisation efforts. While there is room for improvement, investors should be encouraged by the company’s move towards greater transparency.

“Investors still need a clearer commitment and plan from Nippon Steel so they can have confidence the company will continue improving, integrating and enhancing its lobbying disclosures. The company will also need to more clearly demonstrate how its lobbying serves its strategic and decarbonisation goals.

“It is good to see Nippon Steel publish its first Industry Association Review. For improvement, future reviews should include all material associations. We note, as just one example, that this review does not include JCOAL, an association with highly negative climate and energy policy engagement, despite the company holding leading roles at JCOAL. Future reviews should also note how much Nippon Steel spends on associations and provide a clear framework for assessing lobbying and addressing misalignments.

“We look forward to working with the company to further align its lobbying disclosures and governance with the Global Standard on Responsible Climate Lobbying and other best practice approaches.”

Aina Fukuda, Head of Japan Investment Stewardship, Asset Management at L&G, said:

“We welcome Nippon Steel’s improved disclosure, which reflects its willingness to respond to calls for greater transparency and accountability in policy advocacy, as expressed by investors through ongoing dialogue and last year’s annual general meeting.

“While this marks a meaningful step towards aligning the company’s advocacy efforts with its long-term strategy and decarbonisation objectives, we will continue our engagement with Nippon Steel, aiming to further strengthen investor confidence and support the integration of transparent and strategic advocacy efforts.”

Background

Nippon Steel Corporation’s Policy Positions and its first-ever Industry Association Review.

• 19.45% of shareholders voted against the re-election of Ann Pickard - Sustainability Committee chair since 2017, who had oversight of the two climate plans which received successive record-breaking votes against^[1]
• 15.31% of shareholders voted against Adoption of the Remuneration Report.

ACCR filed members’ statements dissenting against the re-election of all three directors, saying Woodside’s entire Board shares collective responsibility for the company’s failings, which include Woodside’s chronically poor shareholder returns and its ongoing failure to manage climate risk.

Commenting on the results, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is the worst vote on record against a Committee Chair for Woodside and the second worst vote ever against a Woodside director.

“It comes off the back of Woodside receiving the world’s highest vote against a company climate plan – twice.

“This persistent pattern of investor dissent and Woodside’s failure to adequately respond shows this is a company with a major governance problem.

“It is time for Ann Pickard to step aside as Chair of the Sustainability Committee – not only does she not have the support of nearly 20% of investors but she has overseen two climate plans that have failed to win the support of investors.

“Alarmingly though, looking at the current board it is hard to see a director sufficiently qualified to take on this critical leadership role as Sustainability Committee Chair – which speaks to the weakness of this Woodside board on managing climate risk.

“If Woodside received qualified audit reports, serious questions would be asked of the Audit and Risk Committee Chair, and the same principle should apply to Ms Pickard. She has overseen the world’s two worst votes against a company’s climate plan and has now received a significant vote against her re-election.

“Despite chronic underperformance and a strategy that’s been rejected by investors, Woodside persists with allocating most of its capex to new high-cost fossil fuel projects in an industry that is in structural decline.

“It is well past time for a strategic re-set, yet Woodside has not demonstrated it realises it has a problem, let alone knows how to fix it.”

Background

At Woodside’s 2023 AGM, 34.81% voted against Ian Macfarlane; 13.43% against Larry Archibald; and 10% against Swee Chen Goh.

At Woodside’s 2024 AGM:

• 16.61% voted against the re-election of Chair Richard Goyder.
• 58% voted against the Climate Transition Action plan (CTAP)

At Woodside’s 2022 AGM, 49% voted against the Climate Report

ACCR analysis, drawing on Rystad data, shows capex intensity for the project is higher than 70% of US LNG facilities.^[1]

This decision is expected to increase Woodside’s Scope 3 emissions by 27%.^[2]

Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“Louisiana LNG is yet another high-cost, high-emissions investment from a company that has delivered less than 1% total shareholder return (TSR) over 15 years and consistently underperformed its peers. Doubling down on the same strategy does not seem like a solution to Woodside’s chronic underperformance problem.

“Rather than focusing on generating strong returns for shareholders, Woodside appears determined to build an LNG empire, regardless of the risks.

“Adding incremental LNG supply into an already oversupplied commodity market is unlikely to deliver strong shareholder returns. The International Energy Agency and Bloomberg are both projecting an LNG glut later in the decade.

“The Louisiana LNG project only exceeds Woodside’s hurdle rate by 1%, which does not seem compelling considering the host of risks this project brings and its reliance on a cross subsidy from trading revenue.

“Even if the promised sell down happens, Woodside will still retain a stake in an underwhelming project that is high up on the cost curve.

“At a time when major proxy advisor Glass Lewis is recommending shareholders vote against a Woodside director at next week’s AGM, based in part on persistent strategic underperformance, this decision further demonstrates the Board’s unwillingness – or inability – to change course.

“For investors who have repeatedly signaled dissatisfaction with Woodside’s strategy, today’s announcement is yet another alarming sign that this Board is not managing climate risk effectively.”

This resolution was filed by Sampension, Folksam and the Australasian Centre for Corporate Responsibility (ACCR).

This page contains the resolution and supporting statements.

Resolution

Request for Board assessment of consistency of Company strategy with shareholder expectations of Paris Agreement alignment.

Minority shareholders have an interest in understanding, from the Board’s perspective, material inconsistencies between the Company’s strategy and formal expectations set by the majority shareholder.

At the 2023 Annual General Meeting, the majority shareholder formally set expectations that the Company “sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris Agreement” ^[1] (Majority Shareholder Expectations).

Shareholders therefore request that the Board disclose:

1. its assessment of the consistency between the Company’s planned increase in oil and gas production disclosed in its 2025 Energy Transition Plan and the Majority Shareholder Expectations, noting material inconsistencies,
2. its assessment of the consistency between its growth strategy in the international segment of its upstream oil and gas business and the Majority Shareholder Expectations, noting material inconsistencies, and
3. the remaining carbon budget assumptions relied on in making these assessments.

These disclosures shall be made by no later than the publication date for the 2025 Annual Report.

Supporting statement

1. Company ownership

The Company is approximately 71% owned by the State of Norway. As at 31 December 2024, the largest shareholder on the company’s share register was the Government of Norway, with 67% of the shares on issue, with that shareholding managed by the Norwegian Ministry of Trade, Industry and Fisheries. The Company’s second largest shareholder was listed as Folketrygdfondet, the state-owned asset manager that manages funds on behalf of the Government Pension Fund of Norway, with a 4% holding.^[2]

2. Majority shareholder expectations

Given the Company’s ownership structure, formal public statements by the majority shareholder are highly relevant to minority shareholders.

At the Company’s 2023 Annual General Meeting, the chair of the meeting read a formal statement from the Ministry of Trade, Industry and Fisheries. The co-filing shareholders emphasise the following extract from that statement:

The state expects ... that:...
ii) The company sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris Agreement…^[3] (Majority Shareholder Expectations)

The Majority Shareholder Expectations are a powerful signal to minority shareholders that could reasonably be expected to inform the Company’s strategic direction. No change to this formal statement has since been expressed by the majority shareholder.

3. Company plans appear materially inconsistent with Majority Shareholder Expectations

The co-filing shareholders have made the request set out in the resolution because the Company’s plans, in particular its focus on upstream oil and gas exploration and expansion, appear to be materially inconsistent with the Majority Shareholder Expectation that it “sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris Agreement.”

The goals of the Paris Agreement, to which the majority shareholder is a signatory, require “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”^[4].

Sanctioned oil and gas projects, globally, are forecast to emit 465 GtCO2 of emissions.^[5] As at January 2025, the remaining carbon budget (RCB) for limiting global temperature increase to 1.5°C was approximately 171 GtCO2,^[6] and the RCB for “holding the increase in the global average temperature to well below 2°C” was approximately 430 GtCO2.^[6:1],^[7] It is accepted that emissions from other sectors such as steel, electricity, cement or land use will take up some of the remaining budget. As such, there is no room for new oil and gas developments in remaining in carbon budgets “in line with the Paris Agreement”.^[8]

Considering the Company’s material expansion plans, the co-filing shareholders therefore seek clarification on how the company assesses the consistency of those plans with the Majority Shareholder Expectations, and the carbon budget assumptions used to inform those assessments.

4. International upstream oil and gas growth strategy appears inconsistent with Majority Shareholder Expectations and does not generate acceptable returns

The long-lead times associated with the Company’s international upstream oil and gas segment point to additional inconsistencies of its growth strategy in this segment with the Majority Shareholder Expectations.

ACCR analysis of Rystad data shows that, in the international segment, the Company has historically taken 18 years on average to reach first production from the time of discovery of an oil and gas resource.^[9]

The International Energy Agency (IEA) concluded that there is no need for new long-lead time upstream oil and gas projects under its only Paris-aligned scenario, the Net Zero Emission by 2050 scenario.^[10]

However, a key pillar of the Company’s strategy has been the rapid growth of the international oil and gas business. This was affirmed at the recent Capital Markets Update with increased international production targets to >950 kboe/d by 2030, a 40% increase on 2024 production levels.

Chart 1: The Company’s international oil and gas production has increased tenfold since IPO, with plans for a further 40% increase by 2030

These growth ambitions include numerous large-scale international projects forecast to come on stream over the next 10 years, such as Bacalhau, Rosebank phase 1, Flemish Pass BdN and Roncador.^[11] These project expansions appear to continue a strategy that is inconsistent with the Majority Shareholder Expectations.

The international oil and gas growth strategy has also delivered inadequate returns to shareholders. This appears in conflict with the majority shareholder’s goal, as owner, which is “the highest possible return over time in a sustainable manner.”^[12]

The Company’s two exploration and production segments – Norwegian and International – have delivered radically different return on asset profiles from their respective asset bases. The Norwegian E&P segment has delivered strong returns, with the average net operating income averaging 68% of average non-current assets over the last twenty years. This is 23 times the returns (on a similar basis) of the international E&P segment, which has averaged just 3%.^[13]

Chart 2: The Company’s international assets return on net operating income have dramatically underperformed its Norwegian assets (2005-2024)

When looking at the returns from the Company’s sanctioned international projects, analysis produced by the Australasian Centre for Corporate Responsibility (ACCR) found^[14] that these projects:

• consumed $14.5 billion (nominal) in acquisition and pre-FID costs
• consumed $94 billion (nominal) development capex
• eroded $3.6 billion Net Present Value (NPV).

Chart 3: ACCR analysis finds that ~$100bn of international capex is estimated to deliver negative $3.6bn of NPV

When looking at the International segment (including other costs such as unsuccessful exploration) since the Company’s 2001 IPO, ACCR found^[15] that the International segment had:

• consumed $103 billion (nominal) of capex, and
• delivered $2 billion (nominal) of value.

The co-filing shareholders therefore note the apparent conflict between the Company’s international oil and gas growth strategy and the “highest possible returns” goal of the majority shareholder.

5. Relevance to shareholders

a. Interests of long-term, diversified investors

The physical and financial risks posed by climate change are systemic, portfolio-wide, and undiversifiable. Therefore, the actions of companies that directly or indirectly impact climate outcomes pose risks to the financial system, and to the entire portfolio of long-term, diversified shareholders.

b. Values basis

The co-filing shareholders have a strong basis for seeking to understand inconsistencies between the Majority Shareholder Expectations and Company plans. This interest is grounded in shared values of sustainability, transparency, good governance and risk management.

The co-filing shareholders encourage support for this proposal.

The resolution asks Equinor’s Board of Directors to explain how it assesses the inconsistency between the company’s planned increase in oil and gas production, and the majority shareholder’s expectation that the company should be operated in line with the goals of the Paris Agreement.

Equinor is majority owned (71%) by the State of Norway. At the 2023 Equinor Annual General Meeting (AGM), the Ministry of Trade, Industry and Fisheries said it expects the company to set targets and implement measures to reduce greenhouse gas emissions in line with the Paris Agreement.

The resolution co-filers are concerned that the company’s new strategic direction, with an increased focus on upstream oil and gas exploration and expansion, is materially inconsistent with Paris Agreement alignment.

In addition, investors are also concerned about the inadequate returns generated by the international oil and gas segment in the past, which appears in conflict with the State of Norway’s goals for Equinor to deliver the highest possible returns over time in a sustainable manner.

Read the resolution and supporting statement here.

Read ACCR’s Investor Briefing here.

Emilie Westholm, Head of Responsible Investments and Corporate Governance at Folksam, said:

“This resolution draws attention to the fundamental inconsistencies between Norway’s expectations and Equinor’s oil and gas expansion plans. As a net zero investor, we hope this resolution will bring more clarity on Equinor transition work, including how it aims to achieve its long-term net zero target.”

Jacob Ehlerth Jørgensen, Head of ESG, Sampension said:

"With its updated strategy, Equinor is turning down its green ambitions and turning up its fossil fuel ambitions. That is simply the wrong path to take at a time when climate change is accelerating.

“We understand that investing in renewables is difficult in the current environment. But if Equinor can’t make its renewables business profitable, it should return excess capital to its investors – not double down on fossil fuel projects that clearly run counter to society’s climate goals.”

Brynn O’Brien, Executive Director, ACCR, said:

“Unlike other companies, Equinor has the support of its majority shareholder to make the required changes to meet global climate goals. But even with that powerful message, company management has been unresponsive to date. The Board’s statement opposing the resolution repeats that pattern by failing to engage with the substance of the resolution.

“Other shareholders have reasonable expectations that the company would move towards alignment with the expectations of the majority shareholder. Instead, Equinor has gone in the opposite direction.

“Sampension and Folksam, on behalf of their beneficiaries, are showing strong leadership in a challenging time. This is the kind of forceful stewardship all pension fund and insurance beneficiaries around the world must undertake, so that their members can have a livable world and stable financial system to retire into.

“We are currently on track for levels of warming that will mean permanent value destruction across diversified portfolios and financial markets, on a timescale that is relevant to pension fund and insurance beneficiaries.”

ABOUT FOLKSAM

Founded in 1908, Folksam is one of the largest insurance and pension providers in Sweden. We insure every second family home and person in Sweden and are also one of the largest asset owners in the country with EUR 59 billion in assets under management at the end of 2024. As a pioneer within responsible investments, Folksam has spent more than two decades engaging with our portfolio companies on issues related to climate change and the environment, human rights and anti-corruption. Folksam is headquartered in Stockholm, Sweden. For more details, please visit www.folksam.se.

ABOUT SAMPENSION

Sampension is one of Denmark’s largest pension providers, with total assets exceeding EUR 40 billion and approximately 355,000 customers and members. Sampension is customer-owned and manages occupational and corporate pension schemes for Sampension Livsforsikring, the Pension Fund for Architects & Designers, the Pension Fund for Agricultural Academics and Veterinary Surgeons, and ISP Pension.

24% of shareholders voted ‘no’ on Ordinary Resolution 3: to re-elect Helge Lund as a director.

Ahead of the AGM, a number of investors pre-declared they would be voting against the Chair, including Legal & General and Robeco.

Commenting on the results, Nick Mazan, UK Company Strategy Lead, ACCR, said:

“This is by far the largest vote against the re-election of a BP Chair over the past decade.

“With no other climate-related item on the AGM ballot, it is safe to assume that this vote against the Chair is in part a reaction to the ongoing climate governance concerns linked to the dropping of the scope 3 target and failure to respond to investors requesting a vote on the energy transition strategy.

“BP is desperate to repair the damage done to its reputation through the continued misallocation of capital. The attempts to do this through increasing upstream capex when fossil fuel demand is in structural decline, is misguided and investors are clearly unconvinced.

“Whoever is chosen to be the next Chair of BP must take note of this investor dissent. Investors understand that the energy transition and accelerating physical impacts of climate change are realities that the company must confront, not avoid. Investors want consistency and capital discipline, neither of which are being provided by the Company.

“BP sought to reset its strategy, however, investors remain unconvinced. Throwing capital at the problem is not the solution, and BP must take the time to reflect on this investor discontent and reconsider its approach to capital allocation.

“We saw a similar vote against Mr Lund in 2023 after BP’s scope 3 target was first watered down, and backlash against the Shell chair in 2024 after it downgraded its NCI targets. But we’re in a very different political climate now, one in which fossil fuel companies feel increasing impunity and shareholder rights are under attack. In light of this, a vote of 24% against an incumbent chair is even more notable.

“While it seems the company tried to diffuse pressure by having Lund announce his planned resignation ahead of the vote, 24% of shareholders have nonetheless made the powerful symbolic gesture of voting against his re-election.

“We know that shareholder votes against the chair are a powerful tool, but they are also a blunt tool. Investors who voted against the chair will now be seeking to communicate the rationale behind their vote to the company, and will no doubt want to convey the need for new safeguards in the company’s investment framework to ensure capital discipline in the absence of the now scrapped production target. “

Background

As reported in the Financial Times last week, 48 investors – including Phoenix Group, Rathbones Investment Management, Robeco and Royal London Asset Management – signed a letter sent to BP’s chair, Helge Lund, that called for a shareholder vote on any potential roll-back of the company’s climate targets and aims.

In January this year, ACCR released “BP: Capex beyond Paris”, which found that BP’s capital allocation towards new oil and gas projects is not consistent with the goals of the Paris Agreement despite a binding 2019 commitment to shareholders. It is available to read online.

Appetite for risk: Glencore's growing coal portfolio assesses the risks of Glencore’s growing coal portfolio, including its recent acquisition of Elk Valley Resources (EVR).

The report comes as Glencore announced this week it is cutting planned coal production, equivalent to 5-10% of Glencore’s 2024 thermal coal production, at its Cerrejón mine in Colombia due to the prolonged collapse in prices. Thermal coal prices have dropped to their lowest level since 2021.

Key findings in the report include:

• Glencore plans to grow coal production nearly 30% by 2050, but even under non-Paris aligned outcomes, the IEA projects less thermal coal will be required.
• Chinese coal demand has a material impact on the global coal trade, and as one of the world’s largest coal exporters, Glencore’s business is exposed to changes in demand. With renewables forecast to become increasingly significant to China’s energy mix, and coal facing increasing competition and displacement from renewables, the outlook for sustained coal demand over the medium to long-term remains uncertain.
• The large-scale water contamination from EVR’s metallurgical coal mines means that Glencore has inherited responsibility to administer one of the world's largest water quality management plans, with ongoing treatment costs. Future additional costs and legal and regulatory action remains a possibility. Glencore continues to exclude the EVR assets from its group climate reporting, which means investors have limited insight into how the company is progressing towards its emissions targets. The EVR acquisition increased the company’s met coal reserves fivefold.
• Our modelling suggests that if Glencore includes the EVR assets in its group climate reporting and adjusts its baseline as per the Greenhouse Gas Protocol, it is unlikely to meet its 2030 emissions reduction target.

Commenting on the research, Naomi Hogan, Company Strategy Lead, ACCR, said:

“Glencore’s Chief Executive says ‘cash is king’, but to deliver long-term shareholder value, an appetite for cash must also come with an appetite for managing the risks of betting heavily on coal.

“Glencore’s decision to scale back production at Cerrejón in response to lower coal prices brings into focus the company’s broader exposure to coal market dynamics, particularly in relation to its other large, long-dated assets and expansion projects. This raises questions for investors around the company’s strategy and risk management.

“Glencore says it is committed to a ‘responsible phase-down’ of thermal coal production but continues expanding its coal profile without any semblance of a plan to manage the long-term risks for investors.

Shell has:

• restated its ambition to “become the world’s leading integrated gas and LNG business” and announced that it is targeting LNG sales growth of 4-5% per year to 2030
• reduced its capex forecast to $20-22bn per annum through to 2028
• increased shareholder distributions from 30-40% to 40-50% of CFFO
• stated that it is “maintaining its climate targets and ambition” set out in its 2024 Energy Transition Strategy.

Nick Mazan, UK Company Strategy Lead, ACCR, said:

“Shell is doubling down on its commitment to LNG as a central pillar of its strategy, which will do little to ease the concerns of investors who are questioning the Company’s bullish LNG demand outlook.

“Increasing LNG sales will make it harder for the Company to reach its climate commitments, despite restating its commitment to more value with less emissions.

“With LNG being core to the Company’s growth strategy, there is an increasing need for investors to have greater oversight of the assumptions that underpin this strategy. The shareholder resolution that has been filed seeks to enhance this transparency in the interests of long-term shareholders.

“The questions around Shell’s LNG Outlook make the resolution critical as this will give the necessary information to investors to appraise the potential risks related to its bullish strategy.

“Shell is making investments that will still be operating in 25 or more years. This makes it incumbent on the Company to provide information allowing investors to discern whether its investments will deliver value over in the long term.”

Conor Constable, Head of Stewardship, Pensions & Investment Research Consultants Ltd (PIRC), said:

“It remains uncertain whether the company can thread the needle between its climate commitments and the levels of LNG demand it needs to materialise. In light of this, the relevance of a shareholder proposal filed for the company's 2025 AGM is thrown into ever starker relief.”

Background

Shell’s plans to grow its liquefied natural gas (LNG) business are facing scrutiny, following the filing of a shareholder resolution by institutional investors. The resolution asks Shell to justify the assumptions behind its LNG growth strategy and explain how it’s consistent with Shell’s climate commitments.

The resolution was filed by Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, which have combined assets under management of US$86 billion. The Australasian Centre for Corporate Responsibility (ACCR) is also a co-filer.

About PIRC

Pensions & Investment Research Consultants Ltd (PIRC) is Europe’s largest independent corporate governance and shareholder advisory consultancy with over 30 years’ experience in providing stewardship and proxy research services to institutional investors on environmental, social and governance issues. PIRC protects and enhances the long-term returns of major investors by promoting the highest corporate standards.

PIRC serve as representatives of Greater Manchester Pension Fund and Merseyside Pension Fund, who recently co-filed a shareholder resolution alongside ACCR on Shell’s LNG strategy.

The members’ statements say Woodside’s entire Board shares collective responsibility for the company’s failings, which include Woodside’s chronically poor shareholder returns and its ongoing failure to manage climate risk.

The governance concerns outlined in the statements include:

• Failure to respond to significant underperformance: Woodside has significantly and chronically underperformed relative to the local market and the global oil and gas sector; 168% lower total shareholder returns (TSR) than the ASX100 and 83% lower than the MSCI World Energy over 15 years. Despite this, Woodside persists with the same high-cost, high-carbon, low-value strategy that contributed to its financial underperformance.
• Failure to materially respond to escalating investor feedback on management of climate risk. In 2024, 58% of shareholders voted against Woodside’s Climate Transition Action Plan (CTAP); in 2021, it was 49%. The Board’s response has largely been to restate the existing strategy and hold more engagements with investors – without substantively addressing investors’ climate concerns.

A vote against all directors facing either re-election or election in 2025 is warranted:

• Ann Pickard - Sustainability Committee chair since 2017, had oversight of the two climate plans which received successive record-breaking votes against.^[1]
• Ben Wyatt - current chair of the Audit and Risk Committee, his responsibilities include oversight of climate risk. Having sat on the Sustainability Committee for two years until December 2023, he shares responsibility for the climate plan that was voted against by 58% of shareholders.
• Tony O’Neill - has sat on the Sustainability Committee since his appointment in June 2024, and shares responsibility for the Board’s response to the majority vote against the climate plan.

Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“The Board continues to back Woodside’s strategy – which means it is not grappling with the magnitude of the company’s underperformance or investor feedback on management of climate risk. Investors should now be asking if their directors are acting in the best interests of the company.

“Woodside has significantly and chronically underperformed its peers, the global equities market and the local equities market. Yet the company is persisting with the high-cost, high-risk, fossil fuel growth strategy that has contributed to its significant underperformance.

“This is not a temporary blip: Woodside eroded a massive 21% TSR in 2024 and only generated 0.7% TSR per year over 15 years. The underperformance runs deep yet the Board has not acknowledged the issue.

“Last year’s 58% vote against Woodside’s Climate Transition Action Plan (CTAP) is the world’s only majority vote against a company’s climate plan. This saw Woodside break its own global record for the worst climate vote of any company and follows Woodside’s worst director vote in 2023 and the worst vote against a Woodside Chair in 2024.

“It is astounding that Woodside has made no material change to its strategy in response to these votes. This raises serious questions about governance.

“As last year’s Qantas Governance Review Report said, effective corporate governance requires the right balance between support and challenge of management. Yet we see little evidence that Woodside’s Board is providing the kind of rigorous oversight of management investors would expect, especially given the chronic underperformance and persistent investor concerns about climate risk.”

Background

Record of investor dissent at Woodside AGMs:

• 2020 - 50% vote in favour of an ACCR resolution seeking that the company set Paris-aligned Scope 1, 2 and 3 targets, and to adjust capital allocation and remuneration accordingly.
• 2022 - 49% vote against Woodside’s Climate Plan under the Say on Climate mechanism, the lowest level of support for a climate plan since the inception of Say on Climate.
• 2023 – a record-breaking 35% vote against director Ian Macfarlane over climate governance concerns.
• 2024 - 58% vote against Woodside's Climate Transition Action Plan, the world's first majority vote against a company climate plan. A 17% vote against re-election of Chair Richard Goyder, the worst vote against a Chair in Woodside's history.

Notes on data:

All TSR values are calculated on a US$ basis, for the year(s) ending 31 December 2024. Additional data, including data tables.

These resolutions will be voted on at Woodside Energy's AGM on Thursday 8 May 2025.

Members’ statement for resolution relating to the re-election of Ann Pickard (971 words inc footnotes)

Last year’s 58% vote against Woodside’s Climate Transition Action Plan (CTAP) is the world’s only majority vote against a company climate plan. In response, the Board has not altered its strategy. This is a repetition of Woodside’s persistent failure to respond to material shareholder votes around climate risk management. In addition, Woodside has significantly and chronically underperformed relative to the local market and the global oil and gas sector. Downplaying strong investor feedback and persisting with a flawed strategy raises serious governance concerns.

Woodside’s directors share collective responsibility for the company’s failings. As Sustainability Committee chair since 2017, having oversight of climate plans which have received successive record-breaking votes against, Ann Pickard bears additional responsibility. A vote against her re-election is warranted.

Chronic share price underperformance

Woodside’s total shareholder return (TSR) in 2024 was -21%^[1], (US$ basis). This continues a trend of material long term underperformance: over a 15-year period it delivered just 0.7% p.a. TSR. Woodside’s TSR also benchmarks poorly. Over five, ten and 15 years respectively, its absolute TSR was 40%, 86% and 168% lower than the ASX100. Whilst the Ukraine war did trigger stronger returns, Woodside still lags its sector: over one, three, five, ten and 15 years respectively, it delivered returns 24%, 20%, 55%, 43% and 83% lower than the MSCI Global Energy index.

Flawed capital allocation strategy

Despite lacklustre returns, Woodside persists with a hydrocarbon growth strategy, progressing marginal projects abetted by a flawed capital allocation framework.

Woodside has a higher oil price assumption than many of its peers including BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Equinor, Shell and TotalEnergies.^[2] This year Woodside increased it by a further 7%.

Assuming higher revenue without higher hurdle rates risks Woodside sanctioning marginal projects, which would not meet some peers’ minimum return thresholds. For example, ACCR analysis suggested most peers (with disclosed hurdle rates or Return on Capital Employed targets) would not have invested in Trion due to either lower oil price assumptions, or higher hurdle rates.^[3]

Woodside has increased its exposure to high-cost, pre-FID assets. When Woodside acquired Louisiana LNG in 2024, its business case appeared weak – higher cost than 76% of other US LNG projects^[4], relying on operating the asset more effectively than the previous owner could, and a cross-subsidy from trading revenue.^[5]

Woodside is persevering with Browse which is more expensive than 70% of other pre-FID gas projects globally.^[6] Woodside spent over $800m^[7] on the project from 2010-16, after which it stopped separately disclosing the project’s costs. This means that Browse has cost more than double KPMG’s independent valuation in 2022.^[8] Shell divested its stake in 2023, because “in comparison with some of the other opportunities [Shell] had… it did not rank from a returns perspective. It was also disadvantaged from a carbon perspective.”^[9]

Woodside’s poor record of project execution further raises risks associated with sanctioning new oil and gas projects. Its last completed major greenfields projects, Pluto^[10] and Sangomar,^[11] were both late and over-budget.

The Board’s capital allocation framework supports hydrocarbon production growth, which in recent years has included high-cost, high-carbon, low-value projects that have contributed to Woodside’s financial underperformance.

Failure to prioritise capital returns

ACCR research^[12] indicates that prior to the FY24 acquisitions, share buy-backs would generate an estimated 22% more value than executing Woodside’s pre-FID projects.

Some peers have recently adjusted their capital allocation frameworks to increase shareholder returns, including Santos, which has reduced its production guidance and is implementing a “capital ceiling”.^[13]

Since the BHP Petroleum merger in 2022, Woodside has doubled its capex and halved its dividend.^[14]

The Board has not materially responded to escalating investor feedback including the 58% vote against its climate plan in 2024

Woodside’s first climate plan in 2021 was voted against by 49% of investors; in 2024, this rose to 58% against.

From 2021-2025, Woodside added disclosures but has not substantively addressed investors’ climate concerns, including:

• no scope 3 reduction target – in fact, the company’s scope 3 emissions would increase by 27% if Louisiana LNG reaches FID.^[15]
• an overreliance on offsets to meet scope 1 targets – because Woodside’s scope 1 and 2 emissions were higher in 2024 than its baseline, all of its reductions in 2024 were due to offsets.^[16]
• allocating more than 80% of capex to fossil fuel projects since setting a “new energy” capex target in 2021.^[17]

Despite the majority vote against its CTAP and five years of escalating feedback, the Board’s response has largely been to restate the existing strategy and hold more engagements with investors. Woodside still has no credible plan to become Paris-aligned and its CTAP does not have market support.

Because of the Board’s ongoing failure to manage climate risk and Woodside’s chronically poor shareholder returns, a vote against all directors is warranted.

Members’ statement for resolution relating to the re-election of Ben Wyatt (984 words inc footnotes)

Last year’s 58% vote against Woodside’s Climate Transition Action Plan (CTAP) is the world’s only majority vote against a company climate plan. In response, the Board has not altered its strategy. This is a repetition of Woodside’s persistent failure to respond to material shareholder votes around climate risk management. In addition, Woodside has significantly and chronically underperformed relative to the local market and the global oil and gas sector. Downplaying strong investor feedback and persisting with a flawed strategy raises serious governance concerns.

Woodside’s directors share collective responsibility for the company’s failings. Having sat on the Sustainability Committee for two years until December 2023, Ben Wyatt shares responsibility for the climate plan. As current chair of the Audit and Risk Committee his responsibilities include oversight of climate risk. A vote against his re-election is warranted.

Chronic share price underperformance

Woodside’s total shareholder return (TSR) in 2024 was -21%^[1:1], (US$ basis). This continues a trend of material long term underperformance: over a 15-year period it delivered just 0.7% p.a. TSR. Woodside’s TSR also benchmarks poorly. Over five, ten and 15 years respectively, its absolute TSR was 40%, 86% and 168% lower than the ASX100. Whilst the Ukraine war did trigger stronger returns, Woodside still lags its sector: over one, three, five, ten and 15 years respectively, it delivered returns 24%, 20%, 55%, 43% and 83% lower than the MSCI Global Energy index.

Flawed capital allocation strategy

Despite lacklustre returns, Woodside persists with a hydrocarbon growth strategy, progressing marginal projects abetted by a flawed capital allocation framework.

Woodside has a higher oil price assumption than many of its peers including BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Equinor, Shell and TotalEnergies.^[2:1] This year Woodside increased it by a further 7%.

Assuming higher revenue without higher hurdle rates risks Woodside sanctioning marginal projects, which would not meet some peers’ minimum return thresholds. For example, ACCR analysis suggested most peers (with disclosed hurdle rates or Return on Capital Employed targets) would not have invested in Trion due to either lower oil price assumptions, or higher hurdle rates.^[3:1]

Woodside has increased its exposure to high-cost, pre-FID assets. When Woodside acquired Louisiana LNG in 2024, its business case appeared weak – higher cost than 76% of other US LNG projects^[4:1], relying on operating the asset more effectively than the previous owner could, and a cross-subsidy from trading revenue.^[5:1]

Woodside is persevering with Browse which is more expensive than 70% of other pre-FID gas projects globally.^[6:1] Woodside spent over $800m^[7:1] on the project from 2010-16, after which it stopped separately disclosing the project’s costs. This means that Browse has cost more than double KPMG’s independent valuation in 2022.^[8:1] Shell divested its stake in 2023, because “in comparison with some of the other opportunities [Shell] had… it did not rank from a returns perspective. It was also disadvantaged from a carbon perspective.”^[9:1]

Woodside’s poor record of project execution further raises risks associated with sanctioning new oil and gas projects. Its last completed major greenfields projects, Pluto^[10:1] and Sangomar,^[11:1] were both late and over-budget.

The Board’s capital allocation framework supports hydrocarbon production growth, which in recent years has included high-cost, high-carbon, low-value projects that have contributed to Woodside’s financial underperformance.

Failure to prioritise capital returns

ACCR research^[12:1] indicates that prior to the FY24 acquisitions, share buy-backs would generate an estimated 22% more value than executing Woodside’s pre-FID projects.

Some peers have recently adjusted their capital allocation frameworks to increase shareholder returns, including Santos, which has reduced its production guidance and is implementing a “capital ceiling”.^[13:1]

Since the BHP Petroleum merger in 2022, Woodside has doubled its capex and halved its dividend.^[14:1]

The Board has not materially responded to escalating investor feedback including the 58% vote against its climate plan in 2024

Woodside’s first climate plan in 2021 was voted against by 49% of investors; in 2024, this rose to 58% against.

From 2021-2025, Woodside added disclosures but has not substantively addressed investors’ climate concerns, including:

• no scope 3 reduction target – in fact, the company’s scope 3 emissions would increase by 27% if Louisiana LNG reaches FID.^[15:1]
• an overreliance on offsets to meet scope 1 targets – because Woodside’s scope 1 and 2 emissions were higher in 2024 than its baseline, all of its reductions in 2024 were due to offsets.^[16:1]
• allocating more than 80% of capex to fossil fuel projects since setting a “new energy” capex target in 2021.^[17:1]

Despite the majority vote against its CTAP and five years of escalating feedback, the Board’s response has largely been to restate the existing strategy and hold more engagements with investors. Woodside still has no credible plan to become Paris-aligned and its CTAP does not have market support.

Because of the Board’s ongoing failure to manage climate risk and Woodside’s chronically poor shareholder returns, a vote against all directors is warranted.

Members’ statement for resolution relating to the election of Anthony O’Neill (978 words inc footnotes)

Last year’s 58% vote against Woodside’s Climate Transition Action Plan (CTAP) is the world’s only majority vote against a company climate plan. In response, the Board has not altered its strategy. This is a repetition of Woodside’s persistent failure to respond to material shareholder votes around climate risk management. In addition, Woodside has significantly and chronically underperformed relative to the local market and the global oil and gas sector. Downplaying strong investor feedback and persisting with a flawed strategy raises serious governance concerns.

Woodside’s directors share collective responsibility for the company’s failings. Tony O’Neill has sat on the Sustainability Committee since his appointment in June 2024, and therefore shares responsibility for the Board’s response to the majority vote against the climate plan. A vote against his election is warranted.

Chronic share price underperformance

Woodside’s total shareholder return (TSR) in 2024 was -21%^[1:2], (US$ basis). This continues a trend of material long term underperformance: over a 15-year period it delivered just 0.7% p.a. TSR. Woodside’s TSR also benchmarks poorly. Over five, ten and 15 years respectively, its absolute TSR was 40%, 86% and 168% lower than the ASX100. Whilst the Ukraine war did trigger stronger returns, Woodside still lags its sector: over one, three, five, ten and 15 years respectively, it delivered returns 24%, 20%, 55%, 43% and 83% lower than the MSCI Global Energy index.

Flawed capital allocation strategy

Despite lacklustre returns, Woodside persists with a hydrocarbon growth strategy, progressing marginal projects abetted by a flawed capital allocation framework.

Woodside has a higher oil price assumption than many of its peers including BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Equinor, Shell and TotalEnergies.^[2:2] This year Woodside increased it by a further 7%.

Assuming higher revenue without higher hurdle rates risks Woodside sanctioning marginal projects, which would not meet some peers’ minimum return thresholds. For example, ACCR analysis suggested most peers (with disclosed hurdle rates or Return on Capital Employed targets) would not have invested in Trion due to either lower oil price assumptions, or higher hurdle rates.^[3:2]

Woodside has increased its exposure to high-cost, pre-FID assets. When Woodside acquired Louisiana LNG in 2024, its business case appeared weak – higher cost than 76% of other US LNG projects^[4:2], relying on operating the asset more effectively than the previous owner could, and a cross-subsidy from trading revenue.^[5:2]

Woodside is persevering with Browse which is more expensive than 70% of other pre-FID gas projects globally.^[6:2] Woodside spent over $800m^[7:2] on the project from 2010-16, after which it stopped separately disclosing the project’s costs. This means that Browse has cost more than double KPMG’s independent valuation in 2022.^[8:2] Shell divested its stake in 2023, because “in comparison with some of the other opportunities [Shell] had… it did not rank from a returns perspective. It was also disadvantaged from a carbon perspective.”^[9:2]

Woodside’s poor record of project execution further raises risks associated with sanctioning new oil and gas projects. Its last completed major greenfields projects, Pluto^[10:2] and Sangomar,^[11:2] were both late and over-budget.

The Board’s capital allocation framework supports hydrocarbon production growth, which in recent years has included high-cost, high-carbon, low-value projects that have contributed to Woodside’s financial underperformance.

Failure to prioritise capital returns

ACCR research^[12:2] indicates that prior to the FY24 acquisitions, share buy-backs would generate an estimated 22% more value than executing Woodside’s pre-FID projects.

Some peers have recently adjusted their capital allocation frameworks to increase shareholder returns, including Santos, which has reduced its production guidance and is implementing a “capital ceiling”.^[13:2]

Since the BHP Petroleum merger in 2022, Woodside has doubled its capex and halved its dividend.^[14:2]

The Board has not materially responded to escalating investor feedback including the 58% vote against its climate plan in 2024

Woodside’s first climate plan in 2021 was voted against by 49% of investors; in 2024, this rose to 58% against.

From 2021-2025, Woodside added disclosures but has not substantively addressed investors’ climate concerns, including:

• no scope 3 reduction target – in fact, the company’s scope 3 emissions would increase by 27% if Louisiana LNG reaches FID.^[15:2]
• an overreliance on offsets to meet scope 1 targets – because Woodside’s scope 1 and 2 emissions were higher in 2024 than its baseline, all of its reductions in 2024 were due to offsets.^[16:2]
• allocating more than 80% of capex to fossil fuel projects since setting a “new energy” capex target in 2021.^[17:2]

Despite the majority vote against its CTAP and five years of escalating feedback, the Board’s response has largely been to restate the existing strategy and hold more engagements with investors. Woodside still has no credible plan to become Paris-aligned and its CTAP does not have market support.

Because of the Board’s ongoing failure to manage climate risk and Woodside’s chronically poor shareholder returns, a vote against all directors is warranted.

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• Panguna mine in Bougainville, where an independent assessment funded by the company has identified serious and imminent risks to life posed by a collapsing mine pit, failing levees and deteriorating infrastructure; access to clean water; and concerns raised about community engagement.
• Bungaroo Aquifer in the Pilbara, Australia, where Traditional Owners have reported that water over-abstraction by the company is causing water insecurity and damage to their cultural landscape, confirmed by independent hydrological assessment that abstraction is damaging the Bungaroo.
• QMM mine in Madagascar, where communities have reported negative impacts to health, livelihoods and environment related to mine wastewater contamination and tailings dam failures, with associated rights concerns.

During the engagement, Rio Tinto acknowledged shareholders could benefit from more visibility of these issues, however it is ACCR's view that the company has much more work to do in addressing critical risks and engaging effectively with communities in all three cases.

ACCR considers Rio Tinto to be crucial to the global energy transition and therefore its investors have an interest in ensuring Rio Tinto’s approach to critical business risk management and governance is as robust as possible.

Commenting on the engagement outcomes, Brynn O’Brien, Executive Director, ACCR, said:

“Investor interest in the risk management approach by major resources companies to issues directly impacting communities has been heightened since the Samarco disaster involving BHP and Vale, and the destruction of irreplaceable cultural heritage at Juukan Gorge by Rio Tinto.

“Investors have an interest in ensuring Rio Tinto’s approach to critical business risk management and governance is as robust as possible.

“ACCR has had intensive recent engagement with Rio Tinto about its approach to management of risks to life, water, culture and environment – as the company was not demonstrating it was prioritising these risks and the surrounding concerns of impacted communities.

“Through the engagement, ACCR formed a view that Rio Tinto’s response to community concerns is overly led by process - so much so that it impedes timely and meaningful action. While establishing processes is important, a 'process-heavy' approach without tangible outcomes weakens the company's ability to address serious risks in a timely and appropriate manner.

“ACCR did not proceed to a shareholder resolution in this case because we judged that a contested resolution on these matters would not deliver the required outcome, which is timely action.

“Rio Tinto has an opportunity to show the market it is a responsible operator by committing to practical strategies to resolve the issues raised by communities affected by its historical and ongoing business activities.

“In our view there is value in shareholders continuing to engage on these community safety, human rights and water resource management issues.

“ACCR appreciates our engagement with Rio Tinto Ltd over various issues for the better part of a decade, the longevity of which engenders a robust and meaningful exchange.”

Key Points:

• BP plans to increase oil and gas production to 2.3-2.5mmboed in 2030, confirming the widely reported abandonment of its target to cut oil and gas production 20-30% by 2030.
• Guidance for upstream capex has increased to $10bn per annum by 2027, which will represent 66-77% of total capex.
• BP announced a reduction in annual capex into renewables of $5bn, now targeting a range of $1.5–2bn p.a.
• The company has not yet responded to a letter sent by investors with around £5 trillion in AUM to the Company calling for a say-on-climate and updates to its capex framework.
• No changes were made to the investment framework, despite investor pressure for more capital discipline.

Commenting on the results, Nick Mazan, UK Company Strategy Lead, ACCR, said:

“BP had no choice but to take action to restore investor confidence, however its plan to ramp up oil and gas production is the wrong diagnosis of the problem and will alarm many long-term investors.

“Investors have called for capital discipline, and BP’s now abandoned hydrocarbon production target was an important driver of capital discipline in this company.

“Last week, institutional investors with £5 trillion in AUM wrote to BP’s Chair calling for updates to its investment framework to impose greater discipline on upstream capex. Investors are unconvinced by BP’s ability to allocate capital responsibly - a concern heightened by the fact that BP’s portfolio of unsanctioned oil and gas projects are relatively expensive compared to peers.

“In terms of strategy, increasing oil and gas production is not a re-set, it is retrograde.

“Cutting its renewables investments does not remedy one of the greatest risks for long-term shareholders and drivers of poor performance, which is its out-dated business model predicated on pouring capex into its oil and gas portfolio even as demand is projected to start declining this decade.

“Since 2019, the capex BP allocated to its low carbon portfolio has been just one sixth of that allocated towards upstream and if BP wants to get serious about capital discipline upstream is where it needs to be looking.

“BP continues to behave reactively, demonstrating a lack of strategic conviction. The scrapping of the previously approved climate targets, without properly consulting investors, is reflective of this and raises concerns about the governance of the Company.

“It is disappointing to see that the company is unwilling to meet the asks of institutional investors, in not using this moment to announce a vote on the energy transition strategy. Investors must ensure that the company is held accountable for walking back on its emissions targets once again.

“The company needs to make significant changes if it is to prove to investors that it can manage risks as demand for oil and gas falls through the energy transition.”

Background

As reported in the Financial Times last week, 48 investors – including Phoenix Group, Rathbones Investment Management, Robeco and Royal London Asset Management – signed a letter sent to BP’s chair, Helge Lund, that called for a shareholder vote on any potential roll-back of the company’s climate targets and aims.

In January this year, ACCR released “BP: Capex beyond Paris”, which found that BP’s capital allocation towards new oil and gas projects is not consistent with the goals of the Paris Agreement despite a binding 2019 commitment to shareholders. It is available to read online.

Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“Woodside may claim to be laying the foundation for a ‘new chapter’ of value creation, but it is just another page in the same old book.

“It is staggering that despite chronic share price underperformance, Woodside is leaving its capital management framework unchanged – digging its heels in on a flawed strategy.

“Over the last 15 years Woodside has generated 0.7% p.a total shareholder return on a US$ basis. In absolute terms over this time, Woodside delivered 168% lower returns than the ASX100 and 83% less than the MSCI World Energy index. Even the US cash rate generated 11% higher returns than Woodside.

“Woodside dropped its final dividend by 12%. Since the BHP Petroleum merger in 2022, it has doubled its capex and halved its dividend. This bucks the industry trend which is to allocate more funds to shareholder returns relative to capex.

“Astonishingly, Woodside increased its oil price assumption from $70 to $78 per barrel, calling into question Woodside’s claims of capital discipline.

“Only a year ago, investors comprehensively rejected Woodside’s climate plan, yet Woodside has made no meaningful response with nothing to show for a year of ‘listening’ to shareholders.

“The board seems in denial that its current strategy does not have market support.

“Some investors might tolerate inadequate response to feedback if returns were high, but Woodside is delivering substantially lower returns than both its peers and the market, whilst persisting with a high-risk fossil fuel growth strategy.

“Nothing in today’s reports indicate that Woodside realises it has a problem, let alone knows how to fix it.”

Background

Total Shareholder Returns are calculated on a USD basis, using the year(s) ending 31 December, 2024. US cash rate is based on the US Federal Reserve bank’s interest rate. Data sourced from Bloomberg Finance L.P.; used with permission of Bloomberg Finance L.P.

• Underlying profit decreased from Q3, at $2.26bn, to $1.16bn, even though oil and gas production is relatively stable (-3%), partly due to weaker realised refining margins
• Net debt is reduced to $23bn, as a result of $2.8bn of divestments and the issuance of around $2.5bn in hybrid bonds.
• BP expects another $3bn in divestments in 2025, as it works towards the completion of its $25bn divestment schedule.

Commenting on the results, Nick Mazan, UK Company Strategy Lead, ACCR, said:

“These are undoubtedly poor results for BP, but investors would be mistaken to think that the solution is to allocate more capital towards fossil fuels.

“It was inevitable that the profits made by oil and gas companies over the past few years were not sustainable. The waning of Asian demand is likely a sign of trouble to come for the sector, and in particular BP’s growth projects, which are shown to be relatively high on the cost curve.

“We support calls for increased capital discipline and, with most capital being allocated to fossil fuel projects, BP’s upstream capex deserves the most scrutiny. BP should make clear to investors how it will ensure that capital discipline is applied to its upstream projects and not just its low carbon portfolio.

“If, as widely forecast, BP drops its scope 3 production target, the risks of capital misallocation are only heightened. It places greater emphasis on BP’s capex framework, which our research shows is not fit-for-purpose and has allowed it to over-invest in fossil fuels.

“Many of BP’s potential FIDs are not cost competitive, with all of its material gas opportunities being more expensive than 60% of competing projects.

“BP continues to underperform peers, and there is a growing consensus amongst investors that governance changes are required to ensure that the company is able to effectively navigate the energy transition.

“BP has flagged ‘a fundamental reset of our strategy’ at its Capital Markets Day later this month. Investors will look to see how BP’s new strategy will respond to the impact of rapidly decreasing renewables costs which are destroying demand for fossil fuels, and not just more recent political trends.”

Background

In January this year, ACCR released “BP: Capex beyond Paris”, which found that BP’s capital allocation towards new oil and gas projects is not consistent with the goals of the Paris Agreement despite a binding 2019 commitment to shareholders. It is available to read online.

• 12% reduction in adjusted operating income for the year

• 6% increase in its 2030 oil and gas production target, based on:

  • minor reductions in its Norwegian Continental Shelf production
  • a 40% increase in international production, which is 15% greater than last year’s Capital Markets Update

• reduction in its 2030 renewables targets from 12-16GW to 10-12GW.

Commenting on the results, Martin Norman, Investor Engagement Lead, ACCR, said:

“Today’s Capital Markets Update was another missed opportunity for Equinor to acknowledge the problems with its international oil and gas investments and finally cease allocating capital to further developments.

“International expansion has made Equinor’s investors, including the Norwegian people, poorer. Equinor should have stopped allocating capital to new international projects long ago.

“For over 20 years, Equinor’s oil and gas investments outside of Norway have delivered woeful returns. Not just lower than its highly profitable Norwegian projects but barely breaking even in nominal terms.

“We’ve found that Equinor’s $103 billion capex investment in international oil and gas has delivered $54 billion less than a comparable investment in Norway’s sovereign wealth fund would have. When considering the Norwegian state’s current stake in Equinor, this implies that Norwegians are $36 billion poorer due to Equinor’s decisions.

“The scope 3 emissions associated with Equinor’s international portfolio are five times larger than all of Norway’s domestic emissions. Continued international oil and gas growth will inevitably exacerbate this problem.

“Ahead of its 2025 AGM, investors will be watching closely to understand how Equinor’s next climate plan will meet the expectations of its majority owner and bring its portfolio into alignment with the goals of the Paris Agreement. Our research shows that ceasing international development and halting all exploration would move Equinor towards Paris alignment without diluting shareholder value.”

Background

ACCR’s recently published research, The road not taken: Equinor’s alternative to international oil and gas growth, found that:

• Despite Equinor spending $103 billion expanding its oil and gas portfolio outside of Norway between 2001 and 2023, the international portfolio has only generated $2 billion in nominal terms.

• Equinor’s international oil and gas projects have emitted 5 times Norway’s domestic emissions and are forecast to emit twice as much again by the end of the century.

• If, instead of pursuing international oil and gas growth, Equinor had paid out higher dividends to shareholders:

  • investments in the Government Pension Fund Global equities (or a similar diversified equities fund) would have generated $54 billion more value than Equinor's international oil and gas assets
  • which means the Norwegian state would have been $36 billion (400 billion NOK) better off.

• The company says it has been ‘radically improving’ and ‘optimising’ its international investments since 2013. However, our modelling shows its international investments since this time have lost money – more than $1 billion in nominal terms. This raises significant questions about the credibility of Equinor’s ability to reform its international portfolio.

“The road not taken: Equinor’s alternative to international oil and gas growth” models a hypothetical scenario where, instead of pursuing international growth over two decades, Equinor paid higher shareholder dividends. This includes paying dividends to the Norwegian state, which under law would have invested this money in the Government Pension Fund Global (GPFG).

The findings show investments in GPFG equities would have generated $54 billion more value than Equinor’s international oil and gas assets, which means Norwegians would have been $36 billion (400 billion NOK) better off.

This is because Equinor’s international oil and gas portfolio has only generated US$2 billion in nominal terms from 2001 to 2023, despite US$103 billion of spending on international expansion.

Equinor’s international oil and gas projects have emitted five times Norway’s domestic emissions since 2001(6.3 GtCO2e) and are forecast to emit twice as much again by 2100.

Commenting on the research, Martin Norman, Investor Engagement Lead, ACCR said:

“Equinor’s leadership has serious questions to answer after delivering an international growth strategy with meagre returns and heavy emissions that has left Norwegians poorer, not richer.

“When investing the high returns from its domestic business in 2001, Equinor had a choice, and our research shows its decision to persist with an international growth strategy – for two decades - has taken away opportunities for shareholders to pursue long-term, diversified returns.

“Equinor’s shareholders should be wary of the company’s claims that it can fix this problem. Equinor has been repeatedly claiming to be improving its international portfolio for at least a decade, but since it started making these claims its international investments have lost more than US$1 billion (nominal).

“Our own earlier research found that ceasing international development and halting all exploration would move Equinor towards Paris alignment without diluting shareholder value. This new research intensifies the need for Equinor to explain in its forthcoming climate plan how it will manage the emissions and expense of its international portfolio as the global energy transition accelerates.”

Shell has announced that:

• shareholder distributions were above the target of 30-40% of CFFO for the year. An increase in the dividend of 4% was announced, as well as a $3.5bn shareholder buyback program.
• quarterly adjusted earnings were down by 39%, with reductions in all segments, except for Corporate & NCI.
• Integrated Gas earnings were down from $2.9bn to $2.2bn, which the company attributes to the expiry of hedging contracts, less LNG production and higher exploration write offs.
• LNG liquefaction volumes are down from 7.5 MT to 7.1 MT from Q3 to Q4. The newest guidance is that this will likely fall further in Q1 2025 to between 6.6-7.2 MT.
• LNG sales volumes also decreased from Q3 to Q4 2024, from 17 MT to 15.5 MT.
• annual cash capex of $21.1bn was 14% below 2023 cash capex and below guidance of $22-25bn.

The results come as Shell’s LNG business faces scrutiny at the upcoming annual general meeting (AGM), following the filing of a shareholder resolution by institutional investors.

Nick Mazan, UK Company Strategy Lead, ACCR, said:

“The lower annual capex and high shareholder distributions reflect the dwindling options for oil and gas companies, particularly as Shell seems to be dismantling its renewables and energy solutions business.

“Lower quarterly earnings from the Integrated Gas segment may be a taste of what Shell is likely to see in coming years, as LNG supply ramps up and we enter a new pricing regime in an oversupplied market.

“This could be a turning point as the power shifts from LNG sellers to buyers, because there is going to be increasing downward pressure on pricing as demand growth is unlikely to meet Shell’s bullish forecasts. For every $1/mmbtu LNG price fall, ACCR models that Shell will experience a -$13bn impact on NPV.

“The concern for investors is that Shell has made a big bet on LNG on the back of short-term record profits. However, new LNG facilities, and many of Shell’s LNG purchase contracts, will be in place for decades. Adopting bullish long-term assumptions based on recent history is not a prudent basis for making multi-decade, multi-billion dollar investments.

”Investor attention is already on Shell’s LNG portfolio, following the filing of a shareholder resolution by institutional investors asking for greater transparency around how Shell arrives at the levels of demand in its LNG Outlook.

“These results appear to be part of an overall trend of declining profits in the oil and gas sector, following two years of record earnings through a period of unprecedented upheaval in global energy markets. ACCR research shows that Shell has not materially updated the prior assumptions underpinning its LNG outlook to account for those upheavals – which have resulted in permanent demand destruction in many markets. As a result, investors have reason to query the soundness of Shell’s assumptions underpinning its bullish LNG outlook, and to be calling for greater transparency.”

Conor Constable, Head of Stewardship, Pensions & Investment Research Consultants Ltd (PIRC), said:

“Shell’s LNG Outlook is due to be released on the 25 February. As Shell has made such a big bet on LNG, investors should scrutinise this closely to ensure that the Company is using credible assumptions in its forecasts.”

Background

About PIRC

Pensions & Investment Research Consultants Ltd (PIRC) is Europe’s largest independent corporate governance and shareholder advisory consultancy with over 30 years’ experience in providing stewardship and proxy research services to institutional investors on environmental, social and governance issues. PIRC protects and enhances the long-term returns of major investors by promoting the highest corporate standards.

PIRC serve as representatives of Greater Manchester Pension Fund and Merseyside Pension Fund, who recently co-filed a shareholder resolution alongside ACCR on Shell’s LNG strategy.

BP: Capex beyond Paris, released today by the Australasian Centre for Corporate Responsibility (ACCR), shows that:

• none of the oil and gas projects BP took a final investment decision (FID) on in 2023 were aligned with the International Energy Agency’s (IEA) Net Zero Emissions (NZE) pathways for oil and gas.
• none of BP’s major unapproved oil and gas projects scheduled for FID before 2030 align with the IEA’s NZE, and the portfolio does not have a cost advantage.

In 2019, 99% of BP’s shareholders – and management – supported a binding special resolution which commits BP to annually review and disclose “the consistency of each new material capex investment”^[1] with the goals of the Paris Agreement. However, ACCR’s research finds that BP’s capital allocation and expenditure far exceeds a Paris-consistent framework.

The research comes ahead of BP’s Investor Day in February, where it is widely speculated the company will announce it is abandoning its target to reduce oil and gas production, following the initial weakening of this target in 2022. If the target is dropped, ACCR forecasts BP will produce 84% more oil and gas in 2030 than it targeted in 2020.

Commenting on the research, Nick Mazan, UK Company Strategy Lead, ACCR, said:

“Oil and gas markets are in a state of structural decline. The onus is on BP to demonstrate how any new investment in fossil fuels is in the interests of long-term shareholders, and aligned with the goals of the Paris Agreement. In our view, this is what the 2019 resolution requires, and what shareholders are entitled to expect.

“BP claims its capex is aligned with the goals of the Paris Agreement. However, if all oil and gas companies applied the same price-based framework as BP, they would sanction enough projects to exhaust the remaining carbon budget for a Paris-aligned world five times over.

“This should be cause for major investor concern. While BP committed in 2019 to disclose how each new material capex investment was Paris-aligned, it has assessed less than half of its greenfield oil and gas capex since 2019, and only provided very select detail to investors.

“BP’s claims of a disciplined approach to capex also require further testing. Our research found that the prices used in its capex framework are well above the average break-even for all unsanctioned oil and gas projects.

“Decarbonisation is essential to BP’s energy transition resilience, and as the company walks back from its target to reduce hydrocarbon production, capital allocation becomes even more critical to keeping the company on track.”

The resolution was filed by Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, which have combined assets under management of US$86 billion.

The Australasian Centre for Corporate Responsibility (ACCR) is also a co-filer and UK-based responsible investment NGO, ShareAction, supported the filing along with more than 100 individual shareholders.

Shell plans to grow its LNG business by an expected 20-30% by 2030, with LNG projected to account for nearly one-third of the company’s upstream hydrocarbon production by the end of the decade.

Investors are seeking greater transparency around how Shell arrives at the levels of demand in its LNG Outlook because:

• Shell has more uncontracted LNG than any other independent oil and gas company, making it highly exposed to value erosion should prices be lower than planned for.
• Shell’s LNG growth strategy is built on an anticipated level of demand higher than every scenario put out by the International Energy Agency (IEA) and appears to have misinterpreted independent analysis in substantiating its demand projections.
• Shell's LNG demand outlook has not been materially revised in response to major changes in the global energy market.

Investors require additional information to better assess the material risks associated with the company’s LNG portfolio and how it is managing those risks.
The resolution has been submitted to Shell for its annual general meeting in May 2025.

The resolution and supporting statement can be viewed here.

ACCR research: Shell’s LNG strategy: Overcooked?

Vaishnavi Ravishankar, Head of Stewardship, Brunel Pension Partnership, said:

“Brunel is deeply concerned about the apparent disconnect between Shell's LNG growth strategy and its stated climate targets and Paris-aligned pathway. We need to see further transparency to assess Shell's alignment with climate goals, particularly in the context of the recent removal of its interim 2035 climate target. We are committed to engaging with Shell to enhance the ambition, transparency, and credibility of its climate transition efforts.”

Spokesperson, Great Manchester Pension Fund, said:

“As an active owner, we want to ensure that the strategies of energy companies are aligned with reducing carbon emissions, can be realistically achieved, and ultimately protect shareholder value. As such, when putting forward an LNG demand outlook that is more than 300% above the IEA’s 1.5-degree scenario, the onus is on Shell to explain how this position can be considered credible in the context of the company’s existing climate commitments.”

Owen Thorne, Responsible Investment Manager, Merseyside Pension Fund, said:

“We are in the midst of a rapid energy transition creating material risks to the business models of existing oil and gas majors. Given the direction of travel, investors urgently require enhanced disclosure to reconcile the high demand forecasts set out by Shell with the fundamentals of energy markets and the views put forward by independent energy forecasters.”

Nick Mazan, ACCR, UK Company Strategy Lead, said:

“Investors are looking at Shell’s LNG demand outlook which predicts a massive uptick in demand for fossil gas on the one hand, and at Shell’s commitments to the goals of the Paris Agreement on the other hand. It is unclear how and whether the company intends to make these pieces fit.

“It is incumbent on Shell to explain to investors why it is building a strategy around huge growth in LNG demand from the very countries where the uptake of affordable renewables is surging.

“Shell is more financially exposed to LNG than any other independent oil and gas company and presumes investors should trust it unreservedly when it cites substantial future LNG demand growth. This resolution encourages Shell to be transparent about its LNG growth assumptions so that investors can be assured the company is allocating their capital responsibly.

“The bullish position of Shell and other oil and gas companies on LNG demand is high on the agenda for investors, who are not able to reconcile these high forecasts with the fundamentals of energy markets, nor with the view put forward by independent energy forecasters.”

Simon Rawson, Deputy CEO at ShareAction, said:

“More than 100 individuals have joined the institutional investors to make this shareholder resolution possible because they share a deep concern that Shell’s climate plans are not consistent with the Paris Agreement to limit global warming. They want to see fossil fuel companies take responsibility for their huge impact on climate by making credible plans before it’s too late.”

Background

About Brunel

Brunel Pension Partnership is a UK-based Local Government Pension Scheme (LGPS) pool that consolidates the investments of ten like-minded funds, collectively managing approximately £35 billion in assets.

About Greater Manchester Pension Fund

Greater Manchester Pension Fund is the largest LGPS fund in the UK, managing over 30 billion pounds on behalf of approximately 400,000 members.

About Merseyside Pension Fund

Merseyside Pension Fund manages over 10 billion pounds on behalf of 153,000 active, deferred and pensioner members of the Local Government Pension Scheme (LGPS).

About ShareAction

ShareAction is an NGO working to shape a world where the financial system serves our planet and its people. We mobilise global investors to use their influence to drive up labour standards, tackle climate change, protect the natural world, and improve people’s health. We push policymakers to ensure the financial system is working in the best interests of society. We work with people to create a movement for change. Visit shareaction.org or follow us @ShareAction to find out more.

This resolution was filed by Brunel Pension Partnership; Greater Manchester Pension Fund; Merseyside Pension Fund; and the Australasian Centre for Corporate Responsibility (ACCR). UK-based responsible investment NGO, ShareAction, supported the filing, along with more than 100 individual shareholders.

This page contains the resolution and supporting statements.

Special Resolution

Shareholders request that the Company disclose whether and how its:

• demand forecast for liquified natural gas (LNG);
• LNG production and sales targets; and
• new capital expenditure in natural gas assets;

are consistent with its climate commitments, including its target to reach net zero emissions by 2050.

These disclosures shall be made by no later than the 2026 Annual General Meeting and shall include the criteria, data sources, methodologies and assumptions used to underpin these claims with reasonable detail, without disclosing any specific matters which are commercially sensitive.

Supporting Statement to Special Resolution

The proposal seeks clarity for Shell investors as to how the company arrives at the levels of Liquified Natural Gas (LNG) demand in its LNG Outlook, and how it reconciles this demand with its broader strategy, including its climate commitments. This in turn should enable investors to better appraise the material risks associated with the LNG portfolio, and how the company is managing those risks.

Investors have cause to seek enhanced transparency from the company about its LNG Outlook because:

1. Shell is building its strategy around an anticipated level of demand which is higher than all scenarios put out by the International Energy Agency (IEA) and appears to have misinterpreted independent analysis in substantiating its demand projections.
2. Shell’s LNG demand outlook has not been materially revised in response to major changes in the global energy market.
3. Shell has more uncontracted LNG than any other independent oil and gas company, making it highly exposed to value erosion should prices be lower than planned for.

The proposal seeks enhanced disclosure related to the company’s LNG business as it is central to the company’s growth strategy and a major source of revenue. LNG is projected to account for 30% of Shell’s upstream hydrocarbon production in 2030. Shell plans to ‘grow [its] world-leading LNG business by an expected 20-30% by 2030’^[1] and grow liquefaction capacity by 25 to 30% over this period.

It is currently not clear how to assess alignment between the company’s LNG strategy and its commitment to reach net zero emissions by 2050.^[2] Shell does not explain the temperature outcome associated with its LNG Outlook, nor how it would meet its net zero commitments if the high levels of LNG demand do materialise, without relying on implausibly high levels of negative emissions technologies.^[3]

Shell’s LNG Outlook 2024 sees higher demand than all IEA scenarios

LNG demand in Shell’s LNG Outlook 2024 is higher than under all scenarios published by the IEA. By 2040, Shell’s LNG outlook is 19% higher than the IEA’s Stated Policies Scenario (STEPS) – a scenario which assumes no further climate policies are implemented. It is 92% above the Announced Pledges Scenario (APS), which assumes all proposed climate targets are met, but no more are introduced; and 301% higher than the Net Zero Emissions by 2050 scenario (NZE), which is aligned to 1.5°C.

It is unclear why Shell’s LNG demand assumptions are so much higher than the IEA. Investors require more transparency from Shell in relation to its demand assumptions, due to the significant financial implications for shareholders should this demand not materialise.

Shell’s LNG demand outlook has not responded to major changes in the global energy market

Since 2021, the IEA has made significant revisions to its LNG demand forecasts because of changes in global energy markets. Shell’s demand outlook has been much less responsive to these changes, with a reduction in the 2040 demand outlook of 33 Mtpa (-5%), which is equal to around one quarter of the change in the IEA APS over that period. This inertia in assumptions raises questions about the oversight of its LNG strategy.

Under the APS, the IEA has reduced the 2040 demand forecast by 131 Mtpa (-28%), to reflect changes in energy markets over the past four years. Russia’s invasion of Ukraine and the subsequent increase in LNG prices has accelerated global investments in renewables. Europe has seen a significant reduction in gas demand, which will continue as countries accelerate the deployment of renewables and heat pumps. Emerging markets such as Pakistan and Bangladesh were priced out of the market during the energy crisis, causing widespread energy outages^[4]. They responded by moving away from reliance on LNG imports, which had ‘acquired a reputation as a costly and unreliable fuel’^[5], instead pursuing independent energy security while reducing overall costs through fixed energy stocks such as solar.

Plans by regulators for expanding energy supply have consequently shifted. In Vietnam, a country which Shell references as a source of growing LNG demand in the power sector, the Power Development Plan projection for LNG-to-power in 2050 has been reduced by 50% - from 55.8GW in 2021 to 27.9GW in 2023.

Shell has more uncontracted LNG than any other independent oil and gas company

According to data from Rystad Energy, Shell has more uncontracted LNG than any other independent oil and gas company, with over 1bn tonnes of uncontracted LNG between 2024 and 2050. Therefore, its risk exposure to LNG prices is greater than any other company. There is expected to be a surplus of LNG supply in the second half of the 2020s, due to a large amount of LNG liquefaction capacity coming online^[6]. Lower prices will impact the company’s revenue and profitability, with every $1 /MMBtu reduction in the gas price eroding $13 billion in NPV^[7]. Given Shell’s exposure and bullish assumptions, it is incumbent on the company to substantiate its position.

The current Outlook lacks the granularity necessary for investors to assess the risks associated with Shell’s strategy, especially considering the substantial misalignment with all IEA scenarios. Investors have reasonable grounds to seek further information about the assumptions underpinning the LNG Outlook and the degree to which the Outlook is consistent with strategy, including climate commitments.

“Shell’s LNG strategy: Overcooked?” analyses Shell’s bullish outlook for future LNG demand, which exceeds all the International Energy Agency’s (IEA) global LNG forecasts. It finds that Shell’s LNG Outlook 2024 is betting on demand coming from a range of sources, primarily emerging markets, however:

• To compete with renewables in Asian emerging markets, Shell’s LNG prices would need to be so low that its LNG portfolio would erode shareholder value. Prices would need to drop below $5/MMBtu - significantly lower than LNG’s typical $8/MMBtu lifecycle cost, as estimated by the IEA. In this price environment, Shell’s:

  • producing assets would have minimal value
  • under construction projects would erode US$10 billion
  • pre-FID projects would not be sanctioned.

• Shell underestimates competition from renewables, which by 2030 when Shell has 40 Mt of uncontracted LNG, will be significantly cheaper than gas power in key emerging market economies Vietnam, the Philippines and Thailand.

• Shell incorrectly cites independent research to exaggerate the role of gas in decarbonising the Chinese steel sector. It also misinterprets the IEA’s Net Zero Emissions (NZE) scenario - the IEA’s only Paris-aligned scenario – with the effect of incorrectly showing that Shell’s forecast is closer to a 1.5°C scenario than it actually is.

The research also models Shell’s LNG market position using Rystad data, finding:

• Shell has built an unprecedented LNG long position relative to its peers. It has the world’s largest uncontracted LNG volume, with over a billion tonnes to 2050 – making it more exposed than any other company to a softer LNG market.
• This long position exposes Shell to financial risk should LNG demand, and hence price, fail to meet its expectations. We estimate the value of Shell’s LNG assets drops by $13 billion with each $1/MMBtu reduction in gas price.

Commenting on the research, ACCR’s UK Company Strategy Lead, Nick Mazan, said:

“Shell’s forecasts for LNG demand growth seem more based on hope than a reasoned and pragmatic understanding of energy markets.

“Shell assumes that emerging market policymakers are going to prioritise capital intensive, imported LNG over cheaper and faster-to-deploy renewables. But this would require gas to be priced below its lifecycle production cost - a scenario that would be detrimental to Shell’s investors.

“Shell’s seeming willful blindness to the growing cost-competitiveness of renewables in Asia, and other major shifts in the global energy market, raises questions for investors about the adequacy of governance at the company.

“This gamble on gas means Shell’s financial exposure to LNG prices is rapidly expanding - it has the largest exposure of all oil and gas supermajors.  If low-price scenarios eventuate - a distinct possibility, particularly if the IEA’s forecast “glut” eventuates - then the company and its shareholders could face significant value destruction.

“Shell’s long LNG position creates an incentive for the company to lobby to lock-in demand for LNG. Investors have already signaled concerns over Shell’s poor transparency on its emerging market lobbying and are eagerly awaiting promised improvements – this research highlights how critical this is.”

This is the first court case in the world to challenge the veracity of a company’s net zero emissions plan.

In August 2021, ACCR commenced proceedings in the Federal Court alleging Santos Ltd breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations contained in its 2020 Annual Report.

In August 2022, ACCR amended its case to include alleged greenwashing in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report, following additional information produced by Santos in the litigation discovery process.

In February 2023, the Federal Court ordered a court-supervised conferral between the parties' respective lawyers, for the purpose of clarifying and reducing the issues in dispute in the proceedings. Following the conferral process, ACCR sought and obtained leave of the Court to further amend its case. The purpose of the amendments is to reduce as far as possible the issues that will need to be heard and determined by the court, and to clarify ACCR’s claims in light of information that has arisen in the conferral process.

Link to video streaming will be available from the Federal Court. NSD858/2021 ACCR v Santos Ltd

The case is due to conclude on Friday 15 November 2024.

Background

In August 2021, the Australasian Centre for Corporate Responsibility (ACCR) commenced proceedings in the Federal Court alleging that Santos Ltd has breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations contained in its 2020 Annual Report.

ACCR later expanded its case to include representations contained in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report.

The representations concern three major areas:

1. Representations that Santos has a clear and credible pathway to:

• reduce its Scope 1 and 2 greenhouse gas emissions by 26-30% by 2030 (from its 2019-20 baseline); and
• achieve “net-zero” Scope 1 and 2 greenhouse gas emissions by 2040.

2. Representations that Santos is a producer of “clean energy”, and that natural gas is a “clean fuel”.
3. Representations that hydrogen produced from natural gas with carbon capture and storage (blue hydrogen) is “clean” and “zero emissions”.

Net Zero Representations

In the 2020 Annual Report, 2021 Climate Change Report and 2020 Investor Day Briefing, Santos made a number of statements that it had a clear and credible pathway to achieve “net zero” emissions by 2040.

A large amount of this reduction is anticipated to come from future carbon capture and storage (CCS) processes and blue hydrogen.

However, ACCR alleges that Santos failed to disclose that it has firm plans to increase its greenhouse gas emissions through expected oil and gas growth and exploration opportunities beyond 2025.

ACCR also alleges that Santos failed to disclose that its net zero plans depend upon a range of undisclosed and/or unreasonable qualifications and assumptions to reduce or offset Santos’ Scope 1 and 2 emissions, calling into question whether Santos had reasonable grounds to assert it has a “clear and credible” plan to reach net zero emissions by 2040.

Gas as Clean Energy Representations

Santos made a number of statements in its 2020 Annual Report that the natural gas it produces is “clean fuel” and provides “clean energy”.

ACCR says that these representations convey that the extraction of natural gas, and the generation of energy using that natural gas, does not have a material adverse effect on the environment and does not release material amounts of greenhouse gases into the atmosphere.

ACCR says that the 2020 Annual Report failed to disclose that the extraction, processing and use of natural gas releases significant quantities of carbon dioxide and methane into the atmosphere, gases that are key contributors to climate change and global warming.

Over the period covered by the 2020 Annual Report, Santos was responsible for the direct emission of approximately 7.74 million tonnes of CO2 equivalent through its operations, with the end-use of the natural gas it supplied resulting in the emission of approximately 28.6 million tonnes of CO2 equivalent. These figures were also not included in its 2020 Annual Report.

Blue Hydrogen is “Clean” and “Zero Emissions” Representations

In the 2020 Annual Report, 2021 Climate Change Report and 2020 Investor Day Briefing, Santos made a number of statements that the blue hydrogen it intends to produce is “clean” and “zero emissions”.

ACCR says these representations convey that any emissions generated by the production of blue hydrogen would be captured by CCS, such that there would be zero emissions from blue hydrogen production.

ACCR claims that Santos failed to disclose that blue hydrogen production will increase its Scope 1 and 2 emissions.

The Corporations Act and the Australian Consumer Law

In the case, ACCR  argues that by making the above representations in its 2020 Annual Report, Santos has engaged in conduct that was misleading or likely to mislead in relation to a financial product – its shares – in contravention of section 1041H of the Corporations Act 2001 (Cth).

It also argues that Santos engaged in conduct in trade or commerce that was misleading or likely to mislead in contravention of section 18 of the Australian Consumer Law.

Further, the case argues that in making the representations relating to gas being a ‘clean’ fuel or energy source, Santos engaged in conduct in trade or commerce that was likely to mislead the public as to the nature, characteristics, suitability, and quality of its primary product (natural gas) in contravention of section 33 of the Australian Consumer Law.

Why is this Important?

Investors need complete, open, and honest information relating to a company they have or are considering investing in.

Accurate information about how the global energy transition towards zero emissions may impact Santos’ future financial prospects is critical to investors’ ability to assess the viability of their investment and their financial and reputational exposure.

Misleading information can leave investors vulnerable to major losses and potentially skew the market unfairly in favour of companies that fail to adequately respond to the risks posed by the energy transition, and unfairly away from companies that are acting responsibly.

Further, by concealing opportunities for smart investment, misleading information may impede an effective and timely response to climate change.

Relief Sought From The Court

ACCR is asking the Federal Court to:

1. Make declarations that Santos has engaged in misleading or deceptive conduct, or conduct that is likely to mislead or deceive;
2. Grant an injunction prohibiting Santos from engaging in the same misleading or deceptive conduct in the future; and
3. Grant an injunction requiring Santos to issue a corrective statement regarding the environmental impacts of its operations.

Rio Tinto’s statement follows months of pressure on the company from institutional investors, who want to see companies like Rio use positive advocacy to secure better climate policies from government.

In July, it was revealed that Rio Tinto had participated in lobbying the Prime Minister to exclude climate from the EPBC Act. As a result, ACCR disengaged from Rio Tinto on improving its climate-related lobbying.

Now, in light of Rio Tinto’s updated position, ACCR will recommence engagement with Rio Tinto on its climate and decarbonisation opportunities.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This outcome demonstrates that activated and informed investors can make an impact on improving a company’s climate-related lobbying.

“ACCR met with Rio Tinto’s major institutional investors who then raised their own concerns directly with Rio Tinto. Investor pressure played a crucial role in prompting Rio Tinto to update its position on the EPBC Act.

“Investors are increasingly looking for companies to lead on decarbonisation and to support stronger climate policies. By listening to investors, Rio Tinto now has the opportunity to rebuild trust and demonstrate leadership by ensuring that its advocacy aligns with its public commitments on climate.”

The resolution requested the company provide additional disclosures about its forward plans and investments for Scope 3 emissions reductions from the steel value chain. BHP’s Scope 3 emissions, dominated by the processing of its iron ore and metallurgical coal into steel, account for 97% of its total emissions footprint.

The resolution was co-filed by Denmark's largest pension fund, PFA Pension Fund, and Vision Super, along with the Australasian Centre for Corporate Responsibility (ACCR). It sought enhanced transparency so shareholders can better assess how the company is addressing reducing its Scope 3 emissions in the steel value chain and positioning as the global demand shifts towards green steel.

• BHP’s 2024 CTAP improves disclosures on steel decarbonisation investment, providing clear insight into its forward financial allocation over the next five years to support steelmaking greenhouse gas emissions intensity reductions.
• The company also discloses a prioritisation framework for its steel decarbonisation plan.
• Co-filers look forward to ongoing engagement with the company towards further clarity on BHP’s plans for achieving net zero Scope 3 steelmaking emissions by 2050.

Rasmus Bessing, co-CIO and head of ESG investments at PFA, said:

“That the mining sector plays a crucial part in the transition towards a low carbon economy is an indisputable fact. Therefore, we are pleased that our continuous dialogue with BHP has led to additional progress in advancing its decarbonization efforts, both in terms of transparency to investors and strategic direction.

“Much can still be done, and we look forward to our future dialogues.”

Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super, said:

“BHP is a leader in the mining sector – and they’ve come a long way since 2019 with a strategy that better fits the world we are moving to.

“The company is also more frank about its plans and the challenges it faces. BHP has heard and addressed the concerns about long-term shareholder value that led us to co-sponsor the resolution, and as a result the resolution has been withdrawn. It’s a clear demonstration of the effectiveness of engagement with companies addressing the need to decarbonise the economy. However, 2023 was a record year for greenhouse gas emissions and atmospheric carbon now stands at more than 423 ppm. We all need to do better and quickly.”

Commenting on the resolution, Naomi Hogan, Company Strategy Lead, ACCR, said:

“BHP has clearly heard that investors want greater insights into how it is tackling the critical issue of steel decarbonisation and has taken an important step forward.

“Addressing the Scope 3 emissions from the processing of its iron ore offers BHP the most significant opportunity to reduce its climate impact and associated transition risks.

“ACCR welcomes the greater transparency from BHP on its forward steel decarbonisation investment, yet we are concerned by the lack of ambition it has revealed. A US$75 million direct spend over five years on steel decarbonisation is difficult to reconcile with the huge scale of the challenge posed by steelmaking emissions, which account for 81% of BHP's total emissions, and we would like to see greater ambition.

“The disclosure provided by BHP on its planned investment in steel decarbonisation is vitally important because it allows shareholders to better assess how the company is positioning for the green steel transformation - it demonstrates once again, that engagement with escalation is key to effective stewardship outcomes.

“There is momentum in the mining sector towards recognising that clear plans for reducing Scope 3 emissions in the steelmaking value chain are critical for ensuring a strong position as global demand shifts towards green steel."

NSC’s $US14.1 billion acquisition of U.S Steel is still pending US regulatory approvals, and this new investment is in addition to the $1.4 billion capital injection committed previously.

• NSC will spend $300 million to reline blast furnace #14 at Gary Works, U.S Steel’s largest manufacturing plant.
• The investment intends to extend the life of the blast furnace by up to 20 years.

Last week, NSC announced the purchase of a 20% stake in Whitehaven’s Blackwater coal mine in Queensland, Australia - raising concerns about its previous commitments to being a globally competitive leader in the green steel market.

In June, shareholders in NSC showed significant support for three climate-related shareholder proposals at the company’s annual general meeting, which urged the world’s fourth largest steelmaker to improve its decarbonisation strategy.

Commenting on the announcement, Fiona Deutsch, Lead Analyst at the Australasian Centre for Corporate Responsibility said:

“This $300m capital expenditure on relining a coal-fired blast furnace is extremely disappointing. Nippon Steel is making a commitment to outdated technology and high emissions - not decarbonisation.

“Steel does not have a climate problem, it has a coal problem. By extending the life of a coal-fired blast furnace by two decades, Nippon Steel is once again leaving its investors unclear about the company’s commitment to being a globally competitive leader in the green steel market.

“Of particular concern for investors is that Nippon Steel’s current emissions reduction targets cover only its Japanese production.

“Without a clear plan for decarbonisation of the U.S Steel business if the acquisition goes ahead, it’s unclear to Nippon Steel’s investors how investments in prolonging coal-based steelmaking contribute to long term value.

“Nippon Steel is overlooking a key opportunity. The United States is a leader in secondary steelmaking, which has significantly lower emissions. Nippon Steel could learn from these practices, positioning itself as a leader in the global green steel transition.

“Instead, the company is sticking with technologies that fail to meet the urgency of the moment.”

• NSC will pay nearly $US720 million for a 20% stake in Blackwater.
• JFE is purchasing a 10% stake for $US360 million.

Whitehaven Coal is seeking to extend the life of the Blackwater mine by an additional 60 years, pushing the mine’s life out to 2085, as part of its Blackwater North Extension Project.

In June, shareholders in NSC showed significant support for three climate-related shareholder proposals at the company’s annual general meeting, which urged the world’s fourth largest steelmaker to improve its decarbonisation strategy.

Commenting on the announcement, Fiona Deutsch, Lead Analyst at the Australasian Centre for Corporate Responsibility said:

“Investors will be rightly questioning Nippon Steel’s previous commitments to being a globally competitive leader in the green steel market with this stake.

“The recent strong support for three climate-related shareholder proposals at Nippon Steel’s AGM suggests investors see a delay in decarbonisation as a risk to corporate value, and this investment will raise questions about the company’s commitment to decarbonisation and meeting investor expectations.

“The transition risks associated with metallurgical coal are increasingly evident. As steelmaking processes evolve to reduce reliance on coal, the risk profile for metallurgical coal is expected to rise.

“A recent global survey of 500 investors across 34 countries showed that 80% believe metallurgical coal’s risk profile will increase in the next decade.

“Instead of doubling down on the highest-emitting part of the steel supply chain, Nippon Steel and JFE should be leading the way in the transition to greener technologies. This is what investors expect.

“Nippon should be pivoting towards technologies with genuine green potential, including Direct Reduced Iron (DRI) and electric arc furnaces (EAFs), and positioning itself as a leader in a decarbonising industry, securing both economic opportunities and climate benefits.”

Harriet Kater, Impact Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The rate of change and ambition in AGL’s strategy following the significant board renewal in 2022 has been underwhelming to date.

“A new Chair at AGL, in the form of renewable energy veteran Miles George, provides a huge opportunity to unlock all the benefits of the renewed board and to drive the cultural change required to swiftly transition Australia’s largest greenhouse gas emitter.

“Patricia Mackenzie was not the right leader for the AGL of today. Amidst the tumult of the board renewal at AGL in 2022, ACCR recommended against her re-election over governance concerns and her role on the board during multiple years of shareholder value destruction.

“With AGL presenting a revised Climate Transition Action Plan (CTAP) to shareholders for a vote in 2025, expectations are now raised for an enhanced strategy that is ambitious, nimble and value accretive.

Glencore says it will “assess how best to integrate the EVR assets into our climate transition strategy”. Glencore’s 2024-2026 Climate Action Transition Plan (CATP), released in April, did not address the acquisition of EVR in relation to its decarbonisation targets and ambition.

ACCR analysis shows the acquisition of the EVR coal assets materially increases Glencore’s exposure to transition risk:

• Teck’s EVR metallurgical coal mines come with an average life of 31 years, with the majority extending beyond 2050. This compares to Glencore’s existing coal assets, which have an average mine life of around 13 years.
• With the acquisition of the EVR coal mines, Glencore is boosting its potential saleable coal by over 30% through to the end of life of its mines.
• Revenue from EVR coal mines would have increased Glencore’s industrial coal revenue by 28% in the last year.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“With the EVR acquisition complete and the coal business to stay, Glencore’s climate plan is now outdated. Glencore needs to move swiftly and give investors much needed visibility on how it plans to manage its increased exposure to climate transition risk.

“With the announcement that the demerger is not going ahead, we expect Glencore to commit to an updated climate plan as a matter of priority.

“Investors need to understand the impact this coal acquisition has on Glencore’s emissions reductions targets.

“With this expansion of its coal portfolio comes an opportunity for Glencore to provide investors with a credible plan to responsibly wind down the coal assets in line with the Paris Agreement.

“Glencore’s new description of metallurgical coal as “carbon steel materials” looks alarmingly like greenwashing and raises questions about the company’s commitment to be upfront about its exposure to climate transition risk.

“Metallurgical coal does come with significant transition risk. The growing adoption of new steelmaking processes that don’t rely on coal indicates the risk profile for metallurgical coal is only going to increase. A recent survey of 500 investors from 34 countries found the majority (68%) foresee a transition away from metallurgical coal in steelmaking, with 80% believing metallurgical coal’s risk profile will increase in the next decade.

“Navigating the energy transition as the world’s largest publicly listed coal mining and trading business will require exemplary governance, and investors may reasonably now be looking for confidence that the board has the right mix of skills and experience to seize available opportunities and manage risk.”

Woodside is under significant pressure to improve its management of climate risk, following a majority (58%) of shareholders voting against its Climate Transition Action Plan (CTAP) and 17% voting against re-election of the Chair at the 2024 Annual General Meeting (AGM).

Analysis in What’s next for Woodside? shows:

• share buybacks would deliver 140% more value than executing Browse and Sunrise (Calypso has been excluded because it is deemed uncommercial by Rystad).
• Browse is neither Paris-aligned nor low cost. It is more expensive than 70% of the world’s unapproved gas projects. Sunrise and Calypso are even more expensive.
• not developing Browse, Sunrise and Calypso would move Woodside towards Paris-alignment by avoiding 80% of emissions from its pre-FID upstream portfolio.

The analysis also looks at the announced US$1 billion acquisition of Driftwood LNG, a pre-FID facility in the United States by Woodside. It finds:

• Driftwood is more expensive than 76% of other pre-FID US LNG projects.
• if all four phases are executed and operate at capacity, Driftwood will generate 68 MtCO2e p.a. of scope 3 emissions; more than 90% of Woodside’s 2023 scope 3 emissions.

Commenting on the research, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“If Woodside can move past its recent habit of pursuing high-capex, financially-marginal fossil fuel projects, then it has a real shot at delivering what investors want - better capital returns and reduced exposure to climate risk.

“Walking away from Browse, Sunrise and Calypso and redirecting the capital to share buybacks delivers more value to shareholders without the emissions. Given the scale of investor dissent Woodside is facing this should be a live option at the board table.

“The majority of Woodside’s investors don’t support its current climate strategy, and the only way for the company to properly address this is by reforming its flawed company strategy.

“Last week’s acquisition of Driftwood LNG is simply another example of its failing strategy: chasing marginal, high-capex and long-duration projects. Last year it was Trion.

“Just because Woodside plans to spend one billion dollars acquiring the troubled Driftwood project doesn't mean it should automatically sink another five to ten billion of shareholder funds executing it. There are lower risk options for shareholders should the board care to look.

“Woodside’s peers are adding value to shareholders by increasing returns - especially through buybacks. With Woodside’s poor pre-FID portfolio it has a strong incentive to follow this trend.

“Investors will rightly be questioning whether Woodside’s board has the right mix of high-calibre and appropriately skilled directors, with the requisite judgement to serve shareholder interests during the energy transition.”

ACCR informed Rio Tinto of its position directly in a Civil Society Roundtable forum on Monday 29 July.

Since July 2023, ACCR has been meeting with Rio Tinto working towards supporting the company’s public commitment to positive climate advocacy and decarbonisation briefing papers. In April 2023, Rio Tinto publicly committed to an “enhanced climate advocacy approach”.

Earlier this year and contrary to its public commitment, Rio Tinto undertook Federal government lobbying where it complained about climate change requirements including greenhouse gas emission estimates and requested the removal of a proposed new object relating to climate change in the EPBC Act.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“ACCR views Rio Tinto’s heavy-handed advocacy to the Prime Minister to be inconsistent with the company’s own commitments for enhanced climate advocacy and transparency.

“The fact it has provided a public commitment highlighting the need for greater transparency and the critical role of government policy signals in decarbonisation, and has then gone against this commitment behind closed doors, is hypocritical and a breach of trust.

“ACCR is now stepping away from an agreement to support climate and decarbonisation related engagement with Rio Tinto. We will not participate in engagements that could rightly be perceived as greenwashing.

“While Rio Tinto has apologised to ACCR for the way it handled its advocacy and the lack of engagement with ACCR over this matter, the true test for the company will be in its actions going forward.

“Ongoing good faith engagement with Rio Tinto by ACCR would only be possible again once the company clearly and formally updates its advocacy position on the EPBC Act reforms and undertakes Federal climate engagement that better reflects its own commitment to enhancing climate policy in Australia.

“Claiming that a climate trigger is duplicative with the Safeguard Mechanism is willful misinterpretation at its best. Rio Tinto and the Business Council of Australia are well aware that, unlike potential emissions considerations in federal assessments, the Safeguard Mechanism was never designed to assess the lifecycle climate change impacts of proposed coal and gas projects.”

Background

The revelation that Rio Tinto had undertaken lobbying to the Prime Minister seeking to obstruct and prevent climate considerations in the EPBC Act only came to light due to an FOI request from Greenpeace. 

ACCR met with Rio Tinto’s Chief Executive Australia, Kellie Parker, on 26 July to discuss Rio Tinto’s policy advocacy on the Federal Government’s environmental reforms, outlined in the letter co-signed with Hancock Prospecting.

The specific policy positions outlined in the letter to the Prime Minister, particularly in relation to seeking to block further climate considerations in the Act, contradicted Rio's commitments both to the public and ACCR for an enhanced advocacy approach on climate.

The lack of transparency and outreach regarding Federal government climate policy considerations was particularly galling considering Rio Tinto’s own 2023 commitment on enhanced advocacy acknowledged “The discussions have highlighted the need for greater transparency and conversation on the critical role of government policy signals in decarbonisation.”

In the 26 July meeting, Kellie Parker apologised to ACCR for how Rio Tinto managed the engagement with ACCR on the issue and acknowledged the need to rebuild ACCR’s trust.

Rio Tinto could not yet provide assurances that its future planned advocacy on Federal policy regarding climate and emissions assessment would change.

Commenting on the announcement, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“While it’s unsurprising that Woodside has been hunting around for acquisitions given its underwhelming pre-FID fossil fuel portfolio, Driftwood LNG just adds more fossil fuel capex and emissions risk.

“Like Browse, Driftwood is a project that has struggled to get off the ground for years. Questions should be raised as to why a super major has not already swooped in on the project. Clearly, these companies do not see Driftwood as the compelling opportunity that Woodside claims it is.

“It is an alarming strategic decision - to double down on LNG just as the IEA is forecasting an emerging LNG glut.

“This adds to concerns about Woodside’s board's ability to think creatively about strategy - investors expect a board that can do more than just pursuing marginal fossil fuel projects.

“Coming just months after the majority of investors voted down its climate plan, this acquisition is a concerning sign that Woodside is still thumbing its nose at investor concerns about management of climate risk.

“Woodside’s CEO Meg O’Neil has today said the acquisition means “no change” to its climate strategy, which is astounding given the majority of investors have rejected the company’s climate plan.

“Woodside does not have a strong track record with greenfields projects. The last two major projects it completed, Pluto and Sangomar, were both late and over budget. Our analysis shows Woodside investors did not recover their cost of capital on either of these projects.”

Ahead of the game: investor sentiment on steel decarbonisation, analyses a survey of 500 investors in the steelmaking, iron ore and/or metallurgical coal mining sectors, commissioned by ACCR and undertaken in December 2023. Survey respondents came from a range of investment institutions in Australia, the United States, Asia and Europe, with the largest cohort working as portfolio managers, investment managers or investment directors.

Key findings from the survey include:

• the majority of investors (81%) agree that ‘green steel’ cannot be produced with fossil fuels;
• 68% foresee a transition away from metallurgical coal in steelmaking, and 80% believe metallurgical coal’s risk profile will increase in the next decade;
• 59% agree that effective climate policies are crucial to accelerate the transition towards green steel production and are likely to positively impact their investment portfolio;
• 59% see importing green iron as a viable opportunity for steelmakers with limited access to renewable energy.

The full results of the survey are also available to read online.

Commenting on the findings, Fiona Deutsch, Company Strategist and Lead Analyst at ACCR, said:

“It’s clear from this research that investors around the globe have a very clear-eyed understanding of the opportunities of the green steel transformation and are willing to move faster - if the right frameworks are in place.

“With the vast majority of investors surveyed predicting a transition away from the use of metallurgical coal in steelmaking, it’s clear that fossil-fuel free projects are viewed as a safe, long-term prospect for shareholders. Any company seeking to expand metallurgical coal assets or double down on coal-based ironmaking should be paying serious attention to this strong investor sentiment.

“With nearly 60% of investors agreeing that effective policies are crucial to accelerating the transition and likely to positively impact their investment portfolio, this is a clarion call for companies and policymakers to facilitate an investment environment which supports green steel supply and demand.

“Investors understand that retaining metallurgical coal in steelmaking is increasingly risky, which is why nearly half of those surveyed are undertaking lobbying to combat this problem.

“By strongly backing innovative future solutions like ‘green iron corridors’, where green iron produced in countries like Australia would be exported to steelmakers in countries with less access to renewables, investors are signalling an appetite for the bold step-changes needed to decarbonise the steel value chain and secure long-term value for portfolios.

The current draft of the Bill allows for the progressive phase-in of mandated and standardised climate reporting by listed and unlisted Australian companies from January 1, 2025.  Statements made relating to transition plans, scenario analysis and Scope 3 emissions will have legal immunity from private litigation during the Bill’s first three years of implementation. Only criminal cases, and matters pursued by the Australian Securities and Investments Commission (ASIC), would be able to be brought forward during this period.

 Amendments brought forward by the Australian Greens propose:

• Reducing  the immunity period for private litigation to 12 months
• Limiting the immunity’s scope to “loss or damage suffered as a result of conduct that is misleading or deceptive, or likely to mislead or deceive”.

Commenting on the proposed amendments, Brynn O’Brien, Executive Director, ACCR, said:

“Companies don’t need a prolonged holiday from shareholder enforcement of accountability provisions which are applicable today.

“Investors are making decisions now about how they wish to allocate capital and how to engage and escalate with heavy emitting companies. They need reliable information with integrity. An extended enforcement holiday decreases the motivation for companies to take mandatory climate disclosures seriously.

“ACCR is particularly concerned about the effect the three year legal immunity would have upon the disclosures of our largest heavy emitters that have been releasing climate transition plans and disclosing in line with the Task Force for Climate-related Financial Disclosures (TCFD) for years.

“ACCR’s case that challenges statements made by oil and gas company Santos, for example, could not be brought by a shareholder for three years under the draft legislation the government has put forward.

“It is an inappropriate burden to place the sole responsibility of enforcing these provisions on under-resourced regulators for such a prolonged period.”

Nippon Steel Corporation’s (NSC) AGM was held last Friday in Tokyo, and results of the voting have just been released:

• 27.98% of shareholders voted in support of a proposal filed by Legal & General Investment Management (LGIM) and the Australasian Centre for Corporate Responsibility (ACCR) asking for improved disclosure of climate-related lobbying activities.
• 23.01% of shareholders voted in support of a proposal filed by Corporate Action Japan (CAJ) and ACCR asking for remuneration to be linked to the company’s GHG emissions reduction targets.
• 21.48% voted in support of a proposal filed by CAJ and ACCR asking NSC to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions, along with disclosure of planned capex for decarbonisation investments.

The three proposals were filed following engagement with the company by a group of institutional investors collectively representing $US4.988 trillion of assets under management.

All three proposals were supported by Amundi, Nordea Asset Management and Storebrand Asset Management.

ClientEarth provided legal support for the engagement and filing

For full comments from co-filers see here.

Brynn O’Brien, Executive Director, ACCR, said:

“One quarter of shareholders voting in support of the climate-lobbying proposal is a strong signal that investors want to see greater transparency about lobbying and policy engagement from politically influential companies like Nippon Steel.

“Given the size of this vote, meeting investor expectations on lobbying transparency needs to be a priority for Nippon Steel’s board.

“For a company looking to flex its muscle on the global stage, it is crucial that Nippon Steel aligns with the expectations of global investors, who believe the transparent disclosures of these activities is required by good governance and essential for long-term value creation.

ABOUT CORPORATE ACTION JAPAN

Corporate Action Japan (CAJ) is a shareholder advocacy organisation, which collaborates with institutional investors, international philanthropic foundations and other stakeholders, leveraging the power of investment to drive climate action in the private sector.

ABOUT LEGAL & GENERAL INVESTMENT MANAGEMENT (LGIM)

Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.2 trillion* (JPY 208 tn, $1.5tn, €1.3tn, CHF 1.2tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.

*Data as at 31 December 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions.

ABOUT CLIENTEARTH IN JAPAN

ClientEarth in Japan is a team of corporate and financial law experts specialising in climate risk and decarbonisation – providing the legal framework and tools for the private sector to lead on climate action. We are helping to strengthen corporate climate governance and embed climate change in investment, regulatory and policy decisions. Read more about ClientEarth in Japan here.

At today’s NSC’s annual general meeting (AGM) in Tokyo, Japan, three shareholder proposals were put before investors:

• A shareholder proposal filed by Corporate Action Japan (CAJ) and the Australasian Centre for Corporate Responsibility (ACCR) asking NSC to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions, along with disclosure of planned capex for decarbonisation investments.
• A proposal filed by CAJ and ACCR asking for remuneration to be linked to the company’s GHG emissions reduction targets.
• A proposal filed by Legal & General Investment Management  (LGIM) and ACCR asking for improved disclosure of climate-related lobbying activities.

The three proposals were filed following engagement with the company by a group of institutional investors collectively representing $US4.988 trillion of assets under management.

All three proposals were supported by Amundi, Nordea Asset Management and Storebrand Asset Management.

ClientEarth provided legal support for the engagement and filing.

Aina Fukuda, Head of Japan Investment Stewardship at LGIM, said:

“Shareholders have emphatically called on Nippon Steel to take bold actions on the climate emergency. Within these are imperatives for greater accountability and transparency in the company’s efforts to influence climate and energy policies, particularly as the year ahead holds critical importance for Japan and many other markets as they define their medium to long-term decarbonisation strategies.

“Importantly, it is our view that a public policy environment aligned with international climate goals would benefit Nippon Steel, considering the massive transformation needed to decarbonise the business and sustain competitiveness in a rapidly heating world and evolving market landscape.

“We believe that the scale and substance of Nippon Steel’s growing global business, significant emissions footprint, and powerful policy influence place the company squarely in the spotlight for investors and other stakeholders. LGIM remains dedicated to engaging with the company and eagerly awaits the participation of Nippon Steel’s board members in future discussions.”

Lewis Ashworth, Climate Specialist at LGIM, said:

“We are encouraged to see shareholders voting in support of these resolutions, in particular that asking for more detail on Nippon Steel’s climate-related lobbying activities. 2024 marks another record-breaking year for global temperatures, and the urgency of addressing the risks associated with climate change is ever more pressing. We will continue to drive engagement with the company on this topic, which we believe is absolutely essential to ensuring that the goals of the Paris Agreement are met.”

Yasunori Takeuchi, CEO / Representative Director at CAJ said:

“The result reflects investors’ concerns and expectations for the decarbonization plan of NSC. A delay in decarbonization is a risk to corporate value.

“Trust by investors can be obtained through proactive disclosure of information which enables investors to make appropriate decisions. NSC is in the central position of the supply chain in industry and has significant political influence. Investors have high expectations for NSC to take a leading role in the decarbonization of Japan.”

Brynn O’Brien, Executive Director, ACCR, said:

“The support for these shareholder proposals reflects that investors want to see greater ambition from Nippon Steel in seizing the opportunities of the green steel transformation.

“As a local leader that competes at scale abroad, Nippon Steel must show investors and policymakers it has a credible decarbonisation strategy and a plan to be responsive to the needs of customers as the demand for green steel grows.

“We look forward to seeing Nippon Steel respond to this investor feedback and take the necessary steps to accelerate the company’s transition towards decarbonisation and increasing long-term shareholder value.”

ABOUT CORPORATE ACTION JAPAN

Corporate Action Japan (CAJ) is a shareholder advocacy organisation, which collaborates with institutional investors, international philanthropic foundations and other stakeholders, leveraging the power of investment to drive climate action in the private sector.

ABOUT LEGAL & GENERAL INVESTMENT MANAGEMENT (LGIM)

Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.2 trillion* (JPY 208 tn, $1.5tn, €1.3tn, CHF 1.2tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.

*Data as at 31 December 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions.

ABOUT CLIENTEARTH IN JAPAN

ClientEarth in Japan is a team of corporate and financial law experts specialising in climate risk and decarbonisation – providing the legal framework and tools for the private sector to lead on climate action. We are helping to strengthen corporate climate governance and embed climate change in investment, regulatory and policy decisions. Read more about ClientEarth in Japan here.

• There was a notable rise in shareholders abstaining from voting on the Climate Action Transition Plan (CATP) this year. Votes withheld were 3 times higher than last year for the climate plan of those who submitted a vote.
• 90.07% voted in support of Glencore’s 2024-2026 CATP. (34.45% of the issued share capital (ISC) abstained from voting, compared to 25.37% in 2023.)
• 94.07% voted for the re-election of Chair Kalidas Madhavpeddi.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The climate plan before this AGM didn’t reflect the near-term future of Glencore’s coal business and continues to leave investors in the dark about climate transition risks. Higher than usual number of shareholders abstaining from voting reflects investor uncertainty about the future of Glencore’s coal business.

“With the upcoming acquisition of the Teck coal mines and a demerger of Glencore’s coal business on the table, investors’ ability to assess forward transition risk is unfortunately very limited.

“Going forward, investors would reasonably expect climate-related information relevant to Teck’s Elk Valley Resources coal mines to be incorporated into Glencore’s group climate strategy from the date it obtains control of the mines, similar to the disclosure of financial information for acquired assets.

“Given the huge international scale of Glencore’s coal business and the enormity of its energy transition challenge, investors need a full and accurate account of their risk exposure.

“Glencore’s forward reporting should also include emissions and capex information about the large new coal extensions the company is pursuing in Australia, like the 25 year extension to the predominantly thermal coal project at Hunter Valley Operations.

“Glencore says it is now going to consult with shareholders on the demerger. Given the rapidly diminishing global carbon budget, a responsible wind down of coal production is a better way to manage emissions than divestment of coal assets.

“Were the demerger to go ahead, one potential safeguard against poor climate outcomes could be for Glencore to put in place spin out conditions that enforce strong Paris-aligned climate commitments. However, given the scale of emissions involved, these conditions would need to be stringent, transparent and led from board level.

“Fundamentally, good corporate governance requires Glencore to take responsibility for the emissions from its coal portfolio.

“All investment portfolios are exposed to the systemic costs of failing to cut real world emissions in line with the timeframe science demands. Considering the massive coal volumes in play for any Glencore deal, decisions the company makes must be carefully considered and will rightly be scrutinised by investors.”

• 26.7% voted against management’s recommendation* on Shell’s Energy Transition Strategy (ETS)
• 11.0% voted against management’s recommendation* on the re-election of chair Sir Andrew Mackenzie
• 21.1% voted against management’s recommendation* on a shareholder resolution filed by Follow This and 27 institutional investors calling on Shell to align its medium-term emissions reduction targets covering the greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goals of the Paris Climate Agreement

* Calculations of votes against management’s recommendation include votes ‘withheld,’ equivalent to an abstain vote, but not included in the company’s official calculations.

Commenting on the results from the AGM, Nick Spooner, Company Strategy Lead, UK, said:

“The Energy Transition Strategy presented by Shell this year weakens its emissions reduction targets over the short- and medium-term, while giving little clarity around how they will achieve the serious decarbonisation efforts that are required after 2030.

“26.7% of shareholders who exercised voting rights on the ETS did so against management’s recommendation, up from 23.4% in 2023. This increase in dissatisfaction follows the company weakening its scope 3 carbon intensity targets earlier this year and the removal of its 2035 target.

“Under the UK Corporate Governance Code, Shell will again have to consult with its shareholders, given the above 20% formal ‘against’ vote on its Energy Transition Strategy.”

“The new management team claims a stronger focus on capital discipline. However, their actions do not reflect this, reducing hurdle rates for fossil fuel projects at a time when risks related to the energy transition are most acute.”

“Shell’s exploration capex remains persistently above that of peers. We asked the company to justify how this spending is in the interests of shareholders, considering that the IEA states that there is no need for exploration capex under the Announced Pledges Scenario (APS) or Net Zero Emissions by 2050 (NZE) scenario.”

“During the AGM, Shell repeatedly described LNG as a ‘low carbon’ fuel. This is a misnomer that will increasingly be challenged by shareholders and regulators, perhaps via the courts.”

“Shell’s board of directors has year-on-year failed to respond to the concerns persistently expressed by over a fifth of its shareholders. The obvious next step for investors whose concerns are not being addressed, but who wish to see change, is to look toward board renewal.”

“The first and foremost step to mitigating a range of acute financial, environmental, legal and social risks for Shell is ceasing exploration for new oil and gas, in line with the IEA’s NZE modelling.”

Proposals 1 & 2 - Japanese translation

Proposal 3 - Japanese translation

The Australasian Centre for Corporate Responsibility (ACCR) has co-filed three shareholder proposals to Nippon Steel Corporation on climate targets and disclosures, linking executive compensation to GHG emissions reduction targets and enhancing climate lobbying disclosures.

This page contains the proposals and supporting statements.

Proposal 1

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

1. The Company shall set and disclose short- and medium-term GHG emissions reductions targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions for all operations and affiliates.
2. The Company shall prepare and disclose transition plans that include, planned capital allocation for decarbonisation investment over the forward 3 years, along with the estimated emissions reduction impact of each investment, to achieve the short and medium-term GHG emissions reductions targets.
3. The Company shall report, in its annual reporting, on its progress against such targets and transition plans.

Reason for the proposal

Long-term investors in the Company see its corporate value depending upon a credible decarbonisation strategy and short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement.  We welcome the commitment by the Company to the recommendations of the TCFD which recommends disclosure of scope 1, 2 and 3 emissions and the related risks for the consolidated accounting group, associates, joint ventures, and unconsolidated subsidiaries not included in the consolidated accounting group.

While we welcome the Company’s intention to achieve carbon neutrality by 2050, the Company’s emissions reduction targets towards 2030 are not aligned to the goals of the Paris Agreement and the Company’s current decarbonisation strategy relies heavily on technologies that have not been proven to deliver emissions reductions at scale. Not having Paris aligned targets together with the uncertainty of its technology investment strategy presents a range of material risks to shareholders, including the risk of stranded assets.

Setting Paris-aligned targets, and disclosing credible business plans to achieve them, would best manage these risks and protect corporate value. Disclosure of the Company’s forward capital expenditure and alignment with emissions reduction targets would assist shareholders assessment of the Company’s plans.

Proposal 2

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

The Company shall set and disclose, in its annual reporting, details of how the Company’s compensation system incentivises and rewards progress for achieving the company’s GHG emissions reduction targets.

Reason for the proposal

Long-term institutional investors in the Company consider a direct linkage between remuneration and achievement of the Company’s GHG emissions reduction targets, to be in the Company’s interests, as an important mechanism to incentivise executive performance towards  achievement of the Company’s strategy and goals and protect corporate value.

Proposal 3

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

The Company shall disclose annually, climate-related and decarbonisation-related policy positions and lobbying activities globally, including its own direct lobbying and industry association memberships, and review these for alignment with the Company’s goal of carbon neutrality by 2050 and explain the actions it will take if these activities are determined to be misaligned.

Reason for the proposal

To manage strategy and risks to protect company value, it is in the Company’s best interests for its climate-and decarbonisation-related policy positions and direct and indirect lobbying activities to be aligned with the Company’s goal of carbon neutrality by 2050 and the achievement of its GHG emissions reduction targets.

Shareholders believe that disclosure of climate-related and decarbonisation-related policy positions and lobbying activities globally and their alignment to the Company’s goals are required by good governance and essential to long-term value creation.

The current level of the Company’s disclosures in these regards means shareholders cannot properly assess if the Company’s lobbying activities are sufficiently coordinated and optimised to ensure the global policy environment supports its decarbonisation goals and are in line with the goals of the Paris Agreement.

• Proposal one, filed by CAJ and ACCR, asks Nippon Steel to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions, along with disclosure of planned capex for decarbonisation investments.
• Proposal two, filed by CAJ and ACCR, asks for remuneration to be linked to the company’s GHG emissions reduction targets.
• Proposal three, filed by LGIM and ACCR, asks for improved disclosure of climate-related lobbying activities.

The filing follows engagement with the company by a group of institutional investors collectively representing $US4.988 trillion of assets under management.

All three proposals are supported by Amundi, Nordea Asset Management and Storebrand Asset Management.

The group of shareholders believe that by implementing these proposals, Nippon Steel can move towards becoming a regional leader on steel decarbonisation in Japan and the broader Asian steel market, strengthening its position globally.

Proposals 1 and 2 reflect concerns from the co-engagement group that Nippon Steel’s lack of Paris-aligned targets, along with a decarbonisation strategy that relies heavily on unproven technologies, presents a range of material risks to shareholders, including the risk of stranded assets. ACCR research shows that while Nippon Steel’s peers are increasing investments in proven Electric Arc Furnace (EAF) technology, it is relying on unproven, high-cost Carbon Capture, Utilisation and Storage (CCUS) technology to deliver at least 50% of its emissions reductions by 2050.

Proposal 3 has been filed following an intensive engagement period with the company focusing on climate-related lobbying. Independent assessments have demonstrated the company lags behind its peers on climate policy engagement disclosures^1, and in 2022, Influence Map named Nippon Steel as one of the most influential companies blocking climate policy action globally.

The investors believe that by adopting the proposals, the company can take positive steps towards delivering long-term shareholder value.

ClientEarth provided legal support for the engagement and filing.

Aina Fukuda, Head of Japan Investment Stewardship at LGIM, said:

“It is clear that there is a growing need for transformative policy developments aimed at accelerating the transition to a net-zero economy. Therefore, transparency around climate policy engagement has become increasingly important for LGIM’s engagements with companies worldwide.

“Japan, too, is at a pivotal juncture in its climate and energy policies. We now call on Nippon Steel to lead by example, to enhance accountability and transparency in its efforts to influence these policies as they take shape.

“We also believe that Nippon Steel stands to benefit from public policies aligned with international climate goals. Policies supporting the shift towards low-emissions steelmaking can, in our view, strengthen the company’s global competitiveness and resilience amidst evolving market dynamics.”

Lewis Ashworth, Climate Specialist at LGIM, said:

“Ambitious climate policy and responsible corporate climate lobbying are essential to an orderly transition to net-zero emissions. We believe that disclosure of climate- and decarbonisation-related policy positions and lobbying activities globally and their alignment to a company’s goals are required by good governance and essential to long-term value creation.

“LGIM’s co-filing on this resolution is because it is our view that the current level of Nippon Steel Corporation’s disclosures in these regards means shareholders cannot properly assess if the company’s lobbying activities are sufficiently coordinated and optimised to ensure the global policy environment supports its decarbonisation goals, nor that they are in line with the goals of the Paris Agreement.”

Commenting on the filing, Yasunori Takeuchi, CEO / Representative Director at CAJ stated:

“Nippon Steel has identified climate change as one of management’s priority challenges and is investing in ‘super innovative technologies’ to achieve its 2030 target and carbon neutrality by 2050. However, the shareholder group is concerned that its current transition plan and capital allocation will not suffice, and may have a significant impact on its corporate value in the coming decades. The proposals seek greater clarity in its decarbonisation efforts to increase investor confidence in the transition and strengthen climate governance to ensure its business resilience towards a 1.5°C scenario."

Brynn O’Brien, Executive Director, ACCR, said:

“Nippon Steel has been too slow to embrace the opportunities built into the green steel transformation. The company needs to do more to provide confidence to shareholders that it can remain competitive in the future.

“Nippon Steel is looking to flex its muscle on the global stage with its likely acquisition of US Steel. A company with these ambitions needs to have a credible decarbonisation strategy, and right now this is undermined by its over-reliance on CCUS.

“Investors can see that Nippon Steel has an opportunity. As a local leader that competes at scale abroad, Nippon Steel can show investors and policymakers it’s ready and willing to find region-specific solutions that are globally competitive and responsive to the needs of customers as the demand for green steel grows.”

ABOUT CORPORATE ACTION JAPAN
Corporate Action Japan (CAJ) is a shareholder advocacy organisation, which collaborates with institutional investors, international philanthropic foundations and other stakeholders, leveraging the power of investment to drive climate action in the private sector.

ABOUT LEGAL & GENERAL INVESTMENT MANAGEMENT (LGIM)
Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.2 trillion* (JPY 208 tn, $1.5tn, €1.3tn, CHF 1.2tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.

*Data as at 31 December 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions.

ABOUT CLIENTEARTH IN JAPAN
ClientEarth in Japan is a team of corporate and financial law experts specialising in climate risk and decarbonisation – providing the legal framework and tools for the private sector to lead on climate action. We are helping to strengthen corporate climate governance and embed climate change in investment, regulatory and policy decisions. Read more about ClientEarth in Japan here.

As part of the plan, J-POWER has committed to closing five coal power generation units within domestic coal plants by FY 2030.

ACCR estimates that collectively these closures will prevent the release of 16.2Mt of CO2 per year .

The announcement follows two consecutive years of shareholder dissent over J-POWER’s decarbonisation strategy:

• At the 2022 annual general meeting (AGM), 26% of shareholders voted in support of a shareholder proposal asking J-POWER to set credible emissions reduction targets and disclose plans to achieve them. Co-filers included Man Group, a global active investment management firm, Amundi, Europe’s largest asset manager, HSBC Asset Management and ACCR.
• At the 2023 AGM, 21% of shareholders voted in favour of a shareholder resolution calling on J-POWER to set and disclose credible short and medium-term emissions reduction targets aligned with the goals of the Paris Agreement. The resolution was filed by Amundi, HSBC Asset Management, ACCR, and was supported by Man Group.

Announcing the coal-power unit closures last week, J-POWER’s President, Hitoshi Kanno, said: “We deemed it necessary to demonstrate to shareholders our strategy for coal power plants on a site-by-site or unit-by-unit basis.”^[1]

Further changes to the Blue Mission strategy include:

• Improved transparency on decarbonisation spend - investing ~$US 1.924 billion towards decarbonisation over the next three years, including ~$US 1.284bn on expanding renewables, ~$US 385 million on enhancing networks, and ~$US 192.6 million on thermal power transition, with significant investment in nuclear and hydrogen-based power after FY2027
• A new renewables target, aiming to increase renewable power generation in Japan by 4 billion kWh/year by 2030, against a baseline of FY2022.

Commenting on the release of the plan, Brynn O’Brien, Executive Director, ACCR, said:

“This welcome announcement by J-POWER shows the company understands its strategy needs to evolve in line with investor expectations.

“Investors have been sending a clear and consistent signal to J-POWER for a number of years that it needs to accelerate its decarbonisation strategy in order to remain competitive in Japan’s transition to a low carbon economy, and this is an important first step.

“Investors now have some clarity on how J-POWER is planning to achieve its 2025 and 2030 emissions reduction targets, after years of asking for it.

“The granular detail on asset level technology plans, a schedule for coal fired power plant closures and increased transparency on decarbonisation spend over the next three years will go some way to providing clarity for investors wanting to understand J-POWER’s exposure to risk under the energy transition.

“This result shows the role engagement and escalation by institutional investors can play in assisting a company to adopt a more credible decarbonisation strategy. We look forward to continuing engagements with J-POWER.”

• An estimated * 32.1% of non-state votes cast (6.46% of total votes) were cast FOR Resolution 15 - a resolution calling for Equinor to update its strategy and capex plans to align with the Paris Agreement, and specify how any plans for new oil and gas reserve development are consistent with the Paris goals.^[1]
• Resolution 15 was filed by Sarasin & Partners LLP, Sampension, Achmea Investment Management and West Yorkshire Pension Fund.
• Nordic funds Nordea, KLP and Storebrand joined Robeco, MN, Railpen and others in voting to support Resolution 15.
• An estimated* 16.4% of non-state votes cast (3.22% of total votes) were cast FOR Resolution 14 - a resolution calling for Equinor board’s nominations committee to ensure a board composition where at least half of the board members have good competency on the energy transition and sustainability.^[2]
• Resolution 14 was filed by WWF Norway and Greenpeace Nordic.

Commenting on the results, Martin Norman, Investor Engagement Lead, ACCR, said:

“Equinor’s non-state investors are extremely concerned that the company lacks the ability and willingness to align with global temperature goals. They have made that clear with today’s unprecedented vote against Equinor management’s recommendation.

“This should be a wake-up call for Equinor’s board and management. The pressure on them to deliver real reductions in emissions will only increase from here.

“The Norwegian government – Equinor’s majority shareholder – has already made it clear the company needs to implement Paris-aligned targets and measures in the short- and long-term, and now a large number of its remaining shareholders have shown they expect a similar strategic shift.

“ACCR research shows if Equinor stops exploring new oil and gas reserves, and halts new projects outside of Norway, it can avoid 67% of the emissions from its unapproved projects.

“Our analysis finds Equinor’s exploration restricts capital availability for projects that support the energy transition, and is unlikely to generate positive free cash flow until the 2050s – when it will be too late. Additionally, its unapproved international oil and gas projects are neither Paris-aligned nor low-cost relative to other major global fossil fuel projects.

“Opposition to Equinor’s expansion projects is building around the world. Today, we saw speeches from community members opposing Equinor’s projects off the coast of Scotland, Argentina and Canada. This level of serious community opposition should not be downplayed.

“Equinor’s projects outside of Norway expose the company to elevated financial, reputational and increasingly even legal risks. They should not be pursued.”

Background

*Estimates of non-state shareholder votes have been calculated:

• on the basis of an 88.59% voting turnout, and
• the assumption that Equinor’s two largest shareholders, the Government of Norway (67%), and Folketrygdfondet (the Norwegian Government Pension Fund Norway) (3.6%), voted against both resolutions 14 and 15, and
• ownership stakes for the aforementioned shareholders remain the same as reported in the most recent 2023 annual report.

Please note: the voting results have been updated from earlier estimates.

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on the results of the Woodside Energy Group (WDS) Annual General Meeting (AGM), at which:

• 58.4% of shareholders voted against the company’s Climate Transition Action and 2023 Progress Report
• 16.61% of shareholders voted against the re-election of Chairman Richard Goyder

ACCR filed a members’ statement against the re-election of Richard Goyder because, under his leadership, the Woodside board has been persistently unresponsive to shareholder concerns on climate risk management over the last four years and is pursuing a growth strategy that is not in shareholders’ interests.

Commenting on the results, Harriet Kater, Head of Impact, ACCR, said:

“It is inconceivable for Richard Goyder’s board to continue its trend of dismissing shareholder concerns following this overwhelming rejection of Woodside’s climate plan.

“The board must now act on investor feedback and begin the long overdue work of credibly de-risking its business.

“The scale of this rejection is globally unprecedented. With 58.4% of investors voting against, this is the least-supported climate plan ever. The fact that the previous record of 49% was also held by Woodside speaks to this board’s persistent unresponsiveness.

“There was a global groundswell of public dissent against Woodside’s climate plan ahead of today’s AGM. It was rejected by all major proxy advisory firms, at least three major Australian superannuation funds, some of the United States’ biggest pension funds, Norway’s largest private pension fund, and Britain’s biggest asset manager.

“For Richard Goyder to keep his job while a solid majority of Woodside’s register has rejected a strategy he is responsible for is an inconsistency in today’s results. However, the 16.6% vote against his re-election is material and is by far the largest vote on record against a Woodside Chair, with no chair over the past 20 years receiving a vote against higher than 1.6%.

“Mr Goyder would be naive to presume that he can continue his final term with a business as usual approach.

“This overwhelming rejection of Woodside’s climate plan is in effect a rejection of the company’s strategy. It is impossible to divorce the two - indeed CEO Meg O’Neill has explicitly said that Woodside’s company and climate strategy are one and the same. Woodside cannot deliver a credible transition plan without addressing its flawed company strategy.

“For Woodside’s board to maintain that the only path to shareholder value is persevering with low value, high risk oil and gas projects suggests a lack of skills, poor judgement and risky group-think.

“The board has alternative options. ACCR research shows Woodside’s portfolio of unsanctioned oil and gas projects does not appear to be a material source of value for shareholders. On the other hand, a capital return strategy would generate more value, with less risk and lower emissions.

“The most material strategic decisions in front of the Woodside board right now are whether to progress with its portfolio of growth projects that are yet to pass final investment decision, including Browse, Sunrise and Calypso.

“It’s time for Woodside’s board to remove its blinkers and have an honest conversation about which growth projects in its portfolio don’t make sense.

“It would surprise us if Goyder did not move quickly to appoint new directors. Any directors presented by Goyder should rightly be scrutinised for their ability to bring fresh thinking and to develop and consider strategies outside the board’s existing fossil fuels growth capability.

“This is the inflection point, the moment for change. It would be belligerent for Woodside to front up to shareholders next year with the same old approach.”

Background

At Woodside’s 2023 Investor Briefing Day Meg O’Neill stated - see p 2 transcript:

“It is also important to note that our Company strategy is a climate strategy, we don’t have two separate strategies”

Proxy advisors against the climate plan

• Institutional Shareholder Services (ISS)
• CGI Glass Lewis
• The Australian Council of Superannuation Investors (ACSI)

Proxy advisors against the re-election of Richard Goyder

• CGI Glass Lewis

Pre-declares against Climate Plan

• Allianz Global Investors
• AustralianSuper
• Aware Super
• CalSTRS
• Florida State Board of Administration
• HESTA
• KLP
• Legal and General Investment Management (LGIM)
• Anima Sgr

Pre-declares against Goyder

• Allianz Global Investors
• Aware Super
• CalPERS
• CalSTRS
• Florida State Board of Administration
• Legal and General Investment Management (LGIM)

Sarasin is co-lead of the Climate Action 100+ initiative’s collaborative engagement with Equinor.

The resolution, which is supported by a co-filing group responsible for $US 270 billion of assets under management, asks Equinor to:

• update its strategy and capital expenditure plans to align with the Paris Agreement
• specify how any plans for new oil and gas reserve development are consistent with the Paris Agreement goals.

The co-filing group is:

• Sarasin & Partners LLP (UK investment manager)
• Sampension (Danish pension scheme)
• West Yorkshire Pension Fund (UK pension scheme)
• Achmea Investment Management (Dutch investment manager)

Equinor’s board has recommended that shareholders vote against the proposal.

Commenting on the resolution filed by Sarasin, Martin Norman, Investor Engagement Lead, ACCR, said:

“ACCR’s research has shown there is a clear pathway for Equinor to move towards Paris alignment in a way that makes immediate and ongoing commercial sense for the company.

“Our analysis contradicts Equinor’s claims that ongoing oil and gas exploration supports the energy transition. We instead find exploration reduces Equinor’s the capital available for the energy transition in the next two decades, and increases the risk of fossil fuel lock-in post-2050.

“Investors should be especially concerned that Equinor’s international production is high emissions, high cost and comes with no guarantee of value accretion. By halting global exploration, and the development of pre-FID projects outside of the Norwegian Continental Shelf, the company can take concrete steps towards lowering its emissions with minimal risk for investors.

“In light of this, the resolution filed at Equinor by Sarasin, if supported by investors, is an encouraging step forward that helps protect shareholder value and move Equinor towards longer-term Paris alignment.

“If Equinor adopts ACCR’s recommendations, the company can avoid 67% of the emissions from its unapproved projects, delivering the bulk of the request contained within Sarasin’s resolution.”

Background

ACCR’s report, “Equinor’s challenge: which way to Paris?”, examines the company’s oil and gas exploration activities, which Equinor says are needed to support the energy transition.

It suggests four key changes for Equinor to reduce emissions “in line with the Paris Agreement”. The first two are particularly commercially pragmatic recommendations, would avoid 67% of the emissions associated with Equinor’s unapproved projects, and are the focus of the research in the report.

• Stopping exploration of new oil and gas reserves worldwide
• Halting development of pre-FID fossil fuel projects outside of the Norwegian Continental Shelf (NCS).

For Equinor to become fully Paris-aligned, it would also have to:

• stop developing Norwegian fossil fuel projects
• develop a strategy around winding down operating assets.

The commitment from Shell comes following a shareholder resolution filed by KLP, Norway’s largest pension fund; Sampension, one of Denmark’s largest pension providers; and the Australasian Centre for Corporate Responsibility (ACCR), ahead of the company’s May 2024 AGM. It was filed with the assistance of UK-based responsible investment NGO ShareAction and several of its public supporters.

The resolution, which asked Shell to provide a global account of its material direct and indirect climate and energy-related lobbying, has now been withdrawn, following engagement between investors and the company.

Last month, ACCR published research highlighting how Shell is failing to disclose to investors its climate lobbying in emerging markets.

Nick Spooner, UK Company Strategy Lead, Australasian Centre for Corporate Responsibility said:

“This commitment is a major shift from Shell, which sees it move from disclosing nothing about its extensive lobbying activities in emerging markets, to acknowledging that better disclosure is warranted.

“Until now, investors in Shell have been flying completely blind. Nearly 60% of Shell’s fossil fuels production from 2024 to 2050 is expected to come from emerging markets, yet investors have had no insight into lobbying activities in these markets that are material to the company's forward business – including if lobbying by Shell and its industry associations is misaligned with the Paris goals and under-cutting Shell’s own decarbonisation strategy.

“By expanding its disclosures to include emerging markets Shell is taking an important first step to ensuring consistency between the company’s lobbying activity and its strategy.

“It is, however, just a first step. Investors need full transparency over Shell’s material lobbying in emerging markets, especially because of the company’s substantial LNG growth strategy, which is focused on these markets.

“ACCR’s research identifies multiple examples of undisclosed lobbying by Shell and its industry associations in emerging markets. A number of these industry associations are actively lobbying for policies that risk locking-in levels of fossil fuel demand that are misaligned with the Paris goals.

“In the context of Shell winding back its own climate targets and its Paris-misaligned projections for gas demand growth, especially in Asia, there remains a concern about how well Shell is positioning itself to thrive in the energy transition.”

Arild Skedsmo, Senior Analyst, Responsible Investments, KLP said:

“Influential companies should use their leverage in support of progressive government policies and be fully transparent in their lobbying wherever they operate. We see this as entirely aligned with the self-interest of companies serious about their role in the transition, and appreciate Shell’s renewed commitment to lead on this.”

Jacob Ehlerth Jørgensen, Head of ESG, Sampension said:

“We are fully committed to continue to work with both companies and civil society organisations to support the transition to a low carbon economy and welcome Shell’s commitment to expand on its lobbying disclosures which is a prerequisite for us as investors to assess the robustness of the company’s climate strategy.”

Background

Shell has materiality criteria that would suggest its disclosures capture lobbying activities globally. However, this is not the case, as disclosures to date have not included emerging markets, where Shell projects the majority of demand growth and where ACCR’s analysis indicates much of Shell’s fossil fuels production is expected to come from. We expect Shell’s inclusion of some emerging markets in its disclosures will also be accompanied by a system overhaul that ensures proportionality.

ACCR has identified emerging markets where Shell’s advocacy activities, either on the supply or demand side,  could be material. We expect that the 5-10 countries that Shell will report on would be selected from the below list:

Argentina

Bangladesh

Brazil

Brunei

China

Colombia

India

Indonesia

Iraq

Kazakhstan

Malaysia

Mexico

Namibia

Nigeria

Oman

Philippines

Qatar

South Africa

Tanzania

Thailand

Trinidad and Tobago

Türkiye

UAE

Venezuela

Vietnam

About ShareAction

ShareAction is an NGO working to shape a world where the financial system serves our planet and its people. We mobilise global investors to use their influence to drive up labour standards, tackle climate change, protect the natural world, and improve people’s health. We push policymakers to ensure the financial system is working in the best interests of society. We work with people to create a movement for change. Visit shareaction.org or follow us @ShareAction to find out more.

• Chair Keith Spence was re-elected with a 6.56% vote against
• Non-executive director Vanessa Guthrie was re-elected with a 7.95% vote against
• The remuneration plan received a 9.38% vote against

ACCR filed a members’ statement against the re-election of Keith Spence because under his leadership, the board has failed to deliver a company strategy that maximises shareholder value.

Commenting on the results, Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“While investor support for Keith Spence was resilient today, there is a limit to investor patience. If Santos does not resolve its strategic failings and share price performance over the coming 12 months, shareholders may not be so forgiving at the 2025 AGM.

“There are strategies available to the Santos board that warrant deep consideration. ACCR research has shown there is a more valuable option for Santos than pursuing its next crop of final investment decisions.

“Redirecting capex from the Papua LNG, Narrabri and Dorado projects to share buybacks creates an additional US$730 million in value and ceasing all new projects presents a potential US$1.7 billion further upside.

“This alternative strategy becomes even more compelling when the additional hurdles faced by Santos’ growth projects are considered. TotalEnergies has yet again delayed FID on Papua LNG, raising doubts if the project is economic. The recent Native Title Tribunal ruling has further pushed out Narrabri, a project that has already been dragging for over a decade. Dorado was put on the backburner in 2022 and hasn’t evidently progressed since then.”

Equinor is under increasing pressure to go further on transitioning its business, with its majority owner, the Norwegian government, asking the company to reduce emissions in line with the Paris Agreement.

The research, “Equinor’s challenge: which way to Paris?”, examines the company’s oil and gas exploration activities, which Equinor says are needed to support the energy transition. It finds that while exploration outcomes are inherently uncertain, Equinor’s oil and gas exploration is unlikely to generate positive free cash flow until the 2050s. This is too late to reinvest in the energy transition, so further exploration will hinder, rather than support a timely transition.

Analysis of Equinor’s international oil and gas production - to date in 16 countries outside of Norway - shows that it has not generated adequate value, despite being allocated large amounts of capital:

• with US$94 billion of capex (nominal) on top of ~US$14.5 billion in net acquisition and pre-FID costs (nominal), international projects are expected to deliver a negative net present value (NPV) return of -US$3.6 billion.
• with an optimistic oil price assumption and a higher average break-even price than the global market, Equinor’s unapproved projects may not be as valuable as it predicts. ACCR analysis found that lowering Equinor’s oil price assumption to the forward Brent price is forecast to slash the NPV of Equinor’s pre-FID international projects by 50%.
• None of the major unapproved oil and gas projects Equinor is seeking to develop outside of Norway are Paris-aligned, nor are they relatively low-cost compared to all other unapproved oil and gas projects globally.
• Equinor’s international projects represent 67% of the 1.3Gt CO2e of cumulative emissions from its total unapproved projects, meaning halting them would make a material step towards Paris alignment.

Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This research shows that Equinor has a huge opportunity to make material steps towards Paris alignment in a way that makes commercial sense for shareholders.

“We expect this research will be highly relevant to the Norwegian government, which has made it clear as the majority shareholder that it expects Equinor to set targets and implement measures to achieve Paris alignment.

“We also expect this research to generate interest among the Norwegian public, who as the ultimate beneficiaries of the government's majority shareholding, will want to see prudent investment decisions by Equinor.

“Our analysis finds no evidence to support Equinor’s claims that ongoing oil and gas exploration  will support the energy transition. To the contrary, exploration reduces Equinor’s access to capital for the energy transition in the crucial next two decades, and increases the risk of fossil fuel lock-in post 2050.

“None of the major unapproved oil and gas projects Equinor is seeking to develop outside of the Norwegian Continental Shelf are Paris-aligned, nor are they relatively low-cost compared to all other unapproved oil and gas projects globally.

“For investors concerned about capital allocation in the energy transition, this is important research to consider. Equinor’s international production is high emissions, high risk, and there is no certainty it will create value. On the other hand, halting international oil and gas projects takes the company a lot closer to Paris without impacting long-term value, which investors really want to see.”

Last month ACCR filed a members statement against the re-election of Mr Goyder at the upcoming AGM.

Commenting on these developments Brynn O’Brien, Executive Director (ACCR) said:

“Woodside chairman Richard Goyder is personally facing the prospect of a shareholder revolt over his board’s chronic unresponsiveness to investor concerns about the company’s management of climate risk under his helm.

“It is a world first for an incumbent chair of a major oil and gas company to face the threat of being held personally accountable for company climate failings.

“As highlighted in ACCR’s members’ statement, as Chair, Richard Goyder carries ultimate responsibility for the company’s systemic failings on climate governance and therefore it is Goyder who investors should hold to account.

“We are unsurprised that CGI Glass Lewis has also recommended a vote against Woodside’s climate plan. Despite four years of persistent investor feedback Woodside has once again failed to bring anything of substance to the table.

“While Woodside may argue it has made further disclosures to address 17 areas of investor feedback, it has somehow still managed to present a materially unchanged climate plan.

“Woodside persists in a determination to bet shareholder money against the energy transition, without any sign it has a serious Plan B.

“Mr Goyder has this week claimed that the board “believes” Woodside’s plan is Paris-aligned. If this is true, the board’s belief goes against every credible scientific assessment - it is just nonsense, and extremely concerning for shareholders.

“Holding boards accountable is the natural escalation pathway under the global Say on Climate mechanism, in the face of repeated failures to present a credible plan.”

At last year's annual general meeting, 30% of investors voted against Glencore’s previous climate plan. At the same AGM, a shareholder resolution co-filed by institutional investors and calling on the company to disclose how its thermal coal production plans align with the Paris objective of keeping global temperature increase to 1.5°C, received support of 29.22%

Despite this clear investor feedback, Glencore’s updated CATP:

• walks away from the Paris-aligned pathway which is based on the most recent science (see Notes to Editors), saying, “Our targets are not aligned with the IEA’s Net Zero Emissions (NZE) Scenarios"
• continues using an inflated baseline to measure its progress against emissions reduction targets. For example, Glencore is already measuring a 22% emissions decrease from its baseline - despite increasing coal output in 2023 - which means it is only expecting to achieve a 3% emissions reduction between now and 2030 (2030 target is 25%), despite this being the critical decade for climate action and emissions decline
• has dropped its coal production cap, right when it might be needed most
• introduces a new 2030 emissions target, which would usually be welcomed, however in this case it drags ambition backwards, by allowing for less action between 2026 and 2030 than in the previous climate plan - effectively delaying emissions reduction work to after 2030.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is an extremely concerning  step backwards for Glencore, especially given the overwhelming investor feedback it received at the last AGM that the company does not have a sound plan to successfully navigate energy transition risks.

“To have the world’s largest thermal coal exporter effectively walking away from Paris alignment is an enormous risk to Glencore’s investors and a risk to all portfolios exposed to the systemic risks of climate change. It represents a reckless bet against an orderly and timely energy transition.

“We’re deeply concerned that Glencore is removing its coal production cap right at a time when it might be needed most, given it is acquiring significant additional new coal assets and planning significant coal expansions.

“While we normally would welcome a company setting a 2030 emission reduction target, for Glencore, the devil is in the detail. The structure of this target and the way Glencore calculates its emissions reductions means Glencore doesn’t need to do much work on reducing its coal emissions until after 2030 - despite this being a critical decade for the climate and for companies to decarbonise.

Background

ACCR’s view is that the IEA NZE pathway is the best available tool for assessment of Paris-alignment, because:

• It aims to limit global warming to 1.5°C in 2100 and provides enough certainty that warming stays well below 2°C throughout the 21st century.
• The temperature outcome in 2100 is determined by a climate model that takes into account all of the IEA’s assumptions, including those relating to energy security, recent technology developments, recent geopolitical events, along with providing comprehensive sectoral and geographic data.^[1]
• It is updated annually and takes into account the emissions output of recent years.

As with all iron ore miners, scope 3 emissions from the use of metallurgical coal in the processing of iron ore for steelmaking account for the vast majority of Rio Tinto’s emissions.

Following engagement with ACCR and other investors, Rio Tinto has committed to significantly enhancing its disclosures prior to the 2025 AGM, including its forward capital expenditure on steel decarbonisation, known milestones, timelines and potential abatement opportunities.

ACCR recently released research into the global green steel transformation, including detailed analysis of the four iron ore companies responsible for 41% of global iron ore production, and understands this is the first such commitment from an iron ore operator globally.

Commenting on Rio Tinto’s commitment, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is a significant announcement from Rio, one that sets a new standard for iron ore producers globally and will be widely welcomed by investors.

“This outcome is the result of constructive company responsiveness to a draft shareholder proposal and demonstrates the roles investors can play in shaping climate related disclosures.

“Scope 3 emissions, predominantly from steel making, account for more than 95% of the total emissions footprint of iron ore miners, posing significant business risks in a decarbonising global economy. Rio’s investors will now be ahead of the curve and gain strategic insights into how the company is planning to tackle this challenge, which is an important first step to helping ensure capital is being allocated towards the best opportunities.

“This outcome should help Rio on its path to unlock large emissions reductions and also better assure long term value through the energy transition.

“These disclosures will help address one of the key barriers to decarbonisation of the sector, which is a lack of detailed information around the allocation of capital specifically towards steel decarbonisation. Investors need to see and measure where companies are investing and prioritising actions towards scope 3 emissions reductions.

Rasmus Bessing, co-CIO and head of ESG investments at PFA, said:

"It is very positive that Rio Tinto is stepping up its green commitments and a victory for the climate.

“On the one hand, the mining and steel industries are vital for the green transition, because they supply metals and minerals which are included in wind turbines or electric cars. On the other hand, the industry also has a significant CO2 footprint, which it is crucial to reduce.

“The transition towards a greener mining sector is a long haul, but Rio Tinto's new announcement shows that constructive dialogue and active ownership produce results."

Background

About PFA

PFA is Denmark’s largest commercial pension provider with 1,3 million customers and 90 billion USD in assets under management. Founded in 1917 by the labour market operators, PFA’s core mission is to provide financial security, a good senior life, health solutions and contribute to a sustainable society. PFA supports the Paris Declaration and have over number of years invested in green technologies such as wind and solar power. PFA has currently reduced the carbon footprint from investments in listed shares, properties and credit bonds by 40 percent since 2019.

The ACCR draft resolution for iron ore producers

Steel decarbonisation resolution for 2024 AGMs

In light of the commercial imperative to be well positioned as global demand shifts towards green steel, shareholders request the Company provide additional disclosures about its plans for Scope 3 emissions reductions from processing iron ore.

In order to promote market confidence, these disclosures should address:

• planned capital allocation for steel decarbonisation investment over the forward 3-5 years, along with the estimated emissions reduction impact of each investment
• the Company’s plans for delivering net zero emissions from iron ore processing by 2050, including timelines, investment priorities, and governance oversight
• optimal policy settings that would promote emissions reductions across the steel value chain.

These disclosures should initially be published before the Company’s 2025 AGM. Thereafter, they should be updated alongside company reporting in each year that material changes are made. This should be undertaken at reasonable cost and omit commercial-in-confidence information.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of the Company.

Media reported last week that superannuation fund HESTA, which holds 0.8% of Woodside shares and sits in the top twenty of the company’s shareholders, has “constructively engaged” with Woodside over several months and “put forward director candidates for Mr Goyder to consider”. According to HESTA:  “We have shared with Woodside for their consideration, independent and highly credentialed potential director candidates, whose new energy and business transformation skills we believe would add to the board’s current capabilities.”

The notice of meeting, released late Friday, contains no nominations of new director candidates.

ACCR has submitted a Members Statement for the Woodside AGM opposing Goyder’s re-election as Chair.

Commenting on these developments Brynn O’Brien, Executive Director, ACCR

“ACCR viewed HESTA’s engagement as a welcome development, given the urgent need for the boards of energy and resource companies to evolve as the energy system evolves. Investors want confidence that boards of carbon-intensive companies have the right mix of high-calibre and appropriately skilled directors, with the requisite judgement to serve long term shareholder interests in the energy transition.

“With the 2024 AGM Notice of Meeting having been published and with no additional director nominees named, it appears HESTA’s engagement efforts have been dismissed by company chair and chair of the nominations committee, Richard Goyder, who is himself facing re-election this year.

“This is yet another example - in a long list - of the poor responsiveness to shareholders that has been a feature of the Goyder-led Woodside board. Over four years, Goyder’s board has resisted change in the wake of major shareholder votes, each relating to its failure to deliver a credible strategy that will maximise shareholder value in the face of the global energy transition.

“Woodside’s shareholders were already fully justified in a vote against Goyder’s re-election, but this dismissal of a constructive engagement by a major investor may well tip more funds towards voting no.

“Despite four years of strong investor feedback, Woodside has failed to bring anything of substance to the table in its latest climate plan; no credible scope 3 plan, no substantive plan for moving away from an overreliance on offsets, no sanctioning of any significant ‘new energy’ project, and no shift away from allocating the majority of its capital to developing new oil and gas projects.

“Woodside’s resistance to investor feedback is astonishing. Investors dished out the world’s largest vote against a company climate plan in 2022, a global record which is still unsurpassed. This was followed by a record-breaking vote against an incumbent director at last year’s AGM.

“The Goyder-led board has shown a determination to bet shareholder money against a rapid and orderly energy transition, without any sign of a Plan B.

“At the upcoming AGM, a vote against yet another woeful climate plan and the chair who delivered it is not only justified, but essential for risk-focused investors.

“As we saw with another Goyder-led Board, Qantas, Goyder failed to read the room and failed to respond adequately to shareholder concerns. One can only imagine that Goyder is bracing himself for further shareholder outrage at the Woodside AGM this April.”

Key changes include:

• Reduction in the level of ambition for the 2030 NCI target from 20% to 15-20%
• Removal of the 2035 NCI target, giving less guidance to investors around the pathway between 2030 and 2050
• Introduction of a new Scope 3 target, for oil products only, of 15-20% by 2030 compared with 2021
• LNG as a transition fuel features heavily in the plan, despite the high cost and high emissions

Shareholders will have an opportunity to vote on the Energy Transition Strategy at the company’s upcoming annual general meeting in May.

Nick Spooner, UK Company Strategy lead, Australasian Centre for Corporate Responsibility said:

“‘By lowering its already weak ambition, Shell is at odds with global momentum towards net zero goals and is further exposing its investors to unnecessary risks through the energy transition.

“The new Scope 3 targets put forward by Shell bring little comfort to investors. Plans for reducing emissions from oil products mean little when they are not coupled with company-wide absolute emissions reduction targets

“The continued promotion of LNG is at odds with the goals of the Paris Agreement. Investors should be concerned about this misallocation of capital, and increasing insistence on LNG as a transition fuel which makes little sense when there are cheaper, cleaner and faster to deploy alternatives available.

“This bullishness on LNG is reflected in Shell’s lobbying activity, which also seems to be promoting demand for LNG in emerging markets.

“The company has been dismantling the segments of its business that are critical to its energy transition strategy as it refocuses on fossil fuel expansion. Investors will be asking why Shell is under-cutting its own ability to work with customers to decarbonise and therefore thrive through the energy transition.

“The actions taken by the new executive team put more emphasis on fossil fuel expansion over low carbon investments. Our analysis shows that the company was not on track to meet its already unambitious emissions reduction targets. The further weakening of these highlights the company’s lack of commitment to the energy transition.

“We would expect it to be difficult for investors to justify supporting this short-sighted strategy, which will be voted upon at the upcoming annual meeting, based on this weakening of its climate ambitions and the impact this will have on the company’s ability to transition successfully

“Investor sentiment around the company is already negative as the decarbonisation targets Shell has set out are vague, unambitious and overly reliant on divestments or negative emissions technologies. This step back will only stoke further discontent from its investor base.

Background

ACCR has also recently published a detailed analysis of Shell’s climate-related lobbying disclosures, finding that the company does not assess or disclose any industry associations it is a member of in emerging markets. Full report: In the dark: gaps in Shell’s climate lobbying disclosures

In December 2023, ACCR published an analysis of Shell’s decarbonisation strategy.

“Santos’ growth strategy: will it deliver for shareholders?” shows that the portfolio of oil and gas projects Santos is targeting for Final Investment Decision (FID) within the next two years appears to generate modest value for shareholders. The projects are the Papua LNG project, Narrabri gas project, and Dorado oil project.

A capital return strategy - share buybacks - offers higher value than delivering the portfolio of selected unsanctioned projects, with lower risk and fewer emissions.

• The total net present value (NPV) of the unsanctioned portfolio is a modest $803m, equivalent to just 5% of Santos’ market capitalisation; forecast capex is over $6b. ACCR estimates reallocating capital from these unsanctioned projects to share buybacks would generate an additional $730 million value. It’s estimated there’s an additional $1.7 billion upside available from ceasing fossil fuel developments because it would reduce costs and risk for the business.
• Analysis of 30 years of Santos’ shareholder returns shows production growth does not seem to have a positive correlation with shareholder returns.
• Shareholder returns have been significantly stronger when Santos is operating under a low-cost operating model.
• • In the low-cost operating phase (2016-2021) shareholder returns outperformed the MSCI World Energy Sector Index by 162%
  • In the current growth phase (2021-2023) capex more than doubled and returns lagged the MSCI World Energy Sector Index by 69%
• In 2023 Santos’ dividend and share buyback yield was 7.4% -  well below the 11% average of a peer group of nine Australian and global peers.

The three projects up for imminent FID all face a range of risks, and the portfolio as a whole is sensitive to the kind of cost overruns typically seen in Australia’s LNG sector.

Commenting on the research, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“Santos shareholders have been increasingly frustrated with the chronic share price underperformance, ineffective strategy and perverse executive bonuses.

“Following the collapse of the merger talks with Woodside, Santos’ board and management are still hunting around for a rabbit to pull out of their hat to try and fix the lagging share price, but a compelling vision seems absent.

“This report calls into question whether Santos’ production growth strategy will address the company’s share price woes.

“When you strip all the hype around the projects Santos is trying to develop and simply look at the figures, it is clear: growth and expansion are not in the interests of shareholders.

“Redirecting capex from these projects to share buybacks creates an additional $730 million value and ceasing all new projects presents a potential $1.7 billion further upside. This strategy warrants deep consideration by the Santos board.

“None of the projects Santos wants to reach FID on in the next two years are Paris-aligned or cost competitive compared to other unapproved oil and gas projects, raising their risk profile even further.”

The steel sector is one of the most carbon intensive industries in the world, accounting for approximately 11% of global carbon emissions. The vast majority (90%) of emissions from steel production come from the use of metallurgical coal in conventional blast furnaces to produce iron, the primary component of steel.

“Forging pathways: insights for the green steel transformation” highlights that 71% of the world’s blast furnaces are due to reach the end of their operating lives between now and 2030, which means decisions to invest capital in refurbishing blast-furnaces, rather than available green steel processes, risks locking in coal-based methods for decades to come.

The research finds that across every stage of the value chain, companies are taking advantage of advancements in technology to enable less carbon intensive steelmaking. But not all technologies labelled “green” offer the same potential for decarbonisation.

Green hydrogen showed the most promise in terms of technological advancement, while Carbon Capture and Storage remains one of the least cost-effective solutions, with significant uncertainty around viability and effectiveness.

The research concludes that capital allocation towards innovative green iron technologies in regions with abundant renewable energy potential is imperative. One possible solution sees ironmaking decoupled from steelmaking, with iron production occurring in areas with significant renewable energy production, delivering a reliable supply of high-value green iron.

The report analyses how 20 major companies (16 steelmakers and four iron ore miners) are addressing steel decarbonisation, finding:

• For the iron ore companies:

  • Three companies mine iron ore in the Australian Pilbara region, where the vast majority of iron ores are not currently suitable for commercial Direct Reduced Iron (DRI) or Hot Briquetted Iron (HBI) production. Each company is tackling this challenge, acknowledging the significant business risk and initiating efforts to address it, with outcomes still to be determined.
  • Scope 3 emissions, predominantly from steelmaking, account for more than 95% of their total emissions footprint. Investments aimed at reducing scope 3 emissions are underway, but ambition and clarity vary.
  • All are pursuing decarbonisation projects (64 in total) with an array of technologies, but with varying degrees of emissions reduction potential.
  • All are directing substantial investment towards operational decarbonisation by 2030, however all need to improve disclosure of their specific capital allocations toward steel decarbonisation projects.

• For steelmaking companies:

  • 50% of the decarbonisation projects the group has invested in have significant potential to reduce emissions, while 40% of the projects have only limited potential.
  • 94% of the companies have net zero by 2050 targets, but short-term commitments are scarce, suggesting companies will struggle to deliver the rapid and substantial emissions reductions their targets require.
  • Less than 20% have net zero emissions targets explicitly encompassing Scope 3 emissions.

Commenting on the findings, Fiona Deutsch, Company Strategist and Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Steel does not have a climate problem, it has a coal problem. With 90% of emissions from the sector coming from the use of metallurgical coal to produce iron, it’s clear that moving capital allocation away from coal-dependent methods and towards genuine green steel processes is where investors, companies and the climate will get the most bang for their buck.

“One of the most time-critical decisions now is whether any more money is pumped into coal-dependent steelmaking processes.

“Investors and companies across the steel value chain can’t afford to waste a minute, or a dollar, heading in the wrong direction.

“It’s very clear from our research that the shift towards green steel is underway and that this is a sector that no longer deserves the reputation of being ‘hard-to-abate’.

“Every single one of the steelmaking and iron ore companies we analysed is investing in decarbonisation projects - which really illustrates the immense opportunities for value creation the market sees in green steel. However, we are also seeing investments go into technologies that have limited decarbonisation potential. Just because a process is called ‘green’, doesn’t mean it is.

“While the overwhelming majority of steelmaking companies we analysed have net-zero by 2050 emissions reduction targets, what investors really need to see is robust near-term commitments. Delaying decarbonisation just makes the job harder further down the track, risking capital misallocation and loss of market share as transition leaders pull away from the laggards.

“The financial risks associated with failing to decarbonise are already apparent and will only increase, for example as the EU’s Carbon Border Adjustment Mechanism (CBAM) fully kicks in. Conversely, all signs indicate that producing green steel is only going to become more cost-effective, with market demand forecast to increase.

“Having the right policy and regulatory frameworks in place is critical for creating favourable investment environments, and global advocacy by investors and companies for the right policy settings is critical.”

By not reporting on emerging markets, Shell’s lobbying disclosures are not proportionate to its business activities. Nearly 60% of Shell’s fossil fuels production from 2024 to 2050 is expected to come from emerging markets.

The research identifies multiple examples of undisclosed lobbying by Shell and its industry associations in emerging markets, including for policies that risk locking-in levels of fossil fuel demand that are misaligned with the Paris goals.

“In the dark: gaps in Shell’s climate lobbying disclosures”, reveals:

• While Shell publicly states its ambition to be a leader in lobbying transparency, it does not assess or disclose any industry associations it is a member of in emerging markets. Its lobbying disclosures instead focus on a small subset of advanced economies.
• ACCR has identified 80 associations which Shell has not assessed or disclosed, and that appear involved in climate and energy policy engagement. More than half (45) of these are based in emerging markets.
• Shell assessed 39 associations in its most recent disclosure. Yet, according to the ACCR research, Shell has not assessed at least 53 additional associations where it holds leadership and governance roles. This is despite Shell saying one of its criteria for assessing associations is that “Shell could be considered influential” in them.

The report also analyses Shell’s LNG growth strategy in emerging markets. It shows that as the largest private LNG trader, Shell is particularly dependent on LNG revenues and that its LNG demand projections are significantly more bullish than industry forecasts and are misaligned with the goals of the Paris Agreement.

Nick Spooner, UK Company Strategy lead, Australasian Centre for Corporate Responsibility said:

“This research is a stark assessment of Shell, a company that has consistently said it wants to be a leader on transparency around political engagement, yet is leaving investors in the dark about a large proportion of its lobbying activities.

“Investors want transparency and clear disclosures of lobbying activity where it is material to the company's forward business.

“Having policy and regulatory settings in place that enable investments in the low carbon solutions required for customers to transition is crucial for Shell to thrive in a net-zero world. Investors need confidence that Shell’s lobbying serves this purpose, not undermines it.

“Shell’s decarbonisation strategy stresses the importance of working with customers to reduce demand for fossil fuels. However, this research demonstrates that some of Shell’s industry associations are lobbying for policies that could have the impact of locking-in demand for fossil fuels in emerging markets.

“Investors need full transparency over Shell’s lobbying in emerging markets, especially because the company has an LNG growth strategy in these markets. Because this strategy faces energy transition headwinds and is built on overly bullish demand forecasts, Shell could well be motivated to lobby for lock-in of demand in emerging markets, especially in Asia – but if so, this would come at the expense of global climate goals and undermines the company’s own decarbonisation targets.

“Any lobbying by its industry associations for fossil fuel expansion in emerging markets would be in direct conflict with Shell’s stated support for the Paris Agreement and expose the company to undue risk in the energy transition, including the risk of capital misallocation and stranded assets.

“The need for climate policy improvement in emerging markets is even greater than in advanced economies. Investors need more information to assess if Shell’s lobbying activity in emerging market countries seeks to entrench the status quo and promote an outdated model for development that is based on fossil fuels.

“For investors, this report raises concerns around transparency and governance at Shell, and how suitable Shell’s strategy is for staying resilient through the energy transition.

“The first step for Shell now is to provide greater transparency to investors around its global lobbying footprint, one that is truly representative of the geographies where it does business. Investors need confidence that Shell’s lobbying does not undermine the success of the company’s decarbonisation strategy and long-term value creation, or the goals of the Paris Agreement.

The statement says a vote against Goyder is warranted because the Woodside board has been persistently unresponsive to shareholder concerns on climate risk management and is pursuing a growth strategy that is not in shareholders’ interests.

Woodside has faced the following major votes on climate governance and strategy at its recent AGMs:

• 2020 - 50% vote in favour of an ACCR resolution seeking that the company set Paris-aligned Scope 1, 2 and 3 targets, and to adjust capital allocation and remuneration accordingly.
• 2022 - 49% vote against Woodside’s Climate Plan under the Say on Climate mechanism, the lowest level of support for a climate plan since the inception of Say on Climate.
• 2023 - a record-breaking 35% vote against director Ian Macfarlane over climate governance concerns.

Despite these clear signals from investors, Woodside’s strategy has not materially changed since the 2023 AGM and the company continues to ignore investor concerns on climate governance.

Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Over the last four years the Woodside board, chaired by Richard Goyder, has failed to respond to reasonable shareholder concerns on climate risk management. Relatedly, the company’s oil and gas growth strategy, which is incompatible with credible and current safe climate models, is not in shareholders’ interests.

“After numerous years of engagement and their concerns being ignored, investors have no choice but to question the capacity and leadership of the Woodside board.

“As Chair, Richard Goyder carries ultimate responsibility for the company’s systemic failings on climate governance and therefore it is Goyder who investors should hold to account.

“Woodside’s resistance to investor feedback is astonishing. Investors dished out the world’s largest vote against a company climate plan in 2022, a global record which is still unsurpassed. This was followed by a record-breaking vote against an incumbent director at last year’s AGM. Despite this, Woodside this week put forward a climate plan with little more than a few tweaks and a change of tone.

“Woodside’s 5 MtCO2-e pa scope 3 “abatement target” is not a new target, it is just restating the existing US$5billion new energy capex target with a different metric. This “target”, which represents just 7% of Woodside’s 2023 Scope 3 emissions, will not pass muster with investors who’ve clearly signalled they expect the company to meaningfully address scope 3 emissions.

“Given the company is progressing 475Mt of new scope 3 emissions from Browse, Sunrise and Calypso, it’s a blatantly unserious offering.

“Woodside openly acknowledged at the 2023 Investor Briefing Day that its offsets portfolio and nascent CCS projects are tools to support growth. It’s clear these plans are about facilitating emissions production, rather than emissions reduction.

“88% of Woodside’s greenfield capex will be allocated to oil and gas expansion. As yet, Woodside has not sanctioned a significant green energy project.

“The Goyder-led board has resisted change in the wake of each major shareholder vote since 2020. Investors have had enough. This style of leadership is ineffective in transitioning Woodside into a thriving, modern energy company.”

This will be voted on at Woodside Energy's AGM on Wednesday 24 April 2024 in Perth, Western Australia.

Members’ statement for resolution relating to the re-election of Richard Goyder (985 words inc footnotes)

The Woodside board, chaired by Richard Goyder, has been persistently unresponsive to shareholder concerns on climate risk management and is pursuing a growth strategy that is not in shareholders’ interests.

A central function of Woodside’s board is to “set the strategic direction of the company”^[1] and this includes the company’s management of climate risk. However, under the chairmanship of Richard Goyder, the current board has resisted change in the wake of major shareholder votes at the last four annual general meetings (AGMs), each relating to its failure to deliver a credible strategy that will maximise shareholder value in the face of the global energy transition.

Most recently, long-standing director Ian Macfarlane suffered a record-breaking^[2] vote of 35% against his re-election at the 2023 AGM over these concerns. Company disclosures since then, in particular those made at the 2023 Investor Briefing Day, indicate Woodside is persisting with its carbon-intensive growth portfolio that appears less value-accretive than a capital return strategy.^[3]

The chair carries ultimate responsibility for the company’s direction, and therefore it is the chair who must be held accountable for Woodside’s current approach.

Investor concerns with Woodside’s climate strategy and governance

The primary elements of concern that investors have held regarding Woodside’s climate strategy and governance over the last four years are:

• Woodside is continuing to allocate the majority of its capital to developing new oil and gas projects
• Woodside’s scope 1 and 2 decarbonisation targets are not Paris-aligned
• Woodside has not set a scope 3 target to drive the decarbonisation of its products and value chain, even though scope 3 emissions constitute 92%^[4] of total equity emissions
• offsets dominate Woodside’s scope 1 decarbonisation strategy, which applies to 8%^[5] of equity emissions
• the company has been persistently unresponsive to the above concerns.

Woodside’s board is still not listening

Based upon available disclosures, Woodside’s strategy has not materially changed since the 2023 AGM. We say this noting that Woodside mandated the filing date of this members’ statement prior to the publication of its 2023 Climate Report. Unlike last year, Woodside refused a request for a modest period to assess the 2023 Climate Report for any substantive updates. Therefore the assessment below is primarily based upon the presentations at the 2023 Investor Briefing Day.^[6]

• Oil and gas expansion remains the priority: Having not sanctioned a significant ‘new energy’ project, all of Woodside’s sanctioned capex has been allocated to oil and gas expansion. When adding Browse, Calypso, Sunrise and Woodside’s $5bn ‘new energy’ capex target, ACCR estimates that 88% of greenfields capex is still targeting fossil fuels.^[7]
• Operational targets (8% emissions) unlikely to be credibly strengthened: With Scarborough, Sangomar and Trion coming online before 2030, scope 1 emissions are expected to increase and the probability of Woodside credibly strengthening its operational targets is low.
• Credible Scope 3 target (92% emissions) not possible: While Woodside continues to actively develop projects that will result in an additional 475 MtCO2e of scope 3 emissions^[8], we see no pathway for a credible Scope 3 target to be announced by the company.
• Offsets will remain integral to meeting operational targets: Despite a growing emphasis on unsanctioned and ‘indicative’ scope 1 reductions that cost up to US$500 /tCO2e^[9], Woodside has not disclosed the potential emissions increases associated with the oil, gas and hydrogen projects it is pursuing. ACCR estimates that scope 1 emissions from Browse, Calypso and Sunrise will be 80 MtCO2e.^[10] This exceeds the upper estimates of Woodside’s potential scope 1 emission reductions. With potential new emissions exceeding potential reductions, offsets will inevitably remain a key lever for Woodside to claim it is decarbonising its operations.

When presenting at the Investor Briefing Day, CEO Meg O’Neill stated “Our company strategy is a climate strategy, we don’t have two separate strategies”.^[11] If the company’s current strategy is progressed as stated, investor concerns will remain unaddressed.

Is it all worth it? Woodside’s carbon-intensive growth portfolio creates less value than capital return

Between 2007 and 2023, with no overall change in oil price despite significant volatility, Woodside doubled its production and only delivered a total shareholder return of 3.5% p.a.^[12]

Despite lacklustre returns, Woodside remains committed to a production growth strategy. Its investment framework is more bullish than peers, with lower hurdle rates and/or higher oil price assumptions than BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Equinor, Shell and TotalEnergies.^[13] This has real world impacts for shareholders, with ACCR finding it unlikely that any of these peers, possibly aside from Shell, would have invested in Trion.^[14] In fact, ACCR analysis concluded that Woodside's oil and gas growth opportunities deliver less value than a share buyback would.^[15]

Richard Goyder’s record as an ASX Chair

With poor responsiveness to shareholders a feature of the Goyder-led Woodside board - for example, lack of responsiveness to major shareholder votes and a last minute commitment to a second Say on Climate vote only after prolonged shareholder pressure^[16] - we have doubts about whether the Chair possesses the leadership style to transition Woodside into a thriving, modern energy company.

In October 2023 Qantas announced significant board renewal plans “in recognition of the reputational issues facing the Group and to support the restoration of trust in the company.”^[17] This included an announcement that the chair Richard Goyder will retire prior to the 2024 AGM.^[18] Mr Goyder’s announced exit was endorsed by the Australian Shareholders Association and the Australian Council of Superannuation Investors.^[19] The announcement was followed by a record 83% vote against the company’s remuneration plan at the 2023 AGM.^[20]

We encourage members to take the concerns outlined above alongside Woodside’s recent history with regard to climate strategy and governance into account when considering their vote on the re-election of the Chair at the 2024 AGM.

Please read the terms and conditions attached to the use of this site.

The climate plan will be put to a vote of shareholders at the company’s upcoming annual general meeting and Chair, Richard Goyder, who holds ultimate responsibility for climate governance at Woodside, is also facing re-election.

Investors have consistently told Woodside that its climate plan isn’t up to scratch - inflicting the world’s largest vote of 49% against a company climate plan in 2022 and a record-breaking vote of 35% against incumbent director Ian Macfarlane at last year’s AGM. The primary elements of concern that investors have held regarding Woodside’s climate strategy and governance over the last four years are:

• Woodside is continuing to allocate the majority of its capital to developing new oil and gas projects
• Woodside’s scope 1 and 2 decarbonisation targets are not Paris-aligned
• Woodside has not set a scope 3 target, even though scope 3 emissions comprise more than 90% of company emissions
• offsets dominate Woodside’s scope 1 decarbonisation strategy
• the company has been persistently unresponsive to the above concerns.

Commenting on the results and the 2023 Climate Transition Action Plan, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility, said:

"With energy markets settling after the highs of the Ukraine war, Woodside's 2023 profit is 74% lower than 2022 whilst its full year dividend has also fallen by 45%.

“Unsurprisingly given the groundswell of persistent investor concern over the last four years, Woodside has today come to the table saying it is listening and responding to shareholders on climate risk management. However, the small tweaks and change of tone are not what matters, it is the core substance of the company’s strategy that investors care about.

“Whilst a tone of self preservation appears to have kicked in, the Woodside board has still failed to bring anything of substance to the table.

“It is hard to see how Chair Richard Goyder will appease frustrated investors with this climate plan, a high risk choice for a chair facing re-election at the 2024 AGM.

“Investors will see that nothing in today’s report changes the fact that 88% of Woodside’s greenfield capex will be allocated to oil and gas expansion and that, as yet, Woodside has not sanctioned a significant new energy project.

“Woodside expects its scope 1 emissions to increase to 2030 and despite a lot of talk about costly and uncertain abatement technologies, it is clear that offsets remain central to meeting its scope 1 target.

“Offsets are not a decarbonisation strategy.

“Woodside’s new abatement target of 5 MtCO2e pa is just 7% of its 2023 scope 3 emissions. And whilst it’s progressing 475 million tonnes of new scope 3 emissions from Browse, Sunrise and Calypso, it’s hard to take anything Woodside says about managing scope 3 emissions seriously.

“Woodside openly acknowledged at the 2023 Investor Briefing Day that its offsets portfolio and nascent CCS projects are tools to support growth. This is not about scope 3 emissions reduction, it is about facilitating scope 3 emissions production.

“As CEO Meg O’Neill has stated, Woodside’s climate strategy is its company strategy, “we don’t have two separate strategies”. And today we see no changes to Woodside’s company strategy.

“A key question is whether Woodside’s carbon intensive strategy will even drive value for shareholders. ACCR analysis has concluded that Woodside's oil and gas growth opportunities deliver less value than a share buyback would.

Santos has announced a slump in underlying net profit of 42% and an increase in the final dividend of 16%.

The results come as Santos Chair, Keith Spence, faces shareholder dissent at the company’s upcoming annual general meeting. Last week, ACCR filed a members’ statement opposing Spence’s re-election because under his direction the Santos board has failed to deliver a company strategy that maximises shareholder value.

Commenting on the results, Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today’s results have only reinforced our concerns with the performance of the Santos board and its Chair Keith Spence.

“While Santos boasted it has delivered “record” cash returns to shareholders, this is coming from a very low base over the previous five years.

“The cash returns of US$852 million also coincided with an increase in net debt of US$814 million, which indicates the dividend increase has been assisted by increasing gearing levels. This is not a sustainable strategy for delivery of shareholder cash returns.

“Unlike the majority of peers, Santos did not buyback shares in 2023, which explains why the company’s dividend and share buyback yield of 7.4% still remains well below the 11% average.

“Santos likely hoped this dividend would distract shareholders from the fact there is no reported progress on its review of strategic options since the collapse of merger talks with Woodside. In fact, the company restated its commitment to its strategy in today’s results. This digging in is perplexing and further points to the critical need for a change in leadership.

“This morning’s fall in share price demonstrates investors are not buying the rhetoric.

“The higher dividend this year cannot hide years of underperformance in the share price. According to ACCR analysis, Santos’ pivot to a growth strategy in early 2021 has increased capex by over 200%, but only delivered 7% total shareholder returns (TSR). The average TSR for global and Australian oil and gas peers over the same period was 82%.

“In 2023 the company spent $3 of capex for every $1 of cash returns to shareholders. This is a direct result of Santos’ pivot to growth from early 2021.

“The board must be held accountable for this misguided pivot to growth that has eroded shareholder value.

“As Chair, Keith Spence holds ultimately responsibility for the company's poor performance and strategic failings.”

Background

Chart: Dividend and share buyback yields of Santos and global and Australian O&G peers, using share prices as of 21 February 2024.

Notes: The dividend and share buyback yield is the sum of 2023 dividend yield (Bloomberg 12 month dividend yield as of 21 February 2024 for peers and Santos’ 2023 declared dividend of US$0.262 divided by the Santos’ share price of US$4.8) and share count yield from 31 December 2022 to 31 December 2023

Members’ statement for resolution relating to the re-election of Keith Spence (982 words inc footnotes)

Under the direction of chair Keith Spence, the Santos board has failed to deliver a company strategy that maximises shareholder value.

The Santos board has made a series of strategic decisions aimed at growth which have resulted in chronic share price underperformance. With shareholder frustration mounting,^[1] the primary strategy the board appears to be contemplating is to merge with or sell off assets to an industry peer. The board’s options are decreasing, with the highly publicised merger talks with Woodside recently concluding without a deal.^[2]

Santos operates in a “sunset industry”^[3] facing long-term structural demand decline and a challenging future operating environment. The company needs a high-calibre chair, with the requisite skill and judgement to properly weigh its strategic options in the face of the energy transition and to deliver satisfactory shareholder returns.

As Chair since February 2018, Spence is ultimately responsible for the company's poor performance and strategic failings. A vote against him is warranted.

Company underperformance relative to peers

Santos' pivot to a growth strategy and subsequent underperformance casts doubt on the board’s judgement. The shift to a growth strategy was marked by the final investment decision for the Barossa project in late March 2021. This saw the company move from a low cost operating model (2016-2020), with average annual capex of US$711m p.a, to a growth phase (2021 to 2023), with average annual capex of US$1,780m p.a.^[4] This amounts to a 150% increase in capex.

To date, this growth phase has delivered only 7% total shareholder returns (TSR).^[5] This is a drastic underperformance when compared with peers and relevant indices over the same period. For example:

• average TSR for global and Australian peers ('peer group') was 82%. Peer TSR’s were:

  • ConocoPhillips (142%), ExxonMobil (98%), Equinor (94%), Shell (84%), TotalEnergies (69%), Eni (69%), BP (63%), Chevron (57%) and Woodside (57%)

• MSCI World Energy Index was 76%

• ASX200 was 18%

This demonstrates Santos’ capex-heavy growth strategy is not delivering for shareholders. At the 2023 investor day CEO Kevin Gallagher noted his frustration with the "cheap" share price, acknowledging "It's stalled, and we need to unstall it".^[6]

Santos is also a laggard in returning capital to shareholders. With a 5.8% 2023 dividend and share buyback yield^[7], it is the lowest amongst its peer group. The average 2023 dividend and share buyback yield for the group is 9.7%.

Santos did not disclose an investment hurdle for new projects in its 2023 Investor Day presentation, unlike recent equivalent disclosures from many in its peer group (e.g. Shell, BP, TotalEnergies, Woodside). This means the level of profitability the Santos board demands from new projects is opaque.

Additionally, for company Return on Average Capital Employed (ROACE) targets Santos is using more optimistic oil price assumptions than its peer group. Santos has the highest oil price assumption of the selected peer group, with an implied 2028 Brent price of $83/bbl (calculated from a $75/bbl 2023 real price). This is 15% above the peer group’s average of $72/bbl. Santos’ use of higher oil prices could drive the company to progress projects its peers would not, exposing its shareholders to higher risk in the energy transition.

Remuneration framework not incentivising shareholder returns

Santos' remuneration settings are misaligned with governance norms and insufficiently incentivise management to focus on shareholder returns.

On 21 April 2021 the board announced a $A6m bonus for CEO Kevin Gallagher to incentivise Santos' growth pivot.^[8] At the time, a governance expert reportedly described it as an incentive “to deliver on future projects that have yet to deliver earnings and value for shareholders”, creating a situation where Gallagher “could still get his bonus if the board subjectively determines performance hurdles have been achieved, even if they don’t generate shareholder value”.^[9] The Australian Shareholder Association also expressed concerns regarding the absence of “a hurdle set to ensure shareholders had a good outcome”.^[10]

The absence of any clear linkage between shareholder returns and the CEO’s growth incentive bonus was a major error of judgement by the Santos board that investors are now paying for.

Management accountability

Multiple incidents indicate the board is either unwilling or unable to exercise an appropriate level of control over management and hold it to account, as required under ASX Corporate Governance guidelines.^[11] The longstanding partnership between the Chair and CEO has raised questions about the board's ability to hold management to account.^[12]

The Santos board permitted the extraordinary appointment of CEO Kevin Gallagher as a Mineral Resources Non-Executive Director in March 2022,^[13] amid Santos' $A22 billion merger with Oil Search, despite the obvious conflicts it would introduce with respect to Gallagher's availability and prioritisation of Santos, in addition to potential business conflicts of interest.^[14] The appointment was reversed following public shareholder discontent.^[15]

Staff satisfaction with management is persistently low:

• an internal 2021 survey indicated that 'trust in leadership' and belief among staff that Santos was 'effectively managed and well run' was 'well below benchmarks'.^[16]
• CEO approval among staff has been as low as 23 per cent, according to Glassdoor.^[17]

Further examples of concerning company culture include: the board's approval of the leasing of a private jet ($US 23 million) in 2022 for board and executive travel, which was undisclosed in company reporting documents but revealed in the media;^[18] and the revelation that Alex Epstein, a vocal opponent of the scientific consensus on climate change, was invited to speak with executive staff.^[19]

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The members’ statement says a vote against Spence is warranted because under his direction the Santos board has failed to deliver a company strategy that maximises shareholder value.

• According to ACCR analysis, Santos’ pivot to a growth strategy in early 2021 has increased capex by 150%, but only delivered 7% total shareholder returns (TSR). The average TSR for global and Australian oil and gas peers over the same period was 82%.
• Santos’ is a laggard in returning capital to shareholders. With a 5.8% 2023 dividend and share buyback yield, it is the lowest amongst its peer group.
• Santos has implemented an A$6m CEO bonus that incentivises growth regardless of shareholder returns.

As Chair since February 2018, Spence is ultimately responsible for the company's poor performance and strategic failings.

Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“From early 2021, with Chair Keith Spence at the helm, Santos has made a series of strategic decisions aimed at growth which have resulted in chronic share price underperformance, delivering woeful returns compared with industry peers.

“And as few shareholders will forget, in 2021 Spence’s board waved through a $A6m bonus for CEO Kevin Gallagher to incentivise growth - despite clear warnings that there was no linkage between this cash splash for the CEO and shareholder value. Investors are now paying for this mistake.

“As Chair, Spence is ultimately responsible for the company's poor performance and strategic failings.

“These strategic missteps cast doubt upon the judgement of Spence’s board and suggest he has hit the wall in terms of his capacity to deliver value for shareholders.

“Shareholder frustration is mounting, with investors seeking to take things into their own hands by proposing alternative strategies in lieu of the board producing a compelling vision.

“It is notable that Santos’ wallowing share price only jumped for a brief moment following the Federal Court ruling in January, which cleared the way for the Barossa project construction to restart. This demonstrates that Santos’ troubles are more fundamental than one delayed project.

“The timing of this vote could not be more critical. While the much hyped merger with Woodside is dead, Santos is clearly still on the market, and shareholders need confidence they have a chair with the requisite skill and judgement to properly identify and weigh all available strategic options before them.

“In the context of sustained underperformance, it’s quite appropriate for the Chair-CEO relationship to receive scrutiny. Keith Spence and Kevin Gallagher have a long-standing business relationship spanning decades across a range of companies, and we question whether there is sufficient independence for Spence to exercise an appropriate level of control over management.

“Given the challenging future operating environment for fossil fuels, investors in carbon-intensive companies quite rightly expect that boards have directors with the requisite energy and expertise to serve long term shareholder interests in the energy transition.”

Background

Chart 1: Total Shareholder Return (TSR) of Santos and selected global and Australian O&G peers (30 March 2021* to 31 December 2023)

• 30 March 2021, date of Barossa FID
  Data used with permission of Bloomberg Finance L.P.

Commenting on the announcement, Harriet Kater, Special Advisor at the Australasian Centre for Corporate Responsibility (ACCR) said:

“While consolidation is a common strategy in a declining market, that doesn’t mean every deal makes sense.

“In the case of Woodside and Santos investors have struggled to see any strategic rationale for a merger.

“The boards of both companies should be prioritising strategies that maximise shareholder value in the face of the energy transition.

“Santos’ board and management are now under even more pressure to fix the wallowing share price. However there are major questions over whether Keith Spence’s board has the capacity to design and execute a strategy that will appease increasingly frustrated shareholders.

“The Santos board appears to be rapidly running out of ideas. After six years at the helm, Keith Spence is facing re-election at the 2024 AGM and shareholders will rightly question whether he has the requisite skill and judgement to identify and weigh the available strategic options.

“For Woodside, previously released ACCR analysis has determined that returning capital to shareholders presents greater upside than pursuing its risky growth portfolio. This strategy should appeal to any investor that wants to increase returns or reduce risk. It’s staggering that Woodside does not appear to have considered this option.”

Commenting on the results, Alex Hillman, Lead Analyst of the Australasian Centre for Corporate Responsibility (ACCR) said:

“After over a year of market speculation, Santos has finally come clean and disclosed an increase of up to $300 million to its guidance for the Barossa project.

“Santos’ drilling for this project ground to a halt in September 2022, after a successful challenge to the Federal Court (Santos v Tipakalippa) by Tiwi Islanders over a lack of consultation.

“It is important to note that the majority of cost overruns are due to Santos’ own inability to comply with regulatory requirements deemed workable by the full Federal Court in the Tipakalippa decision.

“The more recent Federal Court decision, (Munkara v Santos), related to the pipe lay. In this case the judge ruled in favour of Santos, though the time for the applicants in that case to consider filing an appeal is still running.

“When considering the schedule impact of these two cases, it’s clear the drilling program was delayed longer than the pipelay program, suggesting that even without the Munkara decision, Barossa start up was unlikely to meet the disclosed schedule.

“This project was going to have cost and schedule overruns regardless of the Munkara decision.

“Kevin Gallagher remains under significant pressure to pull a rabbit out of a hat over Santos’ poor share price performance, whilst acknowledging that there is “no certainty” that the merger talks with Woodside will progress to a transaction.”

Background

ACCR estimates:

• Santos’ failures with regard to Tiwi Islander consultation for the Barossa drilling program have cost the company $450 million due to the drill rig being on standby; and
• The delays from the pipelay legal challenge (Munkara v Santos) cost the company $350 million.

These costs are calculated based upon a combination of public statements and court affidavits provided by Santos, independent financial analysis and local media reporting.

The court has dismissed the Tiwi Islanders’ claim.

Commenting on the ruling by Justice Charlesworth, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“While today’s court ruling may clear the way for Santos to restart its Barossa project after 16 months of delay, it leaves a colossal haemorrhage of shareholder money in its wake.

“We estimate that Santos’ regulatory delays could have cost the Barossa project $800 million.

“It remains to be seen whether the decision today addresses mounting investor concerns about Santos’ share price and the optimal structure for maximising shareholder value.

“Barossa has been tripped up by a number of legal challenges. For a company that operates in a highly regulated sector, Santos has evidently struggled with navigating regulations.

“Santos’ board is dangling a $6 million carrot in front of the CEO to deliver new projects, but Santos’ largest project has been beset by repeated problems.

“Investors should be asking serious questions about the governance of a company which has faced repeated legal challenges from local communities and Traditional Owners, not only at Barossa but also at Narrabri.

“Today’s decision does not mean it is all smooth sailing for Santos. FID on the Narrabri Gas project has recently been pushed back another year to 2025. The associated Hunter Gas Pipeline is facing opposition from local landholders and a reassessment under Commonwealth environmental laws.

“Recent court challenges of offshore project consultation processes have turbocharged an industry push to overturn social and environmental regulations deemed “workable” by the full Federal Court.

“It is expected that shareholders will continue to monitor the advocacy of companies like Santos and Woodside in the interests of ensuring consistency between the companies’ published policies and standards on one hand, and their actions on the other.”

Background

The $800 million estimate is based on $1 million per day in standby fees payable for the pipelay vessel from Jan 2023 when drilling was meant to start, and $1 million per day for the drill rig, which had to cease work in September and has only recently been remobilised.

https://www.accr.org.au/insights/investor-bulletin-muddying-the-waters-industry-lobbying-on-offshore-oil-and-gas-regulation/

The new preferential tax system will particularly benefit steel makers converting from blast furnaces, which use metallurgical coal, to electric arc furnaces. The details include:

• companies producing green steel can claim a tax deduction of 20,000 yen (AUD$209.27) per tonne of production and sales, capped at 40% of corporate tax liability
• the deduction rate for green steel is up to 75% for the first eight years, 50% in the ninth year, and 25% in the tenth year
• to qualify for these tax incentives, companies must meet specific criteria including wage increases and capital investment, with the incentive period lasting 10 years from the plan's approval.

Commenting on the news, Executive Director of the Australasian Centre for Corporate Responsibility, Brynn O’Brien, said:

“This is a clear signal from the Japanese government that it sees enormous economic opportunity in being a frontrunner in the energy transition.

“These policy levers put Japanese steel makers in a strong position to accelerate their decarbonisation and meet the escalating global demand for green steel.

“This is an immense opportunity for the Japanese steel sector, and by extension, its investors. There is no doubt, investors will be looking to ensure these opportunities are maximised.

“With many blast furnaces nearing the end of their operating life, incentives which support the transition to electric arc furnaces are timely. The Japanese government clearly sees the opportunity for accelerating the transition of a nation-critical industry.

“Technological advancements mean steel is well on the way to getting rid of its coal problem - taking the additional step of dropping remaining tax exemptions for steelmaking using metallurgical coal would be another positive move for Japan to further incentivise emissions reductions in the steel sector.

“Significant investment in Japan’s renewable energy capacity is essential to support these green initiatives. We will be watching closely to see how the Japanese government plans to enhance its renewable energy infrastructure to meet these new industrial demands in its upcoming 7th Strategic Energy Plan.”

Harriet Kater, Special Advisor at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Whilst the confirmation of early stage discussions between Woodside and Santos has seen an explosion of commentary and speculation, it is important that cool heads prevail and to acknowledge that there are significant headwinds against a deal.

“There are material regulatory challenges to consider, especially considering the ACCC’s ongoing east coast gas inquiry, and the implications for Woodside’s role in the west coast domestic gas market.

“Should the response to competition concerns be to carve up Santos’ assets between a range of different companies, the deal will get exponentially more complicated.

“However we do acknowledge that these early stage discussions are happening at a time of consolidation across the global oil and gas sector, which is an expected, defensive strategy for an industry facing structural decline.

“Whether the deal proceeds or not, it is critical that fossil fuel company boards ensure they are governing in the interests of shareholder value rather than progressing high risk expansion strategies in a declining market.

“Previously released ACCR analysis has determined that at Woodside, returning capital to shareholders presents greater upside than pursuing its risky growth portfolio. The adoption of such a strategy may well appease the significant block of Woodside shareholders that remain aghast at the board’s responsiveness to their climate concerns.

“Regardless of how far these discussions progress, Santos is certainly motivated to show frustrated shareholders that options are being considered to improve share price performance, which has been persistently lagging, in part due the company’s failings over First Nations engagement for the Barossa project.”

The report, “Australia's LNG growth wave - did it wash for shareholders?” examined the eight LNG projects that reached Final Investment Decision (FID) between 2007 and 2012 - projects responsible for Australia being one of the top three LNG exporters in the world.

The analysis shows that collectively these projects eroded US$19 billion of shareholder value. Every one of the eight projects ran over budget and behind schedule.

This ‘LNG growth wave’ attracted massive investment and now generates significant revenue for company coffers. However, shareholder value is only created when a company generates returns over and above its cost of capital.

Key findings include:

• Australia's LNG growth wave appears to have eroded US$19 billion of shareholder value - with returns not meeting the cost of capital.
• Every project exceeded the capex guidance provided at FID, by an average of 35%.
• Every project started production later than the schedule guidance provided at FID.
• ACCR estimates these projects achieved Internal Rates of Return (IRR) of between 3% and 10.5%, with the Gorgon Project the only project to exceed 10%. No project met the hurdle rates that European and US oil and gas majors currently expect.
• The failure of the Australian LNG industry to deliver shareholder value requires scrutiny from investors as the industry seeks to progress new projects. The LNG growth wave came online during a period the IEA dubbed in 2011 the “golden age of gas”. However, the IEA is now  projecting that gas demand peaks in every one of its scenarios by 2030, and Australian gas production reduces by 60% by 2050 if countries meet their climate targets.

Commenting on the findings, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility, said:

“Australia’s LNG industry has consistently overpromised and under-delivered.

“When we look at the wave of LNG projects that made Australia the biggest LNG exporter in the world, they’re generating revenue, but they are not meeting the cost of capital. In simple terms, these projects have lost shareholders’ money.

“Despite these companies touting their robust contracting strategies and cost contingencies, every one of these projects was over budget. Every project was also late.

“Out of the eight projects, only one achieved an Internal Rate of Return over 10%. None of them met hurdle rates that European and US oil and gas majors currently expect.

“With renewables now the cheapest form of energy and countries ratcheting up their climate commitments, it’s only going to get harder to develop a profitable oil or gas project. But Australia’s LNG growth wave showed that even in boom times, these projects can erode significant shareholder value.

“As Woodside and Santos seek to expand in Australia, Senegal, Papua New Guinea and Mexico with new projects, investors should be casting a critical eye over their plans and calibrating these with how their previous investments have panned out.

“This analysis demonstrates that pursuing new LNG projects can be a genuine risk to shareholder value. Rather than doing what they have always done, it is incumbent on the boards of companies like Woodside and Santos to ensure that all avenues to optimise value are considered.

“Previously released ACCR analysis has determined that at Woodside, returning capital to shareholders presents greater upside than pursuing its growth portfolio.”

Background

In August 2023, ACCR published Woodside’s growth portfolio: what’s in it for shareholders?, a risk-adjusted financial analysis of Woodside’s growth portfolio, showing that the company’s portfolio of unsanctioned oil and gas projects does not appear to be a material source of value for shareholders, and that reallocating the capital earmarked for these projects towards a share buyback offers more value and less risk than delivering them.

Commenting on the briefing, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Despite Santos facing a barrage of uncertainty around its project execution it is still fronting up to investors with the same guidance on Barossa’s timing and cost.

“The reported facts are increasingly at odds with Santos’ characterisation of the risks to its project execution.

“Last month’s results raised important questions for investors about how Santos could deliver Barossa on time and on schedule when the Federal Court has restrained it from commencing work on major components of the project. Since then, Santos has been delayed from commencing a large portion of pipelay activities until at least mid-January 2024 and has made no evident progress on the drilling approvals.

“Some investors will still be questioning Santos on how it can lose a year in the drilling schedule and still be on track.

“Whilst Santos conditions its CEO’s $6 million performance bonus to delivery of  Barossa and other new projects, investors will no doubt be scrutinising the risks of tying massive cash bonuses to growth projects.

“Santos has increased its oil price assumption from last year - up from US$65 per barrel to US$75. While this certainly makes its long-term free cash flow numbers look better, it is hard to see the justification for this and is not supported by the market.

“Despite the IEA recently announcing that gas demand will peak in all of its published scenarios before 2030, Santos continues to talk up its book by claiming LNG demand will inexorably increase until 2040.”

Background

Bloomberg data shows that Brent forward prices have decreased slightly in the last year.

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today’s Investor Briefing shows Woodside’s response to persistent shareholder concerns about its lack of a credible climate plan is to throw on a splash of gloss and hope that investors are fooled.

“Woodside's growth portfolio is not well placed for the low carbon transition and to try and dress it up as such is farcical.

“Woodside’s plan to spend $5bn of investor funds on ‘new energy’ is visibly struggling. Its first major ‘new energy’ project, H2 Oklahoma, is on hold whilst it tries to find customers and pleads for more subsidies.

“Fresh off the harrowing events of the Qantas’ AGM last week, investors could have reasonably expected that Woodside Chair Richard Goyder would have learned the lessons of doing too-little too-late.

“Investors have consistently told Woodside that its climate plan isn’t up to scratch - inflicting the world’s largest vote against a company climate plan in 2022 and a record-breaking vote against an incumbent director at this year’s AGM.

“Yet despite these startling results, Woodside has once again failed to bring anything of substance to the table.

“This is a company that doesn’t listen, led by a board that lacks the agility and skill-set to properly confront the risks and opportunities of the energy transition.”

34% of votes were cast AGAINST the re-election of Todd Sampson - more than a tripling of the highest vote ever recorded against a management-supported director at Qantas, according to available records, which date back to 2008 (Previous record was 10.3% against Maxine Brenner’s re-election in 2018. Source data: Diligent).

Group CEO and Executive Director Vanessa Hudson, incumbent director Belinda Hutchinson AC, and new directors Doug Parker and Heather Smith all received strong endorsement by shareholders.

Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today’s result marks the second time this year that an ASX100 board led by Richard Goyder has faced the wrath of shareholders. At today’s Qantas AGM and at Woodside's AGM in April, investors showed they expect better on corporate governance and can’t be bought off with last minute concessions that do little more than wallpaper over fundamental problems.

“The eye-watering 83% vote against the remuneration report delivers a huge first strike, and the record-breaking 34% vote against director Todd Sampson comes as no surprise.

“The Qantas board was too slow to read the room, and failed to satiate investor concerns despite the departure of the company’s CEO, three directors, and Mr Goyder’s belated decision to vacate his chairmanship before the next AGM.

“The parallels between today’s vote at Qantas and the Goyder-led Woodside AGM earlier this year are impossible to ignore. At Woodside, an investor-led campaign against the climate governance failings of the Goyder-led board resulted in an unprecedented  35% vote against a director - despite an 11th hour rescue attempt by Woodside to give shareholders a vote on the company’s climate plan in 2024.

“On both occasions, shareholders have clearly indicated they expect consistent and competent corporate governance from directors with the requisite skills to be there,  and the willingness to step up and do what needs to be done.

“Woodside shareholders will have an opportunity to vote directly on Mr Goyder’s chairmanship at the next Woodside AGM in April 2024, where he is up for re-election.”

Commenting on the results, Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility said:

“Despite the drilling environment plan for the Barossa Gas Project being set aside by a decision of the Federal Court over a year ago and still not reissued, Santos is still suggesting that the project could be delivered on time and within cost guidance.

“Investors will be questioning Santos on how it can lose a year in the drilling schedule and still be on track. And what gives Santos confidence that drilling will recommence this year, despite the drilling rig reportedly being needed for a separate contractual obligation?

“According to recent reports, the drill rig has cost AUD$350 million to remain idle for the past year and appears to have a contractual obligation to start drilling a separate project imminently.

“Santos’ progress with its Moomba CCS project also raises a number of questions. At FID Santos reported that the project would sequester CO2 for less than $24 per tCO2. The project capital cost has since increased by 33%, but Santos is still targeting the same unit cost. Greater disclosure from Santos on how this is possible would be very welcome.”

Background

According to a recently released IEEFA report from September 2023, the drilling rig for Barossa is only contracted to Santos until October 2023, before being transferred to another company, thought to be Shell for drilling at the Crux field in the northern Browse Basin. IEEFA said “this adds to the uncertainty on whether Santos will have a rig to drill the Barossa field should it receive the regulatory approval to do so.”

Commenting on the announcement, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility said:

“BHP’s sale of its two coal mines to Whitehaven Coal is irresponsible and demonstrates a dismal failure by BHP to take into account the future impacts on financial returns associated with the systemic risks of runaway climate change.

“Instead of playing pass the parcel on emissions, BHP should have done what it did with the closure of the Mt Arthur thermal coal mine in NSW - abandon plans for divestment and close the asset itself over time. Flogging off emissions-intensive assets to buyers with weak climate credentials exposes investment portfolios to future financial risks from runaway climate change.

“Alternatively, BHP could have put in place sale conditions to enforce strong Paris-aligned climate commitments by the buyer, ultimately mitigating potential emissions increases.

“Whitehaven is now outlining to the ASX its opportunity to increase production and materially extend the life of mine at Blackwater - already one of Australia’s largest open cut coal mines. This is a clear example where real world emissions are now likely to increase due to this asset transfer.

“Any short-term windfall for investors must be measured against the systemic costs of failing to cut real world emissions in line with the timeframe science demands.”

“Whitehaven Coal is a company that appears determined to keep digging up and burning coal, while more responsible stewards race to limit global warming.

“Flogging off fossil fuel assets to climate laggards does nothing to assist the urgently required cuts to real world emissions. The sale to Whitehaven could lead to an increase in emissions, as this company does not have credible emissions reduction targets.

“Since 2020, BHP has been telling its shareholders that limiting warming to 1.5 degrees is the best outcome for shareholder value. Divesting these two mines to a company which does not support the Paris Agreement serves to undermine global efforts to limit warming.

“Investors are becoming increasingly aware of the risks to investment portfolios when high-emissions assets are divested to buyers with weaker environmental and social commitments. The Investor Group on Climate Change recommends that investors engage with companies like BHP, to encourage the buyers of its emissions intensive assets “to implement climate change commitments and strategies that are at least equivalent to those of the seller”.

Background

The Glasgow Financial Alliance for Net Zero views the managed phaseout of high emitting assets as a credible alternative to companies divesting from assets, stating that “a responsible approach for net zero committed financial institutions and companies is to manage down the GHG emissions from their portfolios, not pass them to someone else”.

The report, “Benchmarking for change: corporate political expenditure and climate lobbying in Australia,” also assessed leading Australian energy & resource companies on the Global Standard for Responsible and Climate Lobbying. This found significant gaps between what companies commit to on the topic of climate lobbying, and what governance and disclosure they implement.

Key findings include:

• None of the Australian companies scored as high as even the average score of the US companies and the majority scored in the bottom 20% of performance. The majority of US companies scored above 60%.
• None of five Australian energy & resources companies ACCR focuses on (BHP, Origin, Rio Tinto, Santos & Woodside) scored highly on the CPA-Zicklin Index.
• These five energy & resources companies do not generally perform strongly on the Global Standard on Responsible Climate Lobbying. There is, however, a notable range of performance across the five companies: 39.3-75%. Regardless of performance, most companies had a significant gap between their policies on climate lobbying and what governance and disclosure they implemented.
• Investor engagement is key to boosting political expenditure governance. US companies that agree to improve their political expenditure governance after being engaged by investors using CPA-Zicklin’s model perform almost twice as well on the CPA-Zicklin Index than companies that have not been engaged by investors.
• Company size is not an impediment to good disclosure and governance, with small companies in the US and Australia regularly outperforming their largest peers.

Commenting on the analysis, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“While Australia’s major energy and resources companies are big political spenders with large influence on government climate policy, the governance and disclosure of these activities are not up to scratch.

“A clear-eyed look at this data shows Australian companies are lagging far behind their corporate counterparts in the US when it comes to transparency of political expenditure. This issue needs urgent focus via increased engagement from investors.

“Poor governance of corporate political engagement and spending is a material risk for investors. Our research demonstrates there is a huge opportunity for Australian companies to do better on policy, oversight and disclosure of political spending.

“We know that good governance of corporate political engagement and spending is increasingly seen as responsible investment practice.

“Investors need certainty that climate and environmental commitments by the companies they invest in are not simply greenwashing and that any corporate political lobbying and expenditure does not undermine these commitments.

“Direct investor engagement with companies in the US has led to improved political expenditure governance. These gains can also be made with ASX companies through more and concerted investor engagement seeking greater transparency on corporate political spending and lobbying.

Commenting on the announcement, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility said:

“The Australian oil and gas industry has been sitting on a ticking time bomb of decommissioning liabilities for decades, and has not been honest with the government or investors about the true extent of the costs and risks.

“Today’s public consultation on strengthening regulations is long overdue.

“The Australian offshore oil and gas decommissioning liability has been estimated at $60 billion to 2050, with a significant portion of work due to occur within this decade.

“$60 billion is likely an underestimate, because the true state and cost for many aging offshore oil and gas facilities in Australia is uncertain: existing public datasets are limited, and company disclosure is generally minimal.

“Internationally, remediation costs have exceeded provisions, by an average of 76%. Yet companies who could have foreseen these risks have not sufficiently disclosed their preparation plans or financial liabilities, leaving investors in the dark about these substantial costs.

“The Australian regulator NOPSEMA expects the decommissioning to be ‘complex, expensive, span many years and introduce many new and significant safety, environmental and well integrity risks’.

“Shareholders urgently need more information about how liabilities are being measured and managed.

“Santos admitted as recently as June this year that it would not plug its abandoned methane wells at Legendre oil field which have been leaking for a decade - a situation that the regulator NOPSEMA considers ‘unacceptable’ and is investigating. Companies that cannot clean up their mess should not make it in the first place.

“Many operators are assuming they will be able to leave a significant amount of infrastructure 'in-situ', despite the fact that the full removal of offshore infrastructure is currently expected in Australia.”

Background

In January 2023, ACCR published extensive research on offshore oil and gas asset decommissioning.

In 2022, Woodside and Santos faced shareholder resolutions at their Annual General Meetings calling on the companies to disclose decommissioning liabilities.

Commenting on the rebrand, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“APPEA’s clunky rebrand to Australian Energy Producers is born from the organisation’s apparent acceptance that the social licence of fossil fuels is nearing its expiration date.

“Spin is all the fossil fuel sector has left.

“The lobby’s most recent financial accounts (published a year late), show it spends big on spin: $2.6M in the 2021/22 financial year alone.

“By adopting a highly generic name, the activities of APPEA’s membership are obscured upon first glance, the effect being to confuse and deflect scrutiny.

“Unfortunately for Australian Energy Producers, there is no getting away from the fact that its member companies “produce around 95 per cent of Australia’s oil and gas”.

“This rebrand follows a long term trend across the oil and gas industry, with Santos, Woodside, Chevron, Shell and BP all describing themselves generically as energy companies, as though oil and gas are dirty words.

“It should come as no surprise that in its submission to the recent Senate inquiry into greenwashing, APPEA pushed back on any suggestion that there should be tighter regulation around greenwashing issues.

“Less than a month after this submission, Ad Standards banned APPEA’s flagship ad campaign for making misleading and unsubstantiated claims about fossil gas.”

In March, ACCR built an emissions and cash flow forecast of Trion and found that weak economics, high emissions and significant downside risk means Woodside does not have a strong case to support a positive FID on Trion.

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Woodside investors are again drawing the short straw. Our analysis shows Trion is a low-margin project, with a constellation of risks, several of which are new to Woodside’s portfolio.

“This capital expansion is not the best use of investor’s funds.

“Woodside’s Trion plan is based on risky assumptions that will undoubtedly leave investors uneasy. Of particular note is Woodside’s bullish assumed oil price that is well above the June 2028 futures price and its low hurdle rates. Woodside is willing to accept lower profits, even after assuming more revenue than peers would.

“Sangomar, the other big oil project Woodside is building at the moment, is now 12 months late and 18% over budget compared to initial guidance provided at Final Investment Decision. The crystal ball would say that Trion could follow this path too.

“Pemex, the joint venture partner in Trion, is in desperate financial straits, and was recently downgraded by Moody’s and Fitch, meaning it is now rated as the worst oil company in Latin America. It is not a partner of choice and adds further risk to a project with already-weak economics.

“This is not a milestone for Woodside investors, but more like a millstone.”

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“With the merger with BHP Petroleum’s assets, production has increased by 66%; but net profit after tax has only increased by 6% and free cash flow has dropped by 88%.

“These figures demonstrate that the sugar rush of the Ukraine war is wearing off.

“Woodside has been making multi-decade decisions in the rush of a sugar hit. Its decision making process is flawed and is overly focused on pursuing growth projects that simply don’t make sense.

“The marginal-value and high-risk Trion deepwater oil development in the Gulf of Mexico is one such development.

“Despite a decade of underwhelming outcomes, Woodside continues to expand its exploration portfolio, more than tripling exploration spend compared to the year prior and acquiring five new leases in the US Gulf of Mexico.

“Yesterday, ACCR published a risk-adjust financial analysis of Woodside’s growth portfolio that shows the company’s portfolio of unsanctioned oil and gas projects does not appear to be a material source of value for shareholders, with even minor slips in project execution potentially resulting in value destruction.

“Our analysis shows that reallocating the capital earmarked for these projects towards a share buyback offers more value, less risk and fewer emissions than delivering them.

“Small investments in new energy, while needed for the energy transition, are not a counterbalance to the massive emissions coming from Woodside’s hydrocarbon business. Woodside has a higher value, lower emissions option available and this should be on the table.

“The board’s continued pursuit of low-value, high-risk fossil fuel growth is putting Woodside’s strong balance sheet in jeopardy. Investors should ask the Board to do better.”

The analysis shows that reallocating the capital earmarked for these projects towards a share buyback offers more value and less risk than delivering them.

The analysis is based primarily on economic and production data from Rystad Energy, an oil and gas research firm, adjusted for the risk profile of each project.

Key findings include:

• Woodside's unsanctioned projects are not a material source of value for shareholders. Woodside’s unsanctioned projects represent a forecast NPV of only 2.5% of market capitalisation. These projects have a combined capex of 41% of Woodside’s market capitalisation, suggesting even minor slips in project execution will result in value destruction.

• A “capital return” strategy appears to create more value, with lower risk and fewer emissions than a “production growth” strategy.

  • As a portfolio, Woodside’s unsanctioned projects are forecast to create less value than a share buyback, assuming investors see Woodside’s shares at a 10% discount to the current NPV.
  • The few projects that are forecast to create incremental value over a share buyback, do not justify the expense of Woodside maintaining its project development capabilities.
  • Woodside’s production growth strategy results in significant expenses on exploring and progressing non-viable projects. For example, Calypso does not appear to be a viable project, despite more than $500 million having been spent on exploration.
  • A capital return strategy delivers value accretion without further emissions growth. Whereas, the projected lifecycle emissions of Woodside’s unsanctioned growth portfolio are 536 MtCO2e.

• A production growth strategy faces increasing challenges

  • Historically, chasing production growth hasn't added value when the oil price has stayed flat. Over the past 16 years Woodside’s total shareholder return is only 3.5% p.a. while production has doubled. Over a 30-year period, Woodside’s total shareholder return (TSR) seems to be more closely related to the oil price than production growth.
  • Woodside’s fossil fuel investment criteria appear to be more bullish than most large European and US oil companies, with higher oil price forecasts and lower new project Internal Rate of Return (IRR) hurdle rates relative to the peer group

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This report calls into question whether Woodside’s production growth strategy will deliver an optimal outcome for shareholders.

“Woodside’s operating assets are delivering a lot of cash and will do so for a long time. But pursuing its portfolio of unsanctioned projects and expecting this to generate strong shareholder value looks like Icarus flying too close to the sun. The numbers just don’t appear to stack up.

“Woodside’s unsanctioned projects are either low return and high risk, or just too small to matter. It has spent hundreds of millions of dollars in shareholder funds on projects that don’t appear to be even viable.

“Woodside is using fossil fuel investment criteria that look to be more bullish than most large European and US oil companies. This seems to be why it keeps progressing projects that other companies wouldn’t.

“Its unsanctioned projects are beset on all sides by risks, increasing the likelihood of slippage. Woodside’s track record on execution leaves a lot to be desired. It delivered Pluto late and over budget, and has increased Sangomar’s cost estimate twice since FID. Based on past performance, projects that look marginal today could get even worse.

“An alternate strategy focused on capital return appears to provide more value to shareholders, with lower risk. It’s hard to see why Woodside wouldn’t put this option on the table.

"It has been clear for some time that Woodside's portfolio is not well placed for a low carbon transition; this analysis shows that its unsanctioned growth portfolio isn't even well placed for a mainstream market outlook.

“This analysis suggests there is a way Woodside can deliver on the holy grail of value accretion without further emissions growth.

"Reallocating the capital from uncompetitive fossil fuel projects to a share buyback would avoid almost 1.5 billion tonnes of greenhouse gases from being released into the atmosphere, making it a win for shareholders and a win for the climate.

"Chasing new projects with lots of emissions, but without a solid financial basis does not appear to be a responsible strategy. Woodside’s board can do better for shareholders.”

Note: The original version of this media release said reallocating the capital from uncompetitive fossil fuel projects to a share buyback would avoid half a billion tonnes of GHG being released into the atmosphere. This figure represents only Woodside's share of the emissions from joint venture projects. The total emissions of these projects, including for other owners, is almost 1.5 billion tonnes. We have updated the figure to reflect total real-world emissions.

21% of shareholders voted in favour of a shareholder resolution calling on J-POWER to set and disclose credible short and medium-term emissions reduction targets aligned with the goals of the Paris Agreement.

This is the second consecutive  year J-POWER’s investors have voted in significant numbers (2022 AGM 26% support) for a shareholder resolution calling on the company to set a clear decarbonisation strategy with Paris-aligned, credible, short and medium-term targets.

The resolution was filed by Amundi, the largest European asset manager,  HSBC Asset Management, and the Australasian Centre for Corporate Responsibility, and was supported by Man Group, the world’s largest publicly traded hedge fund company,

15% of shareholders also voted in support of a resolution calling on J-POWER to disclose how remuneration policies incentivise progress against emissions reduction targets.

Brynn O’Brien, Executive Director, ACCR, said:

“These results are a clear and consistent signal from over a fifth of J-POWER shareholders that they expect the company to set a more credible decarbonisation strategy. We expect this motivated and active investor cohort to keep pushing J-POWER’s board hard.

“Given the considerable level of support for the proposal for its second year, the company should take action to demonstrate that it has heard the concerns of its shareholders. Our co-engagement with the company over the last 12 months did not give us comfort that our concerns had been taken seriously.

“J-POWER’S current climate strategy is not credible for a company expecting to create value for its shareholders in a rapidly decarbonising global economy. The company’s reliance on speculative technologies like carbon capture utilisation and storage and ammonia co-firing in order to prolong the life of coal power is implausible and comes with a high cost.

“Our ultimate diagnosis of the problem at J-POWER is company leadership. J-POWER’s failure to set out a credible plan to keep pace with the energy transition is largely because those in charge of that plan are not adequately interested in evolving the company’s approach. We expect investor focus on the competence of J-POWER’s board to increase. We await the release of voting results on director elections, which have not yet been disclosed.”

Background

See here for text of the resolutions and here for ACCR’s Investor brief on J-POWER.

In 2021, ACCR commenced landmark proceedings in the Federal Court alleging that Santos Ltd breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to its “clean energy” claims and its net zero plan in its 2020 Annual Report.

This was the first court case in the world to challenge the veracity of a company’s net zero emissions plan.

In August 2022, ACCR amended its case to include alleged greenwashing in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report, following additional information produced by Santos in the litigation discovery process.

In February 2023, the Federal Court ordered a court-supervised conferral between the parties' respective lawyers, for the purpose of clarifying and reducing the issues in dispute in the proceedings.

Following the conferral process, ACCR has sought and obtained leave of the Court to further amend its case, which it filed today.

The purpose of the amendments is to reduce as far as possible the issues that will need to be heard and determined by the court, and to clarify ACCR’s claims in light of information that has arisen in the conferral process.

The key allegations in today's Further Amended Concise Statement are:

• Santos’ representation that the natural gas it produces is “clean energy” was misleading or deceptive, as the extraction and use of natural gas as an energy source is a material contributor to climate change and global warming;

• Santos’ representations that blue hydrogen (hydrogen produced using natural gas with carbon capture and storage (CCS)) is “clean” or “zero emissions” were misleading or deceptive, as blue hydrogen production would increase Santos’ greenhouse gas emissions and it was not practical or commercially viable for Santos to capture all of the increased emissions using CCS.

• Santos’ net zero roadmap, which is described as “clear and credible”, was misleading or deceptive, including because Santos failed to disclose that:

  • its net zero plan did not account for expected production and/or emissions growth from oil and gas exploration opportunities beyond 2025;
  • CCS itself results in emissions when used for enhanced oil recovery, which ACCR says Santos was considering;

• the ‘CCS Expansion’ portion of the net zero plan actually reflected offsets which Santos would apparently seek to procure.  It did not represent modelled reductions in Santos’ own emissions, but instead is a nominal number making up the difference to net zero;

• the ‘Hydrogen with CCS’ portion of the net zero plan also reflected offsets which Santos would apparently seek to procure.  Again, it did not represent modelled reductions in Santos’ Scope 1 and 2 emissions, but instead depended upon Santos receiving offsets for reducing its customers’ Scope 1 and 2 emissions through the sale of blue hydrogen.

The parties to the proceedings will return to Court on 6 October 2023 for further directions.

Background

ACCR claims that by making the above representations, Santos has engaged in conduct that was misleading or likely to mislead in contravention of s 1041H of the Corporations Act 2001 (Cth) and/or s 18 of the Australian Consumer Law (ACL) (Schedule 2 of the Competition and Consumer Act 2010 (Cth)). Further, in making representations that gas is a ‘clean’ fuel or energy source, and blue hydrogen is ‘zero emissions’ or ‘clean’, ACCR claims that Santos engaged in conduct that was liable to mislead the public as to the nature, characteristics, suitability and quality of Santos’ goods (being ‘natural’ gas and blue hydrogen), contrary to s 33 of the ACL.

In March, ACCR built an emissions and cash flow forecast of Trion and found that weak economics, high emissions and significant downside risk means Woodside does not have a strong case to support a positive FID on Trion.

Our analysis of today’s FID shows:

• The 16% IRR is based on an oil price assumption of a 2028 US$78 per barrel, which is when production is scheduled to begin. The Brent Crude Futures price for June 2028 is currently US$66 per barrel. When adjusting for this, the IRR for Trion appears to be below the targeted 15%> IRR hurdle rate that Woodside sets for new offshore oil projects.
• Capex for the project has been revised upwards. Trion’s capex has increased from KPMGs US$6,630 million estimate in the April 2022 Independent Expert's Report^[1] to today’s US$7,200 million announcement. This remains a risk.

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The approval to proceed with Trion is glaring evidence that the board of Woodside has no credible transition strategy and is failing to comprehend the economic risks of the energy transition by throwing billions of investor dollars into a flawed oil project.

“Analysts have quite rightly been wary of Trion. Our analysis shows it’s a low-margin project, with a constellation of risks, several of which are new to Woodside’s portfolio.

“Today Woodside has pulled a rabbit out of the hat by claiming the project has value, however its plan is based on risky assumptions that will undoubtedly leave investors uneasy.

“Of particular note is Woodside’s bullish assumed oil price that is around 20% above the current June 2028 futures price.

“Woodside’s answer to managing transition risk at Trion is to extract two thirds of the oil resource in the first ten years of operation from 2028. But with the range of risks this project faces, the probability of such rapid construction, commissioning and production must be questioned.

“Trion will be a carbon emissions bomb, representing a 14% increase against Woodside’s current estimated emissions.

“This decision tells investors exactly what Woodside is as a company: a pure play oil and gas producer denying that the world is decarbonising and without a credible transition strategy.

“Woodside even states that Trion’s returns will be used to fund new oil and gas projects, indicating that no end is in sight for its hydrocarbon expansion plans.

“This is a board that is willing to risk shareholder funds on precarious oil projects because it doesn’t know how to do anything else. If there was ever a time to demand fresh thinking and strategy at Woodside, today is the day.”

29.22% of shareholders voted in support of the resolution, which is the second highest vote ever recorded in favour of a climate-related shareholder resolution not supported by management on the London Stock Exchange.*

Because the vote was over 20%, under the terms of the UK Corporate Governance Code Glencore is now required to formally consult with shareholders about the reasons for the result.

The resolution was co-filed by a global coalition of institutional investors collectively representing $US2.2 trillion of assets under management, including: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management. The Australasian Centre for Corporate Responsibility (ACCR) and UK-based responsible investment NGO ShareAction were also co-filers.

Prior to the AGM, it received unprecedented support from an additional group of institutional investors representing well over half a trillion dollars (approx US$596 billion) in assets under management, as well as support from major proxy advisors Glass Lewis and Institutional Shareholder Services (ISS).

Despite this, Glencore’s board recommended voting against the resolution.

The resolution asked Glencore - the world’s biggest coal trader and Australia’s largest coal miner -  to disclose how its projected thermal coal production and capex plans align with the Paris objective of keeping global temperature increase to 1.5°C.

The result is a clear indication that institutional capital is increasingly alert to the risks of thermal coal and investors expect disclosures that enable them to navigate energy transition risks.

Dror Elkayam, Global ESG Analyst – Investment Stewardship, Legal & General Investment Management (LGIM) said:

“We are encouraged by the strong and robust support of our proposal.

This is a clear signal by shareholders that further disclosure around the company’s thermal coal business is imperative. We look forward to building on the progress the company has already made on some key elements of disclosure over the next few months.”

Vincent Kaufmann, CEO of Ethos Foundation said:

“With today’s vote at Glencore’s AGM shareholders have made it abundantly clear that its thermal coal business is exposed to significant risk in the energy transition and that the company must be upfront about the level of exposure.”

Simon Rawson, Director of Corporate Engagement & Deputy CEO at ShareAction said:

“The scale of investor support for this resolution reflects the level of frustration at Glencore’s inactivity over a number of years to set out a credible plan for their coal business that meets the ambitions of the Paris Agreement to urgently address global warming.

Instead of ignoring the realities of the damage coal is doing to our planet and its people, Glencore needs to meaningfully engage with their investor and civil society stakeholders who have driven this resolution and deliver a robust plan showing how they will transition from a dirty past to a clean future.”

Naomi Hogan, Strategic Projects Lead at ACCR said:

“A vote of this size is impossible for Glencore to ignore. Momentum has been built across Glencore investors who are calling for clearer thermal coal disclosure. Investors will continue to demand information in the lead up to the next Glencore Climate Plan.

“Glencore must recognise that neither the risks of its thermal coal business nor the concerns of investors are going away.

“Glencore now needs to engage in meaningful dialogue with shareholders and provide transparency around its thermal coal plans.”

Background

Shareholder Resolution to Glencore PLC on thermal coal production

* In 2021, 30.5% shareholders voted for a climate-related shareholder proposal filed with Shell, which is the highest vote recorded in favour of a climate-related shareholder resolution not supported by management on the London Stock Exchange.

Additional 2023 AGM results:

• Glencore also received a vote of 30.25% against its 2022 Climate Report, building on the vote against the plan from last year’s AGM.
• The chair received an 11% vote against.

Background on co-filers

The global coalition of institutional investors is joined in the co-filing of this resolution by 68 individual shareholders. Under Article 53.3 of Glencore’s Articles of Association (AA), members have a right to require the company to circulate a resolution for an Annual General Meeting.

Legal & General Investment Management (LGIM)

LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of US$1.57 trillion. It works with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors. For more than 50 years, it has built a business through understanding what matters most to its clients and transforming this insight into valuable, accessible investment products and solutions. It  provides investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Its capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.

The Ethos Foundation

The Ethos Foundation was created in 1997 with the goal to enable Swiss pension funds to invest responsibly, taking into account environmental, social and governance (ESG) criteria. Its 245 current members, which must be Swiss pension institutions or charitable foundations, together represent approximately US$393.6 billion under management or a quarter of second pillar wealth in Switzerland. In 2000, the Ethos Services company was created to help the Ethos Foundation achieve its goals. Over the years, it has developed and expanded its range of services dedicated to SRI and currently offers four lines of products and services – investment funds and stock indices, exercise of voting rights, shareholder dialogue programs and sustainability analysis of listed companies – as well as training in sustainable finance.

HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 30 September 2022, HSBC Asset Management managed assets totalling US$571 billion on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

Vision Super

Vision Super is a strong performing industry super fund that was established in 1947. It has US$8.2 billion in assets it manages on behalf of around 84,000 member accounts. Vision Super is a long-term investor and aims to improve the long-term sustainable value of the companies it invests in. It looks to the Boards and Executive management of those companies to serve in the best interests of long-term shareholders and other stakeholders. It integrates ESG issues and risks as part of its investment governance framework and incorporates dialogue with its fund managers and the companies it invests in more broadly. It focuses on delivering low fees, strong risk-adjusted returns with appropriate consideration of environmental, social and governance factors (ESG). Its investment strategy aims to provide members with favourable long-term returns.

ShareAction

For more than 15 years, ShareAction, the responsible investment NGO, has been working to shape a world where the financial system serves our planet and its people. Through research, campaigns and advocacy we mobilise global investors to drive up labour standards, tackle climate change, protect the natural world, and improve people’s health. We push policymakers to ensure the financial system is working in the best interests of people and the planet. Visit shareaction.org or follow us @ShareAction to find out more.

On Wednesday 10 May, at its FY2022 Earnings Announcement, Nippon Steel committed to the start of studies to shift from a blast furnace (BF) steelmaking process to an electric arc furnace (EAF) steelmaking process, with the Kyushu Works steel plant in Yawata, and the Setouchi Works steel plant in Hirohata, identified as candidate sites.

In dialogue with Nippon Steel, the co-engagement group understands that Nippon Steel intends to align with the decarbonisation targets of the company through converting blast furnaces that reach the end of their life into EAFs, or taking measures such as retrofitting them to ensure real emissions cuts at scale. The group also understands that Nippon Steel intends only to temporarily prolong the life of the BFs that use conventional technology, where economic, maintenance or safety matters stand in the way of immediate conversion.

The investor group, comprising Man Group, Storebrand Asset Management, Corporate Action Japan (CAJ) and the Australasian Centre for Corporate Responsibility (ACCR), has been co-engaging with  Nippon Steel in recent months with a focus on enhancements to decarbonisation generally, and the above topics specifically.

These new commitments are in line with the expectations of investors that the company set a credible decarbonisation strategy to promote the long term value of the company.

The co-engagement group also welcomes Nippon Steel’s statement that a stable supply of green hydrogen and green power - in other words, renewable energy - is needed as a key input to achieve its target of carbon neutrality.

Jason Mitchell, Head of Responsible Investment Research at Man Group said:

“The Japanese steel industry has a vital role to play in supporting Japan’s net zero efforts. As Japan’s largest steel company, Nippon Steel has the unique opportunity to help lead the sector towards a strong, Paris-aligned commitment. The company’s announcement to both begin studies and to shift its blast furnace steel production process to an electric arc furnace-oriented one, is testament to its leadership. Indeed, one of the powerful lessons that we take away is that a constructive, multi-stakeholder engagement can drive climate action.”

Victoria Lidén, Senior Sustainability Analyst at Storebrand Asset Management, said:

“To ensure the realization of their long-term climate objectives, companies must display ambitious action in the near future. Accelerated progress prior to 2030 is imperative to establish a credible decarbonization of the steel industry, ultimately leading to net neutrality by 2050. As shareholders, we value the constructive dialogue and engagement with Nippon Steel regarding these matters and find encouragement in this announcement.”

Yasunori Takeuchi, CEO/Representative Director, Corporate Action Japan , said:

“This is an important moment for Japanese steelmaking and for the Japanese industry broadly.

“This will help Nippon Steel not only increase its future corporate value but mitigate climate risk. The shift from a BF to an EAF in the plans will be a trigger of further decarbonization in the electric power sector through increasing demand. We commend the leadership shown by Nippon Steel in this announcement and look forward to continuing our very productive conversation with them and the study being materialized.”

Brynn O’Brien, Executive Director, at ACCR, said:

“Constructive, science-based investor-company engagement is an extremely promising accelerator of decarbonisation around the world, and we commend Nippon Steel for their responsive approach to dialogue that has resulted in an outcome designed to protect long term corporate value. We are looking forward to engaging with Nippon Steel and other Japanese companies to promote long term shareholder value and ensure a safe climate."

“Momentum for green steel is clearly growing and we hope that the Japanese Government understands Nippon Steel’s message about the need for massive amounts of green energy in Japan going forward.”

Background

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $144.7 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com

*As at 31 March 2023. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Storebrand

Storebrand Asset Management is part of the Storebrand Group, managing NOK 1100 billion of assets for Nordic and international clients. A key guiding principle in our work is to generate the best possible risk-adjusted returns for our clients, while not compromising the ability of future generations to meet their own needs. Storebrand Asset Management is a pioneer in the field of sustainable investments since the mid-1990s and a founding signatory of the UN Principles for Responsible Investment (PRI). We take a holistic and integrated approach to ESG, aiming for real impact and long-term value creation.

About Corporate Action Japan

Corporate Action Japan (CAJ) is an independent Japanese non-profit organization that was established in June 2022. We encourage leading Japanese corporations to engage in climate action and speed up the transition process towards carbon neutrality (net zero greenhouse gas emissions).

At this AGM, this is Representative Director (Executive Vice President) Hitoshi Kanno, responsible for the company’s flagship decarbonisation plan the ‘Blue Mission 2050’.

The co-engaging group includes Man Group, the world’s largest publicly traded hedge fund company, Amundi, the largest European asset manager, and HSBC Asset Management, along with the Australasian Centre for Corporate Responsibility.

The resolution was co-filed by Amundi, HSBC and ACCR, and is supported by Man Group. It contains two shareholder proposals calling on J-Power to:

• Set and disclose credible short and medium-term emissions reduction targets, aligned with the goals of the Paris Agreement, and;
• Disclose how remuneration policies incentivise progress against emissions reduction targets.

The  filing states that long term institutional investors in J-Power see its corporate value depending upon a credible decarbonisation strategy. J-Power’s targets are still not Paris-aligned or science-based, and the company has presented no indicative schedule for retirement of its coal-fired power assets - instead presenting a plan that involves capital expenditure into speculative technology such as ammonia co-firing prolonging the life of these assets.

It says this presents a range of material financial risks to shareholders, and setting science-based targets and disclosing a business plan to achieve them would best manage these risks.

In 2022, Man, Amundi and HSBC were part of the first investor group-led climate shareholder resolution filed in Japan, with a proposal to J-Power on emissions targets receiving support from more than one-quarter (26%) of shareholders.

The failure of J-Power to meaningfully respond to a material shareholder vote, and the escalating risks to long-term value of the current climate plan, have prompted each in the co-engagement group to signal their intention to vote against the company director principally responsible for overseeing J-Power's decarbonisation strategy.

Jason Mitchell, Head of Responsible Investment Research at Man Group said:

“Setting a clear decarbonisation strategy with Paris-aligned, credible, short and medium-term targets is vital to protecting J-Power’s long-term value given the risks and opportunities associated with the global shift away from fossil fuels.”

“We are concerned that JPower’s continued reliance on co-fired ammonia as a solution in its climate plan is not compatible with global decarbonisation targets, and continuing down this path will impact long-term shareholder value.”

“Despite a number of meetings over two years, we remain disappointed by the Blue Mission strategy. We do not have confidence that the company’s approach to the urgent challenge of decarbonisation will evolve under the current leadership, so we have decided to take voting action.”

Caroline le Meaux, Head of ESG research, engagement and voting Amundi, said:

“We are concerned by Blue Mission 2050, notably the high emissions from J-Power’s coal power business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s plan.”

“OECD countries need to be on a pathway to complete coal phaseout by 2030, and J-Power’s plans are inconsistent with this critical objective. Its strategy bets against the success of the Paris Agreement, and risks shareholder value in the process.”

“As the company’s climate strategy is falling short of our minimum requirements, we will continue to vote against the renewal of board members following our voting policy.”

Sachi Suzuki, Senior Manager – Investment Stewardship, HSBC Asset Management, said:

“We expected the last AGM result would encourage a shift from the current high-cost, coal-based strategy to a more credible decarbonisation strategy, in line with investor expectations. Regrettably, we have not seen evidence of such a shift. Under J-Power’s existing plan, shareholder money will continue to be spent on speculative technologies to prolong coal power, rather than focusing on expanding renewables. This would likely expose the company to risks associated with costs, sourcing and adverse regulatory changes and potentially cause a loss of value to investors.”

“We think that climate risk has strategic implications for J-Power and therefore the responsibility of the board. We are concerned that directors have shown insufficient consideration of climate risks and we want other investors to know that, despite our intensive engagement, we are unsatisfied with their response and believe it is important for us to signal this through our votes.”

Brynn O’Brien, Executive Director, ACCR, said:

“J-Power’s leadership has demonstrated no understanding of how their strategy needs to evolve in line with investor expectations. Despite last year’s vote and several meetings this year with Director Kanno, we have seen no material progress.

“We commend the leadership of the investors in our co-engagement group in situating accountability where it needs to be: with the directors most responsible for the weakness of the company’s plans. “

Background

About HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight.

As at 31 March 2023, HSBC Asset Management managed assets totalling US$641bn on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $144.7 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com

*As at 31 March 2023. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Amundi

Amundi, the leading European asset manager, ranking among the top 10 global players, offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets. This offering is enhanced with IT tools and services to cover the entire savings value chain. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €1.9 trillion of assets.

With its six international investment hubs, financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 5,400 employees in 35 countries.

Amundi, a trusted partner, working every day in the interest of its clients and society.

Shareholder resolutions co-filed by the Australasian Centre for Corporate Responsibility (ACCR), HSBC Global Asset Management (UK) Limited, and Amundi Asset Management with Electric Power Development Co., Ltd (J-Power).

Resolution 1

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

1. To promote the long-term value of the Company, the Company shall set and disclose a business plan to achieve science-based short- and medium-term GHG emissions reduction targets aligned with the goals of the Paris Agreement.
2. The Company shall report, in its annual reporting, on its progress against such targets at reasonable cost and omitting proprietary information.

Reason for the proposal

Long-term institutional investors in the Company see its corporate value depending upon a credible decarbonisation strategy and short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations.

While we welcome the Company’s intention to achieve carbon neutrality by 2050, the Company’s targets are not yet aligned with the goals of the Paris Agreement. In particular, the Company has presented no indicative schedule for the retirement of its coal-fired power assets and has instead presented a plan that involves capital expenditure into speculative technology prolonging the life of these assets. This presents a range of material financial risks to shareholders, including the risks arising from anticipated changes in GHG emissions-related public policy.

Setting science-based targets, and disclosing a business plan to achieve them, would best manage these risks and protect corporate value. A disclosure of the Company’s assessment of how material capital expenditure aligns with those targets in such business plan would assist shareholders.

Resolution 2

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

The Company shall disclose, in its annual reporting, details of how the Company’s remuneration policies will incentivise progress against the Company’s science-based short- and medium-term GHG emissions reduction targets, at a reasonable cost and omitting proprietary information.

Reason for the proposal

Long-term institutional investors in the Company consider a direct linkage between remuneration and achievement of GHG emissions reduction targets to be in the Company’s interests, as an important mechanism to incentivise executive performance against decarbonisation goals and protect corporate value.

The resolution seeks disclosures on how the company’s thermal coal production aligns with the Paris objective of keeping global temperature increase to 1.5°C. It was filed late last year by a global coalition of institutional investors collectively representing $US2.2 trillion of assets under management, including: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management.

In April 2023, an additional group of institutional investors representing well over half a trillion dollars (approx US$596 billion) in assets under management added their support to the terms of the resolution.

In its Notice of Meeting (NoM), Glencore’s board said it will not support the resolution - due to be voted on at the AGM on 26 May in Switzerland.

“We are disappointed with Glencore's response to our thermal coal resolution and believe there is a fundamental lack of willingness to engage with four long-term institutional investors.

“It is deeply frustrating for investors that the only meaningful feedback on such a material issue is being conducted via the notice of a meeting, rather than in engagement discussions.  The principles which have long been core to investment stewardship and responsible shareholder engagement are being called into question.” Michael Marks, Head of Investment Stewardship and Responsible Investment Integration at Legal & General Investment Management (LGIM)

“The resolution aims to clarify how Glencore’s coal production and capital expenditure align with the 1.5°C goal, thus providing shareholders and stakeholders with crucial information for assessing Glencore’s role in the energy transition. It is important therefore that all shareholders of the company support this resolution.” Vincent Kaufmann, CEO Ethos Foundation

“We are very disappointed that Glencore did not support this resolution which would have once and for all set in place a mechanism for Glencore to demonstrate to investors that they were meeting their Paris commitments. " Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super

“This disregard for investors as they seek transparency across the Glencore business is a missed opportunity by the company to demonstrate respect for investors who are seeking clear information to navigate energy transition risks.

“At a time when Glencore is actively talking up a demerger of the coal business, investors expect the company to be upfront about the level of exposure to the risks of thermal coal. By failing to support the resolution, Glencore is denying investors the opportunity to fully assess this risk.” Naomi Hogan, Strategic Projects Lead, ACCR

Background

Glencore’s Notice of Meeting is available here.

34.81% against Ian Macfarlane; 13.43% against Larry Archibald; and 10% against Swee Chen Goh.

These results come after institutional investors Vision Super and Betashares, along with ACCR, co-filed members’ statements ahead of the AGM calling on directors to be held to account for the board’s repeated failure to present a credible climate strategy.

In addition, 20.99% of shareholders voted against Woodside’s remuneration report.

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today is a pivotal moment for company directors across Australia - climate risk matters and if shareholder concerns are blatantly ignored, director votes won’t breeze through an AGM.

“As a long-standing director, Ian Macfarlane has clearly been held accountable for the climate governance failings of the entire board.

“Chair Richard Goyder must reflect on this result and the substantive strategic shift required to regain investors’ confidence. This board’s culture of ignoring material shareholder votes must end.

“Votes against directors on this scale are unprecedented for Woodside. Until today, only one Woodside director over the last decade had ever received less than 95% support.

“It is also exceedingly rare across the ASX100. In fact, no director on any ASX100 energy company’s board has had a vote greater than 15% against them in the last decade.

“One of the very clear reasons for today’s record-breaking result is that Woodside’s board has repeatedly failed to present a credible climate strategy and investors have had enough.

“This board has overseen a climate strategy that appears to ignore we are in the 21st century. It is an approach completely unsuited to a rapidly decarbonising world, with no plan for scope 3 emissions and a concerning over-reliance on offsets.

“It persists in throwing billions of dollars of shareholder money at new oil and gas projects like it's the beginning of the industrial revolution, not the twilight era for the fossil fuel industry.

“These votes are even more striking considering the record-profits that Woodside has made. It shows that short-term mega-profits don’t get you off the hook with investors who understand the value at risk from procrastinating on the energy transition.”

Brynn O’Brien, Executive Directors at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is a globally significant vote against incumbent directors of a top ten global independent fossil fuel producer, and it shows that accountability for climate governance failures has finally reached board level, where it belongs.

“We’ve seen director ‘yes’ votes before at major emissions intensive companies -- like Exxon and AGL -- but this is the first major ‘no’ across an incumbent slate at a top ten independent producer.

“The Woodside board’s decision to ignore last year’s whopping vote against the company’s climate plan has exposed the board’s culture to the company’s investors; once seen it can’t be unseen.

“The days of rubber-stamping binding management resolutions, particularly the election of directors responsible for a recalcitrant approach to climate governance, are over.

“The boards of all emissions-intensive companies have been warned.

“The actions of Vision Super and BetaShares, as co-filers of the members’ statement calling for the ‘no’ vote, should be commended.

“Directors now need to act to reduce real world emissions like their jobs depend on it. Because they do.”

Background

Along with Vision Super and Betashares (see here), investors that predeclared votes against one or more directors facing re-election (non-exhaustive list):

LGIM AGAINST Ian Macfarlane

CalPERS AGAINST all three directors up for re-election, AGAINST remuneration,

AP7^[1] AGAINST Swee Chen Goh and Ian Macfarlane

MN^[2]  AGAINST all three directors up for re-election, AGAINST remuneration

KBI Global Investors^[3] AGAINST all three directors up for re-election

ActiveSuper AGAINST all three directors up for re-election

Recent Woodside director votes ^[4]

This indicative support is subject to any response which the company may make prior to the annual general meeting in May 2023.

The resolution was co-filed in December 2022 by Glencore investors including Legal and General Investment Management, Ethos Foundation on behalf of Pensionskasse Post and Bernische Pensionskasse, Vision Super and HSBC Asset Management. The wording of the resolution is included below.

Ordinary Resolution - Projected thermal coal production

That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:

1. Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity.

Indicative support for this resolution is given by:

• Man Group
• Brunel Pension Partnership
• EFG Asset Management
• Swiss Federal Pension Fund PUBLICA
• Border to Coast Pensions Partnership
• Pensionskasse SBB
• Scottish Widows
• Downing Fund Managers
• Fulcrum Asset Management

Glencore's recent merger bid for Teck Resources and the proposed coal demerger only strengthens the need for greater transparency on how Glencore’s coal business aligns with Paris.

In late December 2022, a global coalition of institutional investors collectively representing $US2.2 trillion of assets under management co-filed a shareholder resolution seeking disclosure on how Glencore's projected thermal coal production and thermal coal capital expenditure aligns with the Paris Agreement’s goals and the International Energy Agency (IEA) Net Zero Emissions pathway.

The co-filers of the resolution include: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse; Vision Super, an Australian industry super fund; and HSBC Asset Management.

Now, an additional group of institutional investors representing well over half a trillion dollars (approx US$596 billion) in assets under management have added their support to the terms of the resolution.

The investors and their representatives, listed below,  agree that clarity is needed on how Glencore’s ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.

• Man Group
• Brunel Pension Partnership
• EFG Asset Management
• Swiss Federal Pension Fund PUBLICA
• Border to Coast Pensions Partnership
• Pensionskasse SBB
• Scottish Widows
• Downing Fund Managers
• Fulcrum Asset Management

This group of investors see the resolution as playing a crucial role in ensuring Glencore demonstrates  Paris alignment of its forward coal production, particularly as Glencore’s recent Climate Report released in March 2023 did not offer the disclosures that were sought.

This show of support for the co-filed resolution comes as Glencore is already on notice,  after nearly one quarter of shareholders rejected its climate plan at the 2022 AGM.

“As a significant shareholder in many of the world’s companies, we believe it’s our responsibility to use our influence to encourage the companies we invest in on behalf of our customers to make positive changes to address climate change at a scale and pace needed to meet the 1.5°C global warming objective of the Paris Climate Agreement. We will be supporting this shareholder resolution towards disclosure of how the Company’s projected thermal coal production and capital expenditure aligns with the Paris Agreement’s objective.” Shipra Gupta, Investments Stewardship Lead, Scottish Widows

“Glencore has been playing cat-and-mouse with its stakeholders on environmental issues for several years. The time has come to give up coal expansion projects once and for all. The sustainable profile of our investments also depends on Glencore’s willingness to align with the Paris Agreement in a tangible and documented way. That is why we will be voting FOR the Thermal Coal shareholder resolution.” Simona Campioni, Senior ESG Analyst, EFG Asset Management

“As a company with upside potential from strengthening sustainability, Glencore is on Fulcrum’s priority list of climate engagements. We think a cleaner portfolio, with declining exposure to coal, would help improve Glencore’s cost of capital, reduce reputational risk and allow the company to invest further in the metals and minerals needed in the energy transition, a view that also seems to underpin the company’s planned demerger. We will be supporting the shareholder proposal calling for clarity on the climate alignment of the company’s coal plans.” Fawaz A Chaudhry, Partner & Head of Equities, Fulcrum Asset Management

“Glencore’s thermal coal business is exposed to significant risk in the energy transition and investors expect the company to be upfront about the level of exposure. The recent proposal from Glencore to merge with Teck and demerge coal highlights how crucial it is for all current and potential future shareholders to have clear disclosures as outlined in this resolution. In its proposed Teck merger and coal demerger Glencore said it remains committed to the Paris Agreement and the responsible decline of its thermal coal production - if this is the case, then now is the time for Glencore to demonstrate it. All long-term investors must have the ability to evaluate the company’s exposure to financially material risks in the energy transition.” Naomi Hogan, Strategic Projects Lead, Australasian Centre for Corporate Responsibility

* The Statement of Indicative Support for the Glencore Thermal Coal Resolution*

[17th April 2023]

The below investors and their representatives give their indicative support for the terms of the shareholder resolution to Glencore plc seeking greater transparency on how the company’s thermal coal production aligns with the Paris objective of keeping global temperature increase to 1.5°C.

This indicative support is subject to any response which the company may make prior to the annual general meeting in May 2023.

The resolution was co-filed in December 2022 by Glencore investors including Legal and General Investment Management, Ethos Foundation on behalf of Pensionskasse Post and Bernische Pensionskasse, Vision Super and HSBC Asset Management. The wording of the resolution is included below.

Ordinary Resolution - Projected thermal coal production

That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:

1. Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity.

Indicative support for this resolution is given by:

• Man Group
• Brunel Pension Partnership
• EFG Asset Management
• Swiss Federal Pension Fund PUBLICA
• Border to Coast Pensions Partnership
• Pensionskasse SBB
• Scottish Widows
• Downing Fund Managers
• Fulcrum Asset Management
• ClientEarth Limited (UK)

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR):

“Woodside held a Say on Climate vote in 2022 and ignored the result. In an 11th hour bid to save one of its directors, it has now capitulated and offered a Say on Climate vote in 2024.

“It took a proxy adviser to recommend against director Ian Macfarlane to finally put a chink in Woodside’s armour of hubris. But this commitment is too little, too late.

“Woodside’s decision to communicate this concession exclusively to a subset of investors that subscribe to a proxy advisor service, rather than any of the three stock exchanges that Woodside is now listed on, demonstrates an ad hoc approach to climate governance.

“We have asked Woodside to make the Chair’s letter generally available through notification to the ASX and this request was declined.  This approach falls far short of best practice and results in information asymmetry across its shareholder base in advance of a looming, contested AGM.

“We encourage investors to consider whether another non-binding advisory vote a year away is going to shift the dial on Woodside’s climate strategy, particularly as the Chair repeatedly states the company is committed to its current path.

“This is a tactical play designed to kick the can down the road for another year. It simultaneously highlights that Woodside is unwilling to take material measures to address climate change and that it has a reactive and chaotic approach to governance.”

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“In 2022, Santos directors experienced an average vote against them of 1%. This year the against vote jumped to an average closer to 9%. This is a significant shift, indicating growing investor concern.

“Santos has faced a litany of problems in recent years. Among other things, there have been allegations of covering up dolphin deaths, and Santos has been found by the Full Federal Court to have failed to meet its legal obligations to consult with traditional owners. Just today, there is news of a previously unreported uncontrolled gas explosion in January at the company’s Big Lake gas facility.

“A growing segment of the investment sector clearly understands that holding boards to account by voting against directors can be an appropriate escalation tool. The tide is turning towards greater director accountability.

“Considering this result at Santos today, all eyes will be on the director re-elections at Woodside’s AGM later this month.

“Whilst Santos has avoided a humiliating second strike on remuneration, the Board must now reflect on the clear message being sent by investors.”

Commenting on Rio Tinto’s commitment, Harriet Kater, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This commitment to positive climate advocacy from Rio Tinto is extremely welcome.

“For there to be any chance of us limiting warming in line with the Paris Agreement, we need industries that have a future in a zero carbon economy to be advocating for policies that are consistent with the most recent science. This is in sharp contrast to the blight of negative industry lobbying that continues to subvert and delay policy settings that would enable rapid and orderly decarbonisation.

“Industrial-scale decarbonisation is an enormous challenge. Companies can show leadership by clearly signaling where government interventions can assist in addressing genuine barriers in order to expedite the decarbonisation of their assets and value chains.

“The more effective policy we have, the less companies will need to fall back on sub-standard alternatives like carbon offsets for meeting their emissions targets.

“This need was recognised by the United Nations High Level Expert Group in its recommendations on credible net zero commitments, which stated that companies ‘should outline the specific policies and regulations, including carbon pricing, that they would need to cut emissions in line with a 1.5°C scenario.’

“Much of the anxiety in the Safeguard Mechanism negotiations stemmed from the perceived slow pace at which industries like alumina and aluminum can decarbonise. If there had been more prior positive advocacy for a range of enabling, innovative policies that help to unlock step changes in the decarbonisation of such industries, this would have laid the foundation for a more ambitious safeguard policy.

“Of course, whilst this commitment is a positive step, the proof will be in the pudding and ACCR will continue to engage with Rio Tinto and monitor its statements and actions.

“ACCR encourages other diversified miners, including BHP, to step up and make similar commitments. Since 2020 BHP has stated that a 1.5°C pathway is the best outcome for shareholder value - yet in 2022 it refused to support a shareholder resolution filed by ACCR calling for positive advocacy to enhance the probability of that outcome. This was a missed opportunity for BHP to walk its talk through genuine climate leadership."

This is the first time institutional investors have sought to bring climate accountability to board level by using members’ statements to dissent on a resolution for the re-election of directors at an ASX100 company.

All Woodside directors share responsibility for the board’s failings with regard to governance and climate change. With three-year director terms in Australia, this concern should be expressed with a vote against the long-standing directors facing re-election in 2023, being:

• Ian Macfarlane
• Swee Chen Goh
• Larry Archibald

The investor co-filers state that Woodside’s repeated failure to respond to material shareholder votes around climate risk management has raised genuine governance concerns.

Over the past three years Woodside has faced successive and record-breaking shareholder votes against its climate plans, yet has refused to change tack.

The investors are concerned that while Woodside is bringing in record returns in today’s high commodity price environment, the company is failing to position for value creation in a net zero economy. Due to its continued fossil fuel expansion, the company is running the risk of future impairments in a transitioning global economy.

The members’ statements note that Woodside acknowledges climate change is a “material strategic governance issue” - one overseen directly by the board with the support of its committees. Investors are asking that the performance of the three named directors - who have all sat on the Sustainability Committee since their appointment to the board - be assessed on this basis.

Quote attributable to Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super:

“Woodside is continuing to allocate the bulk of its capital to developing new oil and gas projects instead of pivoting to deal with the inevitable changes that climate change is bringing. With the war in Ukraine, Woodside got a second chance to pursue a viable long-term strategy, but again failed to grasp that opportunity. We have lost confidence in the Board’s ability to oversee a change to an appropriate strategy, and in particular we have lost faith in the Directors who sit on the Sustainability Committee.”

Quotes attributable to Alex Hillman, Lead Analyst, Australasian Centre for Corporate Responsibility:

“This historic co-filing to hold directors of Woodside to account has come after years of clear and consistent messages from investors that the Woodside board is stuck in the past with no credible plan to take advantage of the 21st century energy transition.”

“We saw it first with the Engine No.1 campaign at Exxon, and then here in Australia with the AGL board - shareholders in high emitting companies are increasingly demanding climate accountability and climate competence at board level because they know that is the path to corporate value creation.

“Directors are obligated to act on behalf of, and be accountable to, shareholders. Director re-elections are not rubber-stamping exercises.”

“ACCR is deeply concerned that on 14 March Woodside emailed ACCR to say it would not be including the statements in the Notice of AGM because: “the documents do not meet the Corporations Act requirement”. This was two weeks after ACCR co-filed the member statements, a week after Woodside had indicated that the Notice of Meeting was to be finalised and after repeated unanswered requests for Woodside to confirm the filings’ validity.

“ACCR is confident it has validly complied with the provisions of the Corporations Act that govern shareholders’ requests for distribution of shareholder statements and in particular s.249P of the Corporations Act.

“ACCR has urgently requested particulars supporting Woodside’s assertion. Woodside is yet to respond to ACCR’s request for more information about why the company has refused to distribute the members’ statements.

“ACCR is deeply concerned at this apparent denial of shareholders ability to voice concerns about governance at the AGM. This is a bold move from a company facing allegations that it does not listen to shareholders.”

"In the present circumstances, where we have given Woodside an opportunity to explain its refusal to comply with a valid request made by shareholders under the Corporations Law, and where Woodside has declined that opportunity, it is reasonable to conclude that Woodside is clutching at straws to avoid complying with a lawful request of its own shareholders.”

Background

The director re-elections will be voted on at Woodside Energy's AGM on Friday, 28 April 2023 at 10:00 AWST / 12:00 AEDT (21:00 CDT Thursday, 27 April) in Perth, Western Australia.

Read the three Members’ Statements here.

In 2020, 50% of Woodside’s shareholders voted for an ACCR resolution asking for the company to do better on climate risk management. In 2022, Woodside received the largest vote against its 2021 Climate Action Transition Plan of any company since the Say on Climate mechanism was introduced.

Say on Climate is a global initiative, where companies develop climate strategies and offer shareholders a vote at a general meeting. There have been 61 votes to date and Woodside’s has secured the lowest vote globally. The average vote against these plans has been 7.75%, whilst at Woodside’s 2022 AGM, 49% of votes cast were against the 2021 Climate Report.

Votes against SoC resolutions that had at least 10% vote against the plan (%; MSCI)

The director re-elections will be voted on at Woodside Energy's AGM on Friday, 28 April 2023 at 10:00 AWST / 12:00 AEDT (21:00 CDT Thursday, 27 April) in Perth, Western Australia.

Members’ statement for resolution relating to the re-election of Ian Macfarlane (670 words inc footnotes)

The Woodside Energy board is failing to respond to shareholder concerns on climate risk management

Woodside has repeatedly failed to respond to material shareholder votes around climate risk management, raising genuine governance concerns. Woodside's lack of responsiveness to shareholders on these risks warrants a vote against Ian Macfarlane, who has been a member of the company’s Sustainability Committee for the duration of his tenure.

Whilst Woodside is producing record returns in today’s high commodity price environment, these persistent investor concerns relate to how the company is positioning for value creation in a net zero economy.

2020 shareholder resolution on Paris-alignment

At Woodside’s May 2020 AGM, shareholders owning a combined 50% of the company sought disclosure of Paris-aligned climate targets, capital allocation and remuneration.^1 The shareholder concerns, represented by this significant vote, were not addressed. In 2021 the company announced a net emissions reduction target of 30% by 2030 which excluded scope 3 emissions; did not reduce funding to fossil fuel expansion; and did not introduce a remuneration structure prioritising emissions reduction.^2

2021 Climate Report and Say on Climate vote

At its 2022 AGM, Woodside received the lowest recorded vote for a Climate Transition Action Plan since the inception of the Say on Climate mechanism, with 49% of votes cast against the 2021 Climate Report. Shareholder concerns included that:

• No tangible scope 3 targets had been disclosed;
• Woodside lacked science-based/Paris-aligned targets;
• Operational emissions reduction targets were insufficiently ambitious, and/or lacked detail;
• There was an overreliance on the use of offsets;
• Woodside is lagging its peers in relation to its emissions plan;
• Woodside's disclosure and responsiveness was poor.

No commitment to second Say on Climate vote

At the 2022 AGM, when the Australian Shareholders' Association asked the Chair if Woodside would provide a 2023 Say on Climate vote considering the lack of shareholder support, the Chair responded that it would not. Consistent with this prior statement, no commitment to a second Say on Climate vote has been made in the reporting suite published 27 February 2023.

The 2022 Climate Report

The 2022 Climate Report presented an opportunity for Woodside to demonstrate that it was responding to the concerns expressed by investors over the last three years. Whilst the company stated that it had engaged with shareholders throughout 2022, this has not translated in any substantive changes in its climate strategy. In fact the Chair stated in his opening remarks that “our understanding and our strategy remains consistent” with the 2021 Report.^3 Key observations relating to investor concerns are below:

• Woodside has not committed to targets that are science-based;
• Woodside has not set a scope 3 target;
• Only incremental improvements in scope 1 emission reductions have been disclosed;
• Offsets continue to dominate Woodside’s scope 1 decarbonisation strategy.

In addition, the 2022 reporting suite confirms that Woodside is continuing to allocate the bulk of its capital to developing new oil and gas projects, which increases risk of impairments in a transitioning global economy.

Climate change governance at Woodside

Woodside acknowledges that 'climate change is a complex and material strategic governance issue', one which is directly overseen by its Board with the support of its committees.^4 The Sustainability Committee is responsible for considering the company's 'management of climate change risk and opportunities', and oversaw and reviewed Woodside’s 2021 and 2022 Climate reports.^5 All directors up for re-election have sat on Woodside's Sustainability Committee for the duration of their tenure as board members. In 2022, Woodside reported that the majority of its directors are 'highly competent' across all 'climate change' competencies.^6 The latest annual report confirmed the Board’s self-assessment that Board members 'collectively have the necessary skills and competencies'. However, the company does not disclose any specific information in support of this conclusion.

Ian Macfarlane has been a Woodside director and Sustainability Committee member since November 2016. Consequently, Mr Macfarlane shares responsibility for the Board’s failings with regard to governance and climate change.

Members’ statement for resolution relating to the re-election of Larry Archibald (670 words inc footnotes)

The Woodside Energy board is failing to respond to shareholder concerns on climate risk management

Woodside has repeatedly failed to respond to material shareholder votes around climate risk management, raising genuine governance concerns. Woodside's lack of responsiveness to shareholders on these risks warrants a vote against Larry Archibald, who has been a member of the company’s Sustainability Committee for the duration of his tenure.

Whilst Woodside is producing record returns in today’s high commodity price environment, these persistent investor concerns relate to how the company is positioning for value creation in a net zero economy.

2020 shareholder resolution on Paris-alignment

At Woodside’s May 2020 AGM, shareholders owning a combined 50% of the company sought disclosure of Paris-aligned climate targets, capital allocation and remuneration.^7 The shareholder concerns, represented by this significant vote, were not addressed. In 2021 the company announced a net emissions reduction target of 30% by 2030 which excluded scope 3 emissions; did not reduce funding to fossil fuel expansion; and did not introduce a remuneration structure prioritising emissions reduction.^8

2021 Climate Report and Say on Climate vote

At its 2022 AGM, Woodside received the lowest recorded vote for a Climate Transition Action Plan since the inception of the Say on Climate mechanism, with 49% of votes cast against the 2021 Climate Report. Shareholder concerns included that:

• No tangible scope 3 targets had been disclosed;
• Woodside lacked science-based/Paris-aligned targets;
• Operational emissions reduction targets were insufficiently ambitious, and/or lacked detail;
• There was an overreliance on the use of offsets;
• Woodside is lagging its peers in relation to its emissions plan;
• Woodside's disclosure and responsiveness was poor.

No commitment to second Say on Climate vote

At the 2022 AGM, when the Australian Shareholders' Association asked the Chair if Woodside would provide a 2023 Say on Climate vote considering the lack of shareholder support, the Chair responded that it would not. Consistent with this prior statement, no commitment to a second Say on Climate vote has been made in the reporting suite published 27 February 2023.

The 2022 Climate Report

The 2022 Climate Report presented an opportunity for Woodside to demonstrate that it was responding to the concerns expressed by investors over the last three years. Whilst the company stated that it had engaged with shareholders throughout 2022, this has not translated in any substantive changes in its climate strategy. In fact the Chair stated in his opening remarks that “our understanding and our strategy remains consistent” with the 2021 Report.^9 Key observations relating to investor concerns are below:

• Woodside has not committed to targets that are science-based;
• Woodside has not set a scope 3 target;
• Only incremental improvements in scope 1 emission reductions have been disclosed;
• Offsets continue to dominate Woodside’s scope 1 decarbonisation strategy.

In addition, the 2022 reporting suite confirms that Woodside is continuing to allocate the bulk of its capital to developing new oil and gas projects, which increases risk of impairments in a transitioning global economy.

Climate change governance at Woodside

Woodside acknowledges that 'climate change is a complex and material strategic governance issue', one which is directly overseen by its Board with the support of its committees.^10 The Sustainability Committee is responsible for considering the company's 'management of climate change risk and opportunities', and oversaw and reviewed Woodside’s 2021 and 2022 Climate reports. ^11 All directors up for re-election have sat on Woodside's Sustainability Committee for the duration of their tenure as board members. In 2022, Woodside reported that the majority of its directors are 'highly competent' across all 'climate change' competencies. ^12 The latest annual report confirmed the Board’s self-assessment that Board members 'collectively have the necessary skills and competencies'. However, the company does not disclose any specific information in support of this conclusion.

Larry Archibald has been a member of the Woodside board, and a member of its Sustainability Committee, since 2017. Consequently, Mr Archibald shares responsibility for the Board’s failings with regard to governance and climate change.

Members’ statement for resolution relating to the re-election of Swee Chen Goh (670 words inc footnotes)

The Woodside Energy board is failing to respond to shareholder concerns on climate risk management

Woodside has repeatedly failed to respond to material shareholder votes around climate risk management, raising genuine governance concerns. Woodside's lack of responsiveness to shareholders on these risks warrants a vote against Swee Chen Goh, who has been a member of the company’s Sustainability Committee for the duration of her tenure.

Whilst Woodside is producing record returns in today’s high commodity price environment, these persistent investor concerns relate to how the company is positioning for value creation in a net zero economy.

2020 shareholder resolution on Paris-alignment

At Woodside’s May 2020 AGM, shareholders owning a combined 50% of the company sought disclosure of Paris-aligned climate targets, capital allocation and remuneration. ^13 The shareholder concerns, represented by this significant vote, were not addressed. In 2021 the company announced a net emissions reduction target of 30% by 2030 which excluded scope 3 emissions; did not reduce funding to fossil fuel expansion; and did not introduce a remuneration structure prioritising emissions reduction. ^14

2021 Climate Report and Say on Climate vote

At its 2022 AGM, Woodside received the lowest recorded vote for a Climate Transition Action Plan since the inception of the Say on Climate mechanism, with 49% of votes cast against the 2021 Climate Report. Shareholder concerns included that:

• No tangible scope 3 targets had been disclosed;
• Woodside lacked science-based/Paris-aligned targets;
• Operational emissions reduction targets were insufficiently ambitious, and/or lacked detail;
• There was an overreliance on the use of offsets;
• Woodside is lagging its peers in relation to its emissions plan;
• Woodside's disclosure and responsiveness was poor.

No commitment to second Say on Climate vote

At the 2022 AGM, when the Australian Shareholders' Association asked the Chair if Woodside would provide a 2023 Say on Climate vote considering the lack of shareholder support, the Chair responded that it would not. Consistent with this prior statement, no commitment to a second Say on Climate vote has been made in the reporting suite published 27 February 2023.

The 2022 Climate Report

The 2022 Climate Report presented an opportunity for Woodside to demonstrate that it was responding to the concerns expressed by investors over the last three years. Whilst the company stated that it had engaged with shareholders throughout 2022, this has not translated in any substantive changes in its climate strategy. In fact the Chair stated in his opening remarks that “our understanding and our strategy remains consistent” with the 2021 Report.^15 Key observations relating to investor concerns are below:

• Woodside has not committed to targets that are science-based;
• Woodside has not set a scope 3 target;
• Only incremental improvements in scope 1 emission reductions have been disclosed;
• Offsets continue to dominate Woodside’s scope 1 decarbonisation strategy.

In addition, the 2022 reporting suite confirms that Woodside is continuing to allocate the bulk of its capital to developing new oil and gas projects, which increases risk of impairments in a transitioning global economy.

Climate change governance at Woodside

Woodside acknowledges that 'climate change is a complex and material strategic governance issue', one which is directly overseen by its Board with the support of its committees. ^16 The Sustainability Committee is responsible for considering the company's 'management of climate change risk and opportunities', and oversaw and reviewed Woodside’s 2021 and 2022 Climate reports. ^17 All directors up for re-election have sat on Woodside's Sustainability Committee for the duration of their tenure as board members. In 2022, Woodside reported that the majority of its directors are 'highly competent' across all 'climate change' competencies. ^18 The latest annual report confirmed the Board’s self-assessment that Board members 'collectively have the necessary skills and competencies'. However, the company does not disclose any specific information in support of this conclusion.

Swee Chen Goh has been a member of the Woodside board, and a member of its Sustainability Committee, since 2020. Consequently, Ms Goh shares responsibility for the Board’s failings with regard to governance and climate change.

Due to investor interest, ACCR has also compiled a summary of our recent engagements with Woodside, which can be accessed here.

Please read the terms and conditions attached to the use of this site.

Commenting on the nominated and proposed new directors, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Through the release of its 2022 Climate Report last week, Woodside demonstrated that its board is still not responding to investor concerns about its climate strategy.

“Woodside remains stubbornly rusted on to its underwhelming 2021 climate plan, which was rejected by 49% of its shareholders at the 2022 AGM. Climate change is a significant strategic governance issue for which the board bears responsibility, and this lack of responsiveness to material shareholder votes raises genuine governance concerns.

“Today’s director appointments only amplify these concerns - particularly with the appointment of long-standing TotalEnergies executive, Mr Arnaud Breuillac.

“It is also hard to see how Ms Minas’ professional history in exploration, petrochemicals and the gas industry will lend itself to Woodside setting a strategy that is aligned with decarbonisation.

“These appointments provide shareholders with direct insight into the company that Woodside wants to be in a decarbonising economy. Based upon the skills and experience of the individuals, it does not read like a pivot away from fossil fuel expansion.

Background

In 2020, 50% of Woodside’s shareholders voted for an ACCR resolution asking for the company to do better on climate risk management. In 2022, Woodside received the largest vote against its 2021 Climate Action Transition Plan of any company since the Say on Climate mechanism was introduced.

Say on Climate is a global initiative, where companies develop climate strategies and offer shareholders a vote at a general meeting. There have been 61 votes to date and Woodside’s has secured the lowest vote globally. The average vote against these plans has been 7.75%, whilst 49% of Woodside shareholders voted against the company’s 2021 Climate Report.

Votes against SoC resolutions that had at least 10% vote against the plan (%; MSCI)

The Australasian Centre for Corporate Responsibility​ (ACCR)  has today released new analysis on Woodside’s Trion project - a greenfield deep-water oil development in the Gulf of Mexico.

In its 2022 Annual Report released this week, Woodside indicated it is pushing ahead with Trion and targeting FID this year.

ACCR built an emissions and free cash flow forecast to assess the viability of Trion.

Key findings include:

• Even when valuing Trion based on an Internal Rate of Return (IRR) - which does not adjust for country risk - the project does not meet Woodside’s hurdle target of >15% for offshore oil projects.
• When adjusting for country risk, the Discounted Cash Flow (DCF) valuation suggests a limited upside of $A0.23-0.35 per share or around 1% of Woodside’s market capitalisation.
• Trion is further exposed to material downside risks not fully captured in either the IRR or DCF valuation, including:
• • Partner risk. Joint venture partner, Pemex (WDS 60% / Pemex 40%) has a poor financial, safety and operating record and has faced allegations of past corruption
  • Capital expenditure risk. Ambiguity in the disclosed capital costs, specifically the carrying amount that Woodside will need to fund for Pemex.
  • Production risk. The valuation is based on contingent resources rather than reserves. Also, the Gulf of Mexico faces extreme weather events that can reduce production, and these will escalate under climate change.
• Trion’s emissions (scope 1, 2 & 3) represent around 24% of the total emissions for Woodside in 2021 and an estimated 12% of the total emissions for the new combined entity of Woodside and BHP Petroleum.

Commenting on the analysis, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“It is difficult to see how shareholders win from Woodside spending US$4.6 billion on Trion. The project has weak economics, high emissions and a constellation of material downside risks.

“The IRR for Trion does not meet Woodside’s own hurdle rates for offshore oil projects.

“Trion has a long list of risks, several of which are new to Woodside’s portfolio. The joint venture partner, Pemex has a chequered operating, safety and financial record and has faced allegations of past corruption. Woodside has not previously operated in Mexico and oil and gas production in the Gulf of Mexico is being increasingly impacted by escalating climate impacts.

“Woodside has better options to offer investors than the pursuit of projects like Trion with a poor risk/return profile. Alternative uses of this capital, like increased new energy spend or share buybacks, are all options that should be on the table.

“Half of investors called on Woodside to set scope 3 targets in 2020 and then voted against last year’s Climate Report in part because it didn’t include scope 3 targets. Despite being economically marginal, Trion is a high emissions project that will increase Woodside’s scope 3 emissions into the 2060s. Trion would be another nail in the coffin of any pretence that Woodside is listening to investors on climate risk management.

“It really begs the question: what is going on at Woodside? Investors need to see some agility in thinking from Woodside’s board. And if they can’t do this, how can they justify to investors that they deserve to be re-elected?”

The Australasian Centre for Corporate Responsibility​ (ACCR)  is commenting on Woodside’s 2022 Climate Report released today. This report follows the dismal Say on Climate vote at Woodside’s AGM last year, where 49% of Woodside shareholders voted against the company’s 2021 Climate Report.

Commenting on the updated climate report, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Energy market turmoil in 2022 has allowed fossil fuel companies like Woodside to make huge profits. It has also driven energy markets to shift to renewables at the fastest rate ever, meaning any windfall profits are short-lived.

“Despite the accelerating energy transition, Woodside’s response in its 2022 Climate Report is to stick with an out-dated strategy that has already been rejected by nearly half of its investors.

“Today, Woodside remains stubbornly rusted on to its underwhelming 2021 climate plan, saying its “strategy remains consistent”. This failure to respond in a meaningful way to overwhelming investor feedback puts the issue of poor corporate governance firmly on the table.

“Investors demanded scope 3 targets last year. Rather than deliver, Woodside has listed a spurious range of reasons for why scope 3 targets are all too hard.

“Regardless of material investor concerns about the company’s overreliance on offsets, Woodside has confirmed it still plans to use offsets to meet 100% of its restated scope 1 emission reduction target. This is simply lazy, lacks any innovation and shows the company is stuck in the 20th century.

“Woodside has faced two record breaking shareholder votes against its climate risk management strategy. This lack of responsiveness suggests Woodside’s board is now displaying a concerning disregard for sound corporate governance.

“Woodside’s directors have a tin ear on climate risk and it’s time they were called to account.”

Background

In 2020, 50% of Woodside’s shareholders voted for an ACCR resolution asking for the company to do better on climate risk management. In 2022, Woodside received the largest vote against its 2021 Climate Action Transition Plan of any company since the Say on Climate mechanism was introduced.

Say on Climate is a global initiative, where companies develop climate strategies and offer shareholders a vote at a general meeting. There have been 61 votes to date and Woodside’s has secured the lowest vote globally. The average vote against these plans has been 7.75%, whilst 49% of Woodside shareholders voted against the company’s 2021 Climate Report.

Votes against SoC resolutions that had at least 10% vote against the plan (%; MSCI)

Commenting on the update, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Santos’ remuneration report states that the board has been ‘engaging widely’ with shareholders following the embarrassing first strike on remuneration at the 2022 AGM. However the controversial CEO Growth Incentive remains in place, with the only adjustment making it easier for Mr Gallagher to meet the deliverables.

“While Santos expresses ‘disappointment’ with the REM strike, it still continues to ignore what investors are most concerned with: that the bonus structure is fundamentally flawed and it must be fixed.

“Shareholders will certainly be raising questions over whether the $6 million bonus is excessive and leading to shortcuts in due diligence and execution.

“Notably, company performance relating to traditional owner relationships was marked down but still deemed within the threshold worthy of reward. This is incomprehensible given the full Federal Court confirmed in December 2022 that the company failed to consult Tiwi Islander people for its Barossa project drilling activities even though it knew of their existence.^[1]

“Other sources of pain for the company’s leadership also got a nod in the remuneration report, including delays in decommissioning end of life projects and the oil spill at Varanus Island, which a whistleblower states caused the death of multiple dolphins.

“Whilst an ‘ongoing incident review and independent investigation’ into the Varanus Island spill continues, the portion of executive rewards relating to the Environment KPI will be withheld. It should not take a whistleblower to reveal allegations via the Federal Parliament for Santos to properly assess its performance.

“Whilst oil and gas peers have been making money hand over fist, Santos’ delivered a total return to shareholders of just 10%. Its peers however, returned between 20% and 87%. The 2022 company scorecard performance was also the worst for at least five years. * See note below

“Santos’ performance is bearing the hallmark of a company which is over-committed, over promising and starting to make serious judgement errors.”

*Note: For clarification (not included in the original media release): total return to shareholder calculated on a US dollar basis

Background

Santos peers assessed were Beach Energy, Woodside Energy, Shell, bp, Exxon and Chevron.

The findings increase pressure on the world’s biggest coal trader - already facing a shareholder resolution from a global coalition of institutional investors representing $US2.2 trillion of assets under management - to provide clarity on how its ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.

The new research shows:

• Based on current disclosures by Glencore and its stated strategy, the company’s forecast cumulative emissions from coal production do not appear to be Paris-aligned.
• Glencore’s ability to reach its own target of a 50% reduction in emissions by 2035 is achieved with the assistance of beneficial carbon accounting, making its emissions reductions appear more significant. For example, Glencore's selection of a 2019 baseline and a 2035 target year achieves nominal emissions reductions, whilst still producing significant cumulative emissions.
• If Glencore proceeds with its plans for the greenfield development of the Wandoan mine in Australia, alignment with the International Energy Agency Net Zero Emissions (IEA NZE) 2050 coal pathway does not appear feasible.
• While Glencore says it is exploring the potential to reduce emissions associated with Wandoan coal by using CCS to sequester emissions, to fully sequester all its emissions will require more CCS capacity than in the pipeline for coal-related capture across the entire globe in 2030.
• Analysis of the proposed CCS projects shows they are costly, unproven on an industrial scale, and do not necessarily stop greenhouse gases being emitted. One of the proposed projects may use CO2 for enhanced oil recovery (EOR), which cannot be classified as CCS, since far more CO2 is emitted than sequestered.

ACCR is one of the co-filers of the shareholder resolution on thermal coal to Glencore, alongside institutional investors including: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management.

The resolution, due to be voted on at the AGM in May, asks Glencore to disclose how its projected thermal coal production and thermal coal capital expenditure aligns with the Paris Agreement’s goals and the International Energy Agency (IEA) Net Zero Emissions pathway.

“The research published today by ACCR provides additional context as to why we seek further disclosure from Glencore on their thermal coal production plans. In particular, it outlines the potential misalignment between the company’s exposure to coal and the 1.5°C trajectory, which we request more clarity on,” said Dror Elkayam, Global ESG Analyst – Investment Stewardship, Legal & General Investment Management (LGIM)

“If Wandoan goes ahead, it’s likely to become a stranded asset. And the plans for offsetting it using carbon capture and storage are at best unproven and possibly reckless. Glencore needs to bite the bullet on Wandoan and start focusing on growth that will actually benefit shareholders – not coal projects that will diminish shareholder value and contribute to the planet becoming uninhabitable,” said Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super.

“This research demonstrates that Glencore has big decisions to make about its proposed new and expanded coal projects. Investors see the opportunity for corporate value creation if Glencore’s thermal coal business is Paris-aligned, but this research shows that currently this does not appear to be the case,” said Naomi Hogan, Strategic Projects Lead, ACCR.

“The ball is now in Glencore’s court to accept the reasonable requests of the shareholder resolution and to make a commitment to disclose to shareholders how its thermal coal production is in fact Paris aligned, as we are not seeing it based on the numbers and forecasts available today.”

Download ACCR’s research deck here.

Background

Under Article 53.3 of Glencore’s Articles of Association (AA), members have a right to require the company to circulate a resolution for an Annual General Meeting.

The Resolution for the 2023 Glencore AGM

ORDINARY RESOLUTION - PROJECTED THERMAL COAL PRODUCTION

That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:

1. Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity generation in (i) advanced economies, and (ii) developing economies.

Read the full supporting statement for the resolution here.

Download ACCR’s research deck here.

Commenting on the update, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Late last year Santos downplayed a 25,000 litre oil spill from its Varanus Island Gas Plant that occurred in March 2022. The company inferred that multiple dolphins dying at the same time and location of the oil spill was coincidental.

"A brave whistleblower has however come forward with disturbing allegations to the effect that Santos engaged in a ‘subsequent cover-up’. The whistleblower says this incident indicates that Santos is an organisation ‘comfortable with a culture of avoiding accountability’.

“Corporate culture springs from the Board and CEO and flows to a company’s employees. The existence of an accountability avoidance culture of the kind alleged by the whistleblower should be of concern to investors.

“For a former employee to bring forward allegations like those tabled in Parliament raises red flags. If Santos has engaged in a cover-up and misled investors and the public on this matter then the leadership responsible must be held to account.

“The whistleblower is calling for Santos to be held accountable for its behaviour. Shareholders are well placed to do this and they are entitled to expect that Santos’ remuneration structure creates incentives for the company to act responsibly and appropriately.

“Investors will be looking closely at the yet to be released 2022 remuneration report. If the company does accept responsibility for this incident and associated impacts, an appropriate response should be reflected in executive remuneration for last year.

“Investors gave an embarrassing “first strike” against Santos’ remuneration report at the 2022 AGM, demonstrating an evolving  concern about Santos’ executives’ incentives.

“Given the company’s aggressive oil and gas expansion plans, many of which lack the backing of local communities, shareholders should be paying particular attention to the questions raised by the whistleblower’s report. Corporate transparency and accountability have never been more important than at this moment in energy transition.”

Background

The 2021 Santos remuneration structure (2021 Annual Report p35-61), allocates 7.5% of the corporate scorecard to environmental performance. If there are any ‘environmental incidents with a consequence of moderate harm or greater’, this metric is allocated a score of 0. Since all species of WA dolphins are listed under the Federal Environment Protection and Biodiversity Conservation Act, it seems reasonable that causing the death of dolphins would be classed as moderate harm. The 2021 remuneration report concluded that Santos had achieved ‘stretch’ performance against this indicator, which converts to 167% of the target payout. When considering the rest of the scorecard performance, this resulted in $970,000 being allocated for environmental performance, which would not have been awarded if the metric was allocated a score of 0.

Commenting on the update, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The Dorado oil project was postponed in August last year due to poor economic fundamentals. The announcement today attempting to link Dorado to “energy security” concerns does nothing to allay investor concerns that Santos is wasting investor funds.

“Santos’ attempt to link this fossil fuel project to energy security is farcical. It ignores the realities of the market and the advice of the International Energy Agency (IEA), which shows that accelerating the energy transition is the best way to reduce dependence on fossil fuels and create real energy security. Dorado was postponed even after Russia’s invasion of Ukraine sent oil prices skyrocketing.

“Santos’ decision to progress a marginal fossil fuel project also raises questions for investors about a remuneration structure that incentivises expansion - a bizarre condition, considering that the latest IEA forecasts show decreasing demand for fossil fuels. Santos’ CEO Growth Projects Incentive rewards chief executive Kevin Gallagher with  a $6 million personal bonus, including for the “successful delivery of Santos’ major growth projects”.

“Santos suffered an embarrassing first strike against its remuneration report at the 2022 AGM, due in part to the CEO Growth Projects Incentive. The board will be padding up to bat off a second strike at this year’s AGM, with proxy advisers and investors paying close attention to the company’s  incentive structure and its consequences.

“Santos’ cavalier approach to project delivery, alongside the CEO’s bonus structure, will no doubt have investors scrutinising the risks of tying excessive cash bonuses to growth.

“Botched consultation on the Barossa gas project resulted in an adverse ruling from the Federal Court, requiring the drilling operations to cease. Santos still hasn’t come clean about likely project delays and how many millions were wasted in that effort.

“Shareholders expect more accountability and a stronger incentive structure aligned to total shareholder returns. Dorado is a step in the wrong direction.”

Background

The delay of the Dorado project was announced with Santos’ 2022 half year report (p8)

The CEO Growth Projects Incentive (2021 Annual Report p50) is a $6 million bonus established in 2021, that is awarded based on a. delivery of a range of ‘Major Growth Projects’ and ‘Emissions reduction, net-zero plan and energy transition’ projects, and b. ongoing employment to December 2025.

Commenting on the proposed changes, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The Government continues to ignore the billion tonne elephant in the room of Australia’s fossil fuel exports.

“Managing Australia’s 137 million tonnes of domestic industrial greenhouse gas emissions is important, but the billion tonnes of fossil fuel emissions that we export every year must be a higher priority for the government.

“The International Energy Agency concluded in 2021 that the best way to ensure a safe climate requires stopping the development of new fossil fuels. If Australia wants to be a trustworthy climate partner, it can’t just continue with Abbott era policies and must stop supporting new fossil fuel developments.

“The Labor government has a clear electoral mandate to address Australia’s dangerous contribution to climate change. It should use this to protect Australia’s future and focus on the opportunities of decarbonisation and green industry, not protecting fossil fuel companies from the inevitable shift in global energy markets.

“Investors are also calling for reductions in exported fossil fuel emissions, with 49% of Woodside investors voting against its 2022 Climate Report due, in part, to the absence of a Scope 3 emissions reduction target.

“Today’s announcement reflects a set of incremental improvements that do not adequately manage Australia’s industrial emissions.

“It allows for unlimited use of offsets, including from discredited methods such as people promising to not cut down trees they weren’t going to cut down anyway.”

Background

The Safeguard Mechanism was established by the Abbott government as part of the Direct Action Plan. It limits the emissions of industrial facilities. Since the Safeguard Mechanism was implemented however, emissions from covered facilities have increased, because companies have been allowed to increase their emission limits.

This is the third round of consultation on the Safeguard Mechanism since the 2022 election. ACCR’s previous submissions are available here and here.

The global coalition of institutional investors, collectively representing $US2.2 trillion of assets under management, include: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management.

This is the first time investors have filed a climate resolution specifically focusing on Glencore’s thermal coal production, and is a significant escalation of pressure on Glencore, already on notice after nearly one quarter of shareholders rejected its climate plan in 2022.

The proposals, facilitated and co-filed with the Australasian Centre for Corporate Responsibility (ACCR) and UK-based responsible investment NGO ShareAction, ask Glencore to disclose how its projected thermal coal production and thermal coal capital expenditure aligns with the Paris Agreement’s goals and the International Energy Agency (IEA) Net Zero Emissions pathway.

Investors want clarity on how Glencore’s ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.

Investors are seeking a constructive dialogue with Glencore on the opportunity for corporate value creation if Glencore’s thermal coal business is Paris-aligned.

“As long-term investors, the ability to assess and evaluate companies’ exposure to financially material risks stemming from the energy transition is vital. Having both invested in and engaged with Glencore over many years, a higher degree of transparency is necessary in order to clarify how the company’s exposure to thermal coal is aligned with the 1.5C pathway and corresponds to its net zero commitment.” Dror Elkayam, Global ESG Analyst – Investment Stewardship, Legal & General Investment Management (LGIM)

“Glencore has a tremendous opportunity to be part of and profit from the energy transition. It is well placed with its exposure to many key commodities for the transition including copper and nickel. Its growing recycling business should also see a tailwind from the energy transition. That’s why it is so disappointing to see Glencore continuing to invest in thermal coal, which is a contracting industry. Glencore’s strategy does not reconcile with the company’s public commitment to alignment with the Paris Agreement.” Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super

“Some parts of Glencore’s business are well positioned to benefit from the energy transition. To seize these opportunities and avoid fueling climate change, the company urgently needs further capex commitments. The greater disclosure we are asking for on how Glencore’s capital expenditure plans align with the Paris Agreement is key to protect the long-term interests of the company’s stakeholders - which is why we are so keen to see it.” Vincent Kaufmann, CEO, Ethos Foundation

“Glencore has significant exposure to thermal coal - approximately 90% of its total annual coal production. Climate disruption and transition risks are already biting, and investors expect Glencore to be upfront about the level of exposure to thermal coal from now until 2035. If Glencore truly seeks to have a Paris-aligned coal run down strategy, then this resolution is the catalyst for the company to clearly disclose to investors precisely what that strategy involves and how it will be managed.

The recent decision by Glencore to withdraw an application for the huge new Valeria greenfield coal mine in Australia shows that substantial reductions in coal output are possible and that Glencore is capable of responding to investor concerns and to the global headwinds against new coal. This resolution provides additional momentum for Glencore to keep acting and to take genuine actions to align coal production with the goals of the Paris Agreement.” Naomi Hogan, Strategic Projects Lead, ACCR

Background

The global coalition of institutional investors is joined in the co-filing of this resolution by 68 individual shareholders. Under Article 53.3 of Glencore’s Articles of Association (AA), members have a right to require the company to circulate a resolution for an Annual General Meeting.

Legal & General Investment Management (LGIM)

LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of US$1.57 trillion. It works with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors. For more than 50 years, it has built a business through understanding what matters most to its clients and transforming this insight into valuable, accessible investment products and solutions. It  provides investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Its capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.

The Ethos Foundation

The Ethos Foundation was created in 1997 with the goal to enable Swiss pension funds to invest responsibly, taking into account environmental, social and governance (ESG) criteria. Its 245 current members, which must be Swiss pension institutions or charitable foundations, together represent approximately US$393.6 billion under management or a quarter of second pillar wealth in Switzerland. In 2000, the Ethos Services company was created to help the Ethos Foundation achieve its goals. Over the years, it has developed and expanded its range of services dedicated to SRI and currently offers four lines of products and services – investment funds and stock indices, exercise of voting rights, shareholder dialogue programs and sustainability analysis of listed companies – as well as training in sustainable finance.

HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 30 September 2022, HSBC Asset Management managed assets totalling US$571 billion on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

Vision Super

Vision Super is a strong performing industry super fund that was established in 1947. It has US$8.2 billion in assets it manages on behalf of around 84,000 member accounts. Vision Super is a long-term investor and aims to improve the long-term sustainable value of the companies it invests in. It looks to the Boards and Executive management of those companies to serve in the best interests of long-term shareholders and other stakeholders. It integrates ESG issues and risks as part of its investment governance framework and incorporates dialogue with its fund managers and the companies it invests in more broadly. It focuses on delivering low fees, strong risk-adjusted returns with appropriate consideration of environmental, social and governance factors (ESG). Its investment strategy aims to provide members with favourable long-term returns.

ShareAction

For more than 15 years, ShareAction, the responsible investment NGO, has been working to shape a world where the financial system serves our planet and its people. Through research, campaigns and advocacy we mobilise global investors to drive up labour standards, tackle climate change, protect the natural world, and improve people’s health. We push policymakers to ensure the financial system is working in the best interests of people and the planet. Visit shareaction.org or follow us @ShareAction to find out more.

ACCR

The Australasian Centre for Corporate Responsibility (ACCR) is an independent, not-for-profit, philanthropically-funded research and shareholder advocacy organisation, based in Australia. Our focus is engaging with investors on how listed companies, industry associations, and other entities are managing climate, labour, human rights and governance issues. We publish research and analysis on various environmental, social and governance practices to empower all shareholders. We have a small portfolio of shares that we hold for the purpose of engaging with companies, including through the filing of shareholder resolutions. We are a member of both the UN Principles for Responsible Investment (UNPRI) and the Responsible Investment Association of Australasia (RIAA). For more information, follow ACCR on Facebook, Twitter and LinkedIn.

The Resolution

ORDINARY RESOLUTION - PROJECTED THERMAL COAL PRODUCTION

That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:

1. Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity generation in (i) advanced economies, and (ii) developing economies.

Read the full supporting statement here.

This page contains the resolution and supporting statements.

Ordinary Resolution - Projected thermal coal production

That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:

1. Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity generation in (i) advanced economies, and (ii) developing economies.

Supporting statement to Resolution (835 words)

Our Company made a welcome public commitment in 2021 to, “manage the decline of [its] fossil fuel portfolio in a responsible manner”, and stated that, “Glencore is committed to align its targets and ambition with the goals of the Paris agreement.” This commitment was accompanied with a medium-term 50% reduction of total (Scope 1, 2 and 3) emissions by 2035 on 2019 levels, which our Company stated was in line with the ambitions of the 1.5°C scenarios set out by the Intergovernmental Panel on Climate Change. However, it is unclear how our Company’s planned thermal coal production aligns with the global demand for thermal coal under a 1.5°C scenario.

Institutional investors in Glencore see immense opportunity for corporate value creation if it can be demonstrated that the Company’s thermal coal production does in fact align with the Paris Agreement's objective of pursuing efforts to limit the global temperature increase to 1.5°C.

According to Glencore’s 2021 Annual Report, coal accounted for approximately 90% of Glencore’s total disclosed scope 1, 2 and 3 emissions. Our Company has significant exposure to thermal coal, which accounts for approximately 90% of its total annual coal production, based on Company disclosures. This high proportion of emissions from thermal coal production requires investors to have greater insights into the specific plan to align thermal coal production with emissions reductions commitments.

In 2022, our Company progressed its intention to gain approval for thermal coal expansions at the Glendell and Hunter Valley Operations coal mines. Thermal coal output recently increased due to the acquisition of 100% of the Cerrejón coal mine in Columbia.

Currently, there is insufficient evidence to demonstrate that our Company’s planned thermal coal expansions are aligned with the Paris Agreement or that these expansions correspond with a pathway to limit warming to 1.5°C.

Capex commitments could drive new opportunities

Capital expenditure for thermal coal is of particular significance for our Company’s corporate value given the high proportion of its emissions generated by coal production.

Our Company is well positioned to benefit in the new energy economy. It possesses significant potential to increase strategic focus on boosting transition metal production to aid renewable energy development. In contrast, thermal coal production faces declining demand and is misaligned with efforts to stabilise global temperature rise to 1.5°C. There is potential to enhance the Company's valuation by aligning coal production to a 1.5°C pathway and accelerating investment in transition minerals.

Our Company will benefit from actively embracing the climate change challenge. By allocating capital to thermal coal expansion, Glencore is exacerbating its Scope 1 and 3 emissions impacts. We believe more value will be created for shareholders by allocating fossil fuel capex to the energy transition instead.

Corporate value would be better protected with greater disclosure of how our Company will align its capital expenditure plans with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C.

'Just transitions' are less risky

Any transition that does not include the fair treatment of workers and communities can carry an additional set of risks for investors. The World Energy Outlook 2022 states, “people‐centred and just transition policies will be vital to provide support for fossil fuel workers with limited transition prospects in energy or parallel industries.” Investors would benefit from more information and for Glencore to outline its own just transition policies as part of the next Climate Action Transition Plan.

The IEA Net Zero Emissions Scenario provides timelines

The most recent 2022 IEA Net Zero Emissions (NZE) scenario offers a 1.5°C-aligned outlook for coal demand that considers the impact of the global energy crisis. Phasing out coal for electricity generation is a central pillar of the scenario, with demand falling by two thirds between 2021 and 2030. The report states, “Despite a temporary boost from the current energy crisis… the share of unabated coal in global electricity generation falls rapidly from 36% in 2021 to 12% in 2030, and to zero percent by 2040 and beyond.”

Thermal coal demand will drop faster than coking coal demand over the period to 2030, falling by 50% compared to 30%, with both categories facing steeper declines after 2030. Overall declines in the NZE will be sharper in developed countries compared to developing countries. Between 2021 and 2030, coal demand will drop by around 75% in the developed world, and 40% in the developing world.

Currently, our Company does not clearly disclose the destination of its thermal coal exports. Enhanced disclosure would assist investors to understand the extent to which Glencore's thermal coal production is being exported to developed countries for power generation and if thermal coal production is aligned with the demand forecast applicable to each customer country.

While investors welcome our Company’s ambition to be net zero by 2050, the next iteration of the Climate Action Transition Plan would be improved by enhanced disclosure of the forward projections for thermal coal production and more frequent reporting against key milestones towards the 2050 net zero ambition.

Commenting on Meg O’Neill’s interview, Brynn O’Brien, Executive Director, The Australasian Centre for Corporate Responsibility (ACCR) said:

“Meg O’Neill has predictably confirmed that the only answer the oil and gas industry has to the energy crunch is to increase supply through fossil fuel expansion. Australian families are struggling with record high energy prices and those companies already war profiteering think it’s ok to push for greater gas dependency.

“As Chair of the oil and gas lobby APPEA, O’Neill is representing both a Woodside and an industry position.

“The government and investors in APPEA member companies need to see this and call this for what it is: self-interested lobbying that is inconsistent with the Paris Agreement’s goals.

“A lot has changed in the decade since the resources industry and their lobbyists campaigned against Kevin Rudd’s government over the mining super profits tax. APPEA is badly misreading the mood of the Australian people, who want prices to come down, and crucially, want action on climate. These things can and must co-exist in all Australian policy settings and the Albanese government has a mandate to deliver on both, not just one.

“Australian and global investors have repeatedly and loudly stated that lobbying for policy that goes against the Paris Agreement's objectives is unacceptable.

“Institutional investors in APPEA’s members, which include major listed companies Woodside, Santos, Origin Energy, Shell and BP, urgently need to make their expectations known.

“APPEA needs to be reined in.

“Another decade of policy gridlock in Australia bowing to the terms and conditions of the oil and gas lobby will hurt investors across their broad portfolios.

“Over the last two decades APPEA has been one of the most damaging forces on Australian democracy. APPEA’s successful lobbying on a range of policy issues is a substantial reason that we now face both of these crises -- energy and climate. Their decades-long lobbying effort has resulted in Australia’s dependency on volatile fossil fuel markets.

“Industry is now explicitly using this severe pricing issue to threaten the government, and to threaten Australian democracy. This is a tactic that has worked for them in the past, and it’s the playbook they feel entitled to use again.”

Commenting on the withdrawal, Naomi Hogan, Strategic Projects Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Glencore has listened to investors’  concerns and heeded warnings of snowballing investor pressure.

“This coal mine went against Glencore’s investor expectations and should never have even been considered.

“Medium to long term forecasts for thermal coal show global energy demand is flipping rapidly towards renewables - clearly faster than Glencore had factored when it put this coal monstrosity on the agenda.

“Earlier this year, Glencore received a clear message from almost a quarter of its shareholders: fix your climate plan and your approach to coal.

“Investors were clearly unhappy about the apparent contradiction between Glencore’s public commitments to 'run down' the existing coal portfolio, and  its pursuit of the highly polluting proposed Valeria coal mine.

“Investors have been engaging heavily with Glencore on coal production expectations. Building a new greenfield coal mine pumping out 16 million tonnes of coal out to 2067 would have been totally inappropriate.

“Withdrawing from this coal mine prevents over 1 billion tonnes of carbon emissions that would have been released when this coal was burned. That’s equivalent to roughly two and a  half years of Australia’s domestic emissions.

“Investors will continue to heavily scrutinise Glencore’s coal production going forward to ensure it is aligned with the commitments of the Paris agreement.

“Glencore’s review of the project’s future status should  result in the mine being taken off the books. A new coal mine of this cost and scale is a stranded asset risk and investors will be watching developments closely to ensure shareholder value is protected.

Commenting on Woodside’s results, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today’s investor briefing day was more of the same from Woodside Energy despite shareholders previously demanding greater climate ambition at its AGM.

“Whilst BHP is celebrating its restructured portfolio and its alignment with the megatrend of decarbonisation, its unwanted assets have been dumped onto Woodside who is now left holding the baby.

“New Energy is a mere footnote when compared to the rest of Woodside’s capital investment plans. A company prioritising the Trion oil and Browse LNG projects is not a company that’s committed to a credible transition.

“While the International Energy Agency notes that it is currently raining money for oil and gas producers, these conditions are unlikely to last - even with the war in Ukraine.

"Woodside has a track record of ignoring shareholder concerns time and again.This lack of responsiveness suggests a company unable to grapple with the reality that its strategy just doesn't pass muster.

"If Woodside wants to be a better steward of investor funds, it needs to wake up to the fact that demand for gas is forecast to decline. Continuing to spruik tickets to a show that's in its final act is just bad business."

Background

ACCR’s analysis of Woodside’s climate plan can be found here

Further details on the results from the Woodside AGM are here

Commenting on the MCA’s comments, Harriet Kater, Climate Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Australia’s democracy has been consistently and relentlessly undermined by resource company-funded scare campaigns.

“It is time for institutional shareholders in major mining companies to take a stand.

“An industry association is the sum of its parts and this recent threat to the Government’s policy agenda - which of course includes its climate policies - is brought to you by BHP, Rio Tinto and South32.

“If this campaign is implemented it risks a further extension of the climate wars.

“BHP and Rio Tinto must rein in the MCA immediately.

“Institutional shareholders have to be alert to the risks this time. They must engage early and forcefully with BHP, Rio Tinto and South32 to ensure they constrain the negative conduct of their industry associations.

“BHP, Rio and South32 remain complicit in this conduct as paying members of the Minerals Council of Australia.”

In addition, AGL received a ‘first strike’ on remuneration.

Commenting on the results of the meeting, Brynn O'Brien, Executive Director, The Australasian Centre for Corporate Responsibility (ACCR), said:

“History has been made today. The board of an Australian listed company has been transformed by shareholders over its handling of climate risks.

“This is both a victory for shareholders and a scathing indictment on those who spent years destroying shareholder value by delaying the inevitable in the face of an escalating energy transition. It is vital that lessons are learned from AGL’s colossal waste of time and shareholder funds.

“Today’s events have demonstrated that the direction of high emitting companies can change and that energy transition is an immense opportunity that must be harnessed to enhance shareholder value and mitigate climate risk.

“The boards of other high-emitting companies should be taking note of today’s outcome: climate risk management is an ever increasing pressure and those who remain flat-footed in the face of rapidly shifting market dynamics will be held to account.

“With a great combination of diverse energy expertise and climate ambition, this renewed board has the capacity to both enhance and execute AGL’s Climate Transition Action Plan in an increasingly competitive energy market, along with growing shareholder value.

“It now needs to attract a suitably qualified and dynamic CEO, which the board to date has struggled to do.

“Patricia McKenzie should be held accountable for her poor judgment since assuming the role of Chair. From her adversarial relationship with AGL’s largest shareholder to her dismissive attitude towards the skills and expertise of independent director candidates who shareholders have now roundly endorsed. The first strike AGL received on remuneration also demonstrates the Chair’s misreading of the expectations of large shareholders.

“At every junction, Ms McKenzie has taken the wrong turn.

“ACCR has been engaging with AGL since 2015, today's result is a vindication of the power of shareholder engagement to produce real change.”

Background

ACCR’s analysis and voting intentions regarding the AGL directors can be found here.

Disclosure of potential conflict of interest: Ms Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of an 11% interest in AGL. Ms Rosenberg has had no role in ACCR’s decision-making and analysis in relation to AGL and its CTAP, the directors proposed for election, and the expired takeover bids. No financial relationship exists between ACCR and Grok or any Mike Cannon-Brookes entity, and no Grok or Mike Cannon-Brookes entity is or has ever been an ACCR donor.

Commenting on the BHP AGM results, Harriet Kater, Climate Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“ACCR’s shareholder resolutions sought to enhance BHP’s climate policy advocacy, along with the company’s recognition of climate change in its financial statements. Surprisingly the BHP board recommended against both resolutions, undermining its supposed commitment to climate change action and best practice disclosure.

“These results were strong considering BHP’s unjustified resistance to the proposals.

“ACCR’s climate accounting resolution sought a greater recognition from BHP that climate risk is financial risk, by asking the company to present a climate sensitivity analysis, using a 1.5C-aligned scenario analysis, in the notes to its financial statements.

“BHP’s strong opposition to the climate accounting proposal has been quite startling given Origin Energy recently agreed to implement the same proposal and that the resolution text is aligned with the Climate Action 100+ Climate Accounting and Audit indicator. Having received 19% support, we expect BHP to engage more constructively with this issue moving forward.

“Since 2020 BHP has been telling its shareholders that limiting warming to 1.5 degrees will deliver the greatest value due to increased demand for its commodities. ACCR’s positive lobbying resolution simply asked that the company align its advocacy to that pathway - and that its advocacy also reflected what it was telling its shareholders.

“BHP is Australia’s largest company and it holds immense political power, which it willingly wields on various policy issues. It should be deploying its influence to enhance the probability of a 1.5 degree  pathway for shareholders.

“ACCR’s positive lobbying resolution is completely aligned with the recent UN High-Level Expert Group recommendations for net zero claims, which called for companies to advocate for ambitious climate policy, in order to create an “ambition loop” that drives the swift transition of our economies.

“Whilst BHP’s climate rhetoric is strong, the company is increasingly being shown up by its peers when it comes to ambition. Investors are noticing this and starting to question whether the culture at BHP is sufficient to genuinely steer the company to align with a net zero world.”

Background

ACCR’s shareholder resolutions filed with BHP.

All results for the BHP AGM can be found below.

Commenting on the published details of the proxy advice released by ISS and Glass Lewis, Brynn O'Brien, Executive Director, The Australasian Centre for Corporate Responsibility (ACCR), said:

“These recommendations make it almost certain that the AGL board is about to grow, with the addition of at least three directors put forward by Grok Ventures a likely result if conventional voting patterns are followed.

“This will be a good outcome for AGL shareholders who see huge opportunity in the company’s rapid decarbonisation.

“It’s difficult to see how Patricia McKenzie can continue as chair. Both reports reinforce governance concerns relating to Ms McKenzie, who was elevated into the role after a search that she oversaw failed to put forward any other candidate.

“ACCR’s own analysis concludes this too.

“But Ms McKenzie may now face further problems entirely of her own making. Given one of the key roles of chair is to unite and guide a board, her adversarial approach to the shareholder-nominated directors, some of whom are now likely to be sitting around the board table, looks extremely foolish.

“In particular, her statements casting doubt on the independence of the shareholder-proposed directors were unjustified — the proxy advice is abundantly clear that the nominated directors are independent.

“There is a lot of work for AGL’s board, however it is constituted after the AGM, to get on with. One of the first decisions directors will take is the appointment of chair, and it is fair to say that Ms McKenzie’s leadership has been destabilised by her own actions.”

Background

ACCR’s analysis and voting intentions regarding the AGL directors can be found here.

Disclosure of potential conflict of interest: Ms Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of an 11% interest in AGL. Ms Rosenberg has had no role in ACCR’s decision-making and analysis in relation to AGL and its CTAP, the directors proposed for election, and the expired takeover bids. No financial relationship exists between ACCR and Grok or any Mike Cannon-Brookes entity, and no Grok or Mike Cannon-Brookes entity is or has ever been an ACCR donor.

Commenting on the 2022 World Energy Outlook, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR), said:

“Despite fossil fuel demand projections steadily decreasing in previous versions of the WEO, this is the first year where every fossil fuel reaches peak demand in every scenario.

“The IEA has made it clear that the tragedy of the Ukraine war is a temporary sugar rush for fossil fuel companies.

“Today’s sky high prices are permanently destroying fossil fuel demand, especially for gas, but prices will normalise before any new fossil fuel investment can start generating revenue.

“This is all very embarrassing for Woodside CEO Meg O’Neill, who has habitually claimed the Ukraine crisis will prop up gas demand for decades, blatantly ignoring the risks that demand destruction presents to shareholders.

“In all but the highest emissions scenario, there is now enough LNG capacity operating or under construction to meet all LNG demand until at least 2050. Any new LNG project is now banking on our complete failure to manage climate change.

“Considering Woodside and Santos’ gas expansion plans, this is a major issue for shareholders. We are watching stranded asset risks emerge in real time.

“The IEA also concludes that coking coal demand in 2030 will be lower than today in every scenario, with further significant falls beyond 2030. This flies in the face of BHP’s claims that its coking coal business will be resilient in even a 1.5C scenario.

“It also demonstrates how absurd BHP’s proposed 90 year Blackwater South mine is, along with the 93 year extension being sought for the Peak Downs coal mine.

“For the Paris-aligned Net Zero Emission scenario, no new conventional oil and gas projects, or any coal mines or coal mine life extensions are needed. Any new fossil fuel project remains at odds with the Paris Agreement.

Background

The WEO includes three scenarios:

• The Stated Policies Scenario (STEPS) that results in 2.5C of climate change by 2100
• Announced Pledges Scenario (APS; 1.7C) and
• the Net Zero Emission scenario (NZE; 1.4).

The NZE is the only scenario that meets the objectives of the Paris Agreement.

This decision comes after many months of deliberation and a thorough process of evidence collection by the IPC, including strong evidence from the Heritage Council of NSW.

Commenting on the NSW IPC refusal, Naomi Hogan, Strategic Project Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Glencore’s proposal to relocate significant cultural heritage at the Ravensworth Estate was inconsistent with its own published social performance policy.

“Investors and the public should be able to rely upon the veracity of publicly-listed companies’ policies, and have confidence that a company’s actions will follow suit.

“This determination is a prime opportunity for Glencore to prove that its stated policy to protect cultural heritage is not simply a PR exercise. The company must now respect the decision of the Independent Planning Commission to protect this significant heritage site.

“The NSW IPC had an especially important responsibility in this case to ensure heritage values were properly considered. The IPC’s decision should go some way to restoring public and investor  confidence that the regulatory process for mining in NSW is operating effectively, rather than simply facilitating more coal mining at any cost.

“Glencore must now outline a clear and fair plan for its workers in the Hunter Valley to be in the best possible position to participate in the energy transition that is well underway.

“This decision, along with significant investor concern regarding Glencore’s coal expansion plans, should give the company pause with regard to pursuit of an appeal.”

Background

Glencore’s Social Performance Policy (page 3) states that the company will “appreciate and respect the importance of cultural heritage and seek to avoid, or where avoidance is not possible, minimise impacts on identified places, items or other aspects of historical and cultural significance”.

Glencore’s website states the company’s approach is, “committed to identifying, recording and protecting, in alignment with local regulatory requirements and best practice, cultural heritage and archaeologically sensitive locations on our landholdings.”

ACCR will also be voting against the re-election of AGL Chair, Ms Patricia McKenzie, on the basis of her previous record.

ACCR has engaged with AGL since 2015, on its management of climate risk, decarbonisation strategy, and governance matters.

In 2021, ACCR and shareholders - representing 53% of votes cast -  called for the company to disclose its Paris Agreement aligned goals and targets for the proposed demerged companies, and to publish details of how the proposed demerged companies’ capital expenditure would align with those targets.

Commenting on AGL's Climate Transition Action Plan, and the vote against AGL Chair Ms Patricia McKenzie, Brynn O'Brien, Executive Director, The Australasian Centre for Corporate Responsibility (ACCR), said:

“While there is no doubt that Ms McKenzie is a competent and capable company director in a general sense, her record at AGL is lamentable. Since 2019 she has held leadership roles on various committees responsible for significant value destruction and grave errors of judgement.

“Our governance concerns relating to Ms McKenzie’s elevation to the role of board Chair, after the nominations committee she chaired failed to identify any other suitable candidate, are well known and have been raised publicly, and directly with the company.

“While of course ACCR does not get a vote on the company chair (that being a matter for the board as constituted after the AGM), ACCR is using its vote on Ms McKenzie’s re-election to signal our opposition to her continued tenure as company Chair. ACCR does not object to Ms McKenzie remaining as a non-executive director.

“While AGL’s Climate Transition Action Plan represents progress against previous offerings, the bar was, frankly, low. This plan is not Paris-aligned, despite the company’s stated commitment to the Paris Agreement.

“AGL’s plan is insufficient in both ambition and detail to justify shareholder support at this AGM, let alone to carry the company through the critical next three years, as the company proposes.

“The pace of transition has been badly underestimated by AGL in the past. AGL needs to keep up with its competitors or risk destroying further shareholder value. ACCR will vote against the plan in its current form and is strongly of the view that the company should present a refined plan for a vote at the 2023 AGM, with the benefit of a new Managing Director and refreshed board.”

Background

Disclosure of potential conflict of interest: Ms Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of an 11% interest in AGL. Ms Rosenberg has had no role in ACCR’s decision-making and analysis in relation to AGL and its CTAP, the directors proposed for election, and the expired takeover bids. No financial relationship exists between ACCR and Grok or any Mike Cannon-Brookes entity, and no Grok or Mike Cannon-Brookes entity is or has ever been an ACCR donor.

Commenting on the commitment, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Shareholders have overwhelmingly endorsed Origin’s climate plan at the company’s AGM, the credibility of which was significantly enhanced following the company’s announced exit from gas exploration in the Beetaloo, Canning and Cooper-Eromanga basins.

“At Origin’s 2021 AGM, 44% of shareholders supported ACCR’s resolution seeking that the company align its capital allocation with a 1.5C pathway and the company changed its strategy accordingly. Today’s support for the CTAP is a ringing endorsement for Origin responding to shareholder expectations.

“Woodside should take a leaf out of Origin’s book.

“ACCR remains concerned about the nature of Origin’s exit from these exploration assets. Through entering a gas offtake with Tamboran, the company is still playing an enabling role in the development of carbon bombs like the Beetaloo basin.

“Whilst divesting exploration acreage moves emissions off Origin’s balance sheet, it may not prevent these emissions from being released. In fact if Origin divests to a junior explorer, this could simply turbocharge the developments.

“ACCR had filed a shareholder resolution with Origin that sought the inclusion of a climate sensitivity analysis in the notes to the company’s financial statements. Origin committed to doing this from FY23, hence we withdrew the proposal.

“Origin’s commitment to disclose the impacts of a 1.5C climate sensitivity from next year acknowledges that climate risk is financial risk. We expect all fossil fuel companies to rigorously disclose climate risk in their financial statements and welcome Origin’s leadership in this space.

“ACCR will be closely watching the conduct of non-executive director Greg Lalicker, who received 98% support for his re-election. We had highlighted to shareholders that Lalicker is CEO of private oil and gas company Hilcorp Energy, which has been named two years running as the highest methane and CO2 emitter of any upstream oil and gas company operating in the United States.”

Background

The resolutions and supporting statements for Origin can be found here.

The move comes despite BHP announcing in its August 2022 full year results that any BMA metallurgical coal growth was “on hold” and that “in light of the Queensland royalty announcement, BMA is reassessing future investment decisions”.

Commenting on the application, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“BHP’s move to extend the Peak Downs coal mine for 93 years to 2116 is delusional. What part of net zero by 2050 does it not understand?

“The company has been speaking out both sides of its mouth on climate change for too long.

“It is hard to imagine that BHP’s carefully curated reputation for climate leadership can withstand such decisions for much longer.

“BHP seeking coal expansion over this time horizon makes it clear why the company is telling  shareholders to vote against ACCR’s climate resolutions at its November AGM.

“BHP appears unable to get with its own program of climate change action, let alone advocate for climate policy that is consistent with limiting warming to 1.5°C. This is in spite of it disclosing since 2020 that a 1.5°C pathway will drive the greatest value for shareholders.

“Whilst Fortescue recently turbo-charged its pursuit of the post-fossil fuel era, BHP continues to plod along with business as usual commitments that are dressed up as leadership.

“The company has even refused to adjust its 30% by 2030 emissions reduction target after the divestment of the Petroleum division to Woodside.

“Investors genuinely thought the culture of the company might have shifted following the petroleum divestment.”

Background

ACCR’s investor brief on the shareholder resolutions filed with BHP can be found here. This includes our response to the company’s comments in the Notice of Meeting for its 10 November AGM.

BHP states that BMA growth is on hold on Page 18 and points to the Queensland royalty decision on page 31 of its Full Year Results presentation.

Commenting on AGL’s announcement, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The Board of AGL has finally listened to its shareholders and accepted that this ageing, polluting coal-fired power station is incompatible with the energy transition and a serious risk to company value.

“It is hard to determine what caused the penny to drop in the AGL boardroom. Was it the embarrassing defeat of the demerger, a new federal government, the rejection of a proposed chair or the final acceptance that shareholder value was at grave risk if Loy Yang stayed online into the 2040s?

“This announcement now means up to 200 Mt CO2-e will not be released into the atmosphere, and is evidence that active engagement strategies, pursued by major shareholders, can have material emissions outcomes in the real world. Those future-focused shareholders that have stayed the course and pushed for change have had a measurable impact on decarbonisation.

“Whilst the  decision to close Loy Yang sooner is welcome, AGL is still not on a pathway that is aligned with limiting warming to 1.5C. Regardless, this is a positive development in the right direction.

“With constant maintenance challenges, it is quite possible that Loy Yang A will struggle to remain open as late as 2035. AGL would be wise to plan for this scenario considering the implications for its workforce and the Latrobe Valley Community more broadly.

“The early retirement of Loy Yang forms a significant pillar in AGL’s Climate Transition Action Plan, which will be put to an advisory vote at the company’s 15 November AGM. The company has also set an interim target to have 5GW of renewables and firming in place by 2030, surpassing Origin’s recent 2030 commitment of 4GW.

“This builds on what has already been a big year of major climate announcements for ASX-listed companies, with BHP and South32 abandoning the Mt Arthur and Dendrobium mine extensions and Origin bringing forward the closure of Eraring and exiting the Beetaloo Basin. These significant developments were born from years of community and shareholder pressure.

“ACCR encourages all shareholders in fossil fuel companies to use their power to push for decision-making compatible with the energy transition and a viable financial future for investors.”

ACCR introduced the resolution because companies exposed to the energy transition and the physical risks of climate change need to show shareholders the financial consequences.

In the 2022 Notice of Meeting (pg 13), in response to the ACCR resolution, Origin stated: “We support including a climate sensitivity analysis using a 1.5°C scenario in our financial statements and commit to doing so from FY2023”.

Commenting on the commitment, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is a win for shareholders. Origin’s commitment to include a climate sensitivity analysis using a 1.5°C scenario in its financial statements is welcome and represents a significant step towards this commitment being normalised across the ASX.

“Climate risk is financial risk, it belongs in financial statements. Regulators and investors expect this. Origin’s plans to disclose a sensitivity to 1.5°C reflects growing global momentum to embed climate change in financial statements.

“Since filing the resolution, ACCR has received significant positive feedback from investors and we welcome Origin’s response. We are now pleased to withdraw the resolution.

“Although Origin did not commit to disclosing the climate risk associated with its exploration assets, it subsequently announced that it is exiting its exploration activities, meaning that this part of ACCR’s resolution became less relevant.

“Shareholders have been expected to vote on climate transition plans, but without the necessary information to understand how climate change impacts their investment. A failure to reflect climate change in financial statements calls into question the governance of directors and the diligence of auditors.

“Reflecting climate risk in financial statements is not a radical ask - it’s just good practice. As such, ACCR expects all ASX-listed fossil fuel producers to follow Origin’s lead.

“BHP is facing a similar resolution at its November AGM but has not yet made a commitment to support the resolution.

“ACCR will continue to monitor Origin Energy’s commitment to ensure the board undertakes disclosures that can give investors comfort that any assumptions and impairments under a 1.5°C pathway are transparent.”

Background

The resolutions and supporting statements for Origin can be found here.

For further context, see 2021 report “Flying Blind: the glaring absence of climate risks in financial reporting” released by Carbon Tracker and UNPRI.

The Climate Action 100+ Net Zero Company Benchmark is now assessing company financial statements and audit reports against indicators. See here for the indicators and the methodology. See here for Origin Energy’s scores in the 2022 assessment.

Similar resolutions were filed by As You Sow with Chevron and by the Christrian Brothers Investment Services at Exxon earlier this year, receiving 38.7% and 51% support respectively.

Commenting on the appointment, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Previous iterations of the Safeguard Mechanism have had little impact because industry has negotiated complicated rules and was allowed to set its own limits.

“Industry can not realistically set its own limits if we want real emissions reductions.

“Whilst emissions from the rest of the economy have decreased since 2005, Australian industrial emissions have increased by 17%. Industry is not only failing to reduce its emissions - they have been increasing. This is unacceptable.

“Industry analysis has concluded it can drastically reduce its emissions by 88%, so this is the time for a Safeguard Mechanism with teeth, there’s no longer any excuse not to.

“For industry to meet its fair share of Australia’s 2030 emissions reduction target, the Government will need to double the ambition for the Safeguard Mechanism, with annual reductions of at least 10 million tonnes of greenhouse gases. If carbon bombs like Browse and Beetaloo proceed, the associated emissions will transfer a greater emissions reduction task to every other Australian project.

“Strict limits must be placed on the use of carbon credits, which should be capped at 5% to prevent industry outsourcing its emissions reductions to the land sector.

“And although the LNG industry has already started calling for handouts and special treatment, the Government must remember that the last carbon price didn’t stop Australia becoming the world’s biggest LNG exporter. Special treatment is unnecessary and risks not only the efficiency of our own policy, but also a vast increase in global emissions.”

Commenting on the announcement, Harriet Kater, Climate Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Origin’s recently released Climate Transition Action Plan consistently skirted around its exploration business, for which it allocated 19% capex in FY22.

“And now we know why. Divestment of fossil fuel assets does not reduce emissions - it just shifts them - almost always to even less responsible owners.

“Origin will still receive up to 36.5 petajoules of gas per annum from a successful Beetaloo development, so is still directly invested in Beetaloo’s development.

“With the gas offtake and 5% royalty payments, this is more like a conscious uncoupling than full throttle divorce from the Beetaloo Basin.

“This is just more greenwashing. Divestment is not a solution to reducing real world emissions. Divestment is simply passing the hot potato to the next asset holder.

“Origin describes Tamboran as an operator that is committed to developing these gas resources. Gas production from the Beetaloo would unleash hundreds of millions of tonnes of CO2 over the coming decades.

“Origin has faced years of sustained local opposition, reputational damage, restrictive environmental regulations and high costs by persisting with its exploration in the Beetaloo basin. It is surprising it took so long to exit the project.

“In announcing a $70-90m loss, Origin is also showing that its exploration strategy has not been in investors’ interests.

“Rather than seeking further buyers, Origin should commit to wind down its permits in the Canning, Cooper and Browse basins.

“The structure of the Beetaloo divestment means that Tamboran inherits the major governance risks associated with being in a joint venture with Falcon Oil and Gas, which is part owned by sanctioned Russian oligarch Viktor Vekselberg.”

Commenting on the appointment, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The announcement that three key architects of AGL’s failed demerger are finally exiting the board will provide investors with comfort that the company could be more open to fresh ideas.

“The board renewal process has been sluggish to say the least.

“The fact the same board that delivered the failed demerger was continuing to progress the forward-looking strategy was becoming untenable.

“New Chairperson Patricia McKenzie was leading the board renewal process. After some well publicised false starts, she has ended up as the final pick. This whole process has been questionable and raises governance concerns.

“It is disappointing that AGL has appointed a Chair who is so close to its previous failed vision.

“Investors could not be clearer: AGL needs a Chair who can deliver a vision for the decarbonised energy needs of the 21st century. More of the same is not going to cut it.

“Mckenzie joined the AGL board in May 2019 and was the nominated chair for ‘CleanCo’ or AGL Australia, had the demerger been successful. Her background is weighted towards the gas industry so it will be interesting to observe her views on opportunities for AGL around electrification.

“It is encouraging to see Miles George, former Chair of the Clean Energy Council and CEO of Infigen Energy, announced as an independent non-executive director. These are the skills that the AGL board sorely needs.

“AGL remains committed to providing its shareholders with a vote on its transition strategy, a Say on Climate, at the 15 November AGM.

“There can be no running away from shareholders at the AGM, McKenzie as Chair needs to take ownership and deliver a credible, multi-decade transition plan for shareholders to vote on. Investors are sick of the can being kicked down the road.”

Background

Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is also a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of a 11% interest in AGL. This potential conflict has been disclosed and Ms Rosenberg has had no role in ACCR’s decision-making on this matter.

Commenting on the announcement, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“When the International Energy Agency clearly states that no new oil and gas projects can be approved in a 1.5C scenario, Woodside’s claim that Browse is Paris aligned is not just alarming but certifiably insane.

“Despite having been rejected by Woodside’s board, Browse just won’t die.

“Browse is yesterday’s false solution to today’s energy crisis. It can’t start producing until 2030 and will continue causing climate damage beyond 2060.

“Browse will result in more than 1.6 billion tonnes of emissions.

“At this year’s AGM, Meg O’Neill said Browse will need to ‘manage its carbon’ if it’s to proceed. The updated environmental approvals still fail to seriously consider Browse’s emissions. It doesn’t even try to claim carbon capture and storage will reduce emissions and instead relies purely on the crutch of offsets.

“49% of Woodside’s shareholders voted against the company’s climate transition plan at the 2022 AGM. Progressing Browse is in clear contempt of Woodside’s shareholders. Board renewal is certainly an option given Woodside fails to listen to its shareholders.”

Commenting on HESTA’s remarks, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This public signaling from HESTA on the importance of engagement and in holding fossil fuel companies to 1.5°C pathways is an extremely welcome development. This level of transparency around engagement objectives with specific companies sets a new standard for best practice.

“Forceful engagement is the most immediate option available to constrain the current and planned climate damage inflicted by listed fossil fuel companies.

“The boards of fossil fuel companies need to be held to account - and their jobs need to be on the line if they continue with  strategies that are in direct contrast to what they have committed to.

“There are abundant opportunities for HESTA’s public leadership to play an important role in challenging companies on the incompatibility of their plans with 1.5°C.

“Origin must be taken to task on the incompatibility of its exploration activities in the Beetaloo, Canning and Lake Eyre Basins with its stated commitment to 1.5°C.

“Additionally, the job is not over with AGL. In particular we need to see the closure date of Loy Yang A brought forward from the 2040s to the early 2030s at the latest.

“Similarly there is a lot of work to do with Woodside, which is running with open arms towards major stranded asset risk by progressing the Browse and Sunrise projects under the guise of energy security.

“ACCR remains concerned with the disappointing trend in the institutional investment community with funds backing away from 1.5°C ambition. This is reprehensible as we observe the catastrophic flooding in Pakistan, the searing heatwaves and drought in China and wildfires in London. These funds clearly haven’t contemplated the full economic and societal impacts of warming beyond 1.5°C.

Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Despite turbocharged profits, Woodside continues to procrastinate with its energy transition.

“This is in contrast to repeated so-called commitments to the Paris target of maintaining warming to well below 2 degrees.

“Rather than invest its fossil fuel profits to transition its business, Woodside has doubled down on more oil and gas.

“Gas is not the solution. It’s the problem.

“The only mention of low carbon technology in today’s announcement is to use carbon capture and storage in an attempt to justify progressing the massive Browse gas field. Browse has already been rejected by local communities and even Woodside’s board.

“With Woodside continuing to ignore investor demands, it’s time for investors to appoint climate competent directors.

“Following the 49% vote against its climate plan, Woodside needs a strategy that aligns with climate science and allocates capital accordingly. Failing this, investors should prepare to vote against directors at the 2023 AGM.”

This page contains the resolutions and supporting statements.

Resolution 1 - Special resolution to amend our company’s constitution

Member resolutions at general meeting

The shareholders in a general meeting may by ordinary resolution express an opinion, ask for information, or make a request, about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution must relate to an issue of material relevance to the company or the company's business as identified by the company, and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company.

Resolution 2 - Ordinary resolution on company consistency with limiting warming to 1.5°C

Shareholders request that our company proactively advocate for Australian policy settings that are consistent with the Paris Agreement’s objective of limiting global warming to 1.5°C.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.

Supporting statement to Resolution 2 (983 words including footnotes)

This resolution addresses our company’s potential to exert climate-positive policy influence in Australia. Australia is a long-time laggard on climate policy, but a recent change in government means that there is an immediate opportunity to accelerate the decarbonisation of its economy. The fossil fuel lobby remains the biggest impediment to Australia’s transition.

Our company is the largest in Australia with significant influence and reach across the economy, politics and society. Our company states that it understands the “urgent global challenge”^[1] of climate change and the IPCC’s warning that warming of 2°C will have significantly worse consequences than limiting warming to 1.5°C.^[2] Given this understanding, and the major opportunity our company sees for its commodities from rapid decarbonisation,^[3] it is reasonable for shareholders to expect that our company uses its significant influence to call for policy that will enhance the probability of limiting warming to 1.5°C. Such efforts will protect and indeed enhance long term shareholder value.

2021 shareholder resolution

In 2021, our company supported a shareholder resolution which sought that it review its industry associations, identify areas of inconsistency with the Paris Agreement, and suspend membership if inconsistency was identified. We look forward to seeing our company’s 2022 industry association review and expect an exit from the Queensland Resources Council at a minimum, due to its ongoing advocacy for thermal coal.^[4]

Whilst constraining the negative advocacy of industry associations is crucially important, this resolution seeks that our company also independently advocates for climate policy that is 1.5°C aligned. We would expect such advocacy to be in the public domain and also with government policy makers.

Miners of future-facing metals must counter the fossil lobby

The 2022 IPCC Working Group III report on Mitigation of Climate Change identified that a major threat to limiting warming to 1.5°C is the “power of incumbent fossil fuel interests to block initiatives towards decarbonisation.”^[5] Australia received a special mention, with the IPCC stating that “campaigns by oil and coal companies against climate action in the US and Australia are perhaps the most well-known and largely successful.”^[6] The coal lobby, including our company’s industry associations such as the Minerals Council of Australia (MCA), continues to play a damaging role in Australia.^[7] Whilst the recent federal election in Australia set the stage for increased national climate ambition, there are signs that the MCA^[8] and the oil and gas industry^[9] will be seeking to water down the effectiveness of evolving climate policy.

Unsurprisingly, campaigns that are oppositional to rapid decarbonisation are wielded by industries that have the most to lose as the world transitions away from fossil fuels. The share of our company’s revenue that is driven by fossil fuels has further declined as a result of the BHP Petroleum spinoff. Diversified mining companies have a significant amount to gain from ambitious climate policy,^[10] yet these companies are insufficiently supportive of such policies. It is not in our company’s interests to be silent or ambiguous about its preferred policy positions, particularly since the fossil fuel lobby is so vocal and obstructive.

Our company’s influence

Our company is very willing to wield its political influence on issues that it sees as a threat to its business. In 2010, it helped to bring down Australian prime minister Kevin Rudd due to his proposed super profits tax for the mining industry.^[11] In 2017, our company lobbied against a proposed mining tax in Western Australia that saw a party leader lose his seat.^[12] In 2022, it has thrown its weight behind an emerging campaign against the Queensland government’s coal royalty rate rise.^[13]

History shows that our company can get what it wants by way of policy in this country. Whilst such aggressive lobbying against taxation is not condoned, shareholders should question why our company is not applying a similar assertive approach to advocacy for the policy settings required to limit warming to 1.5°C. On numerous occasions, such as when our company^[14] and its industry associations were successful in campaigning for the repeal of Australia’s carbon pricing mechanism,^[15] our company has used its influence to undercut climate action.

Whilst there are some promising early signs our company may start to advocate for the opportunities and new sources of national prosperity from decarbonisation,^[16] it is not yet using its extensive political influence to enhance the ambition of climate policies in Australia in support of 1.5°C.

Policy opportunities

As a major winner from rapid decarbonisation, our company should consistently and positively advocate in line with the 1.5°C goal. Specific advocacy opportunities include:

• Publicly supporting significantly enhanced ambition in Australia’s Nationally Determined Contribution for 2030 and 2035.
• Advocating for the Australian government’s Safeguard Mechanism^[17] to incentivise real reductions in industrial emissions over land based offsets, for scheme settings to allow for ambition to be ratcheted up, and to prevent carve outs or loopholes.
• Proactively engaging with policy ideas to decarbonise Australia’s mining industry, such as proposals to phase out the fuel tax rebate for the mining sector to incentivise the electrification of mine haulage.^[18] Just last year the MCA, our company’s industry association, aggressively resisted such a proposal.^[19]
• Openly supporting proposals to insert a climate trigger for state and federal government project approvals.
• Actively supporting enhanced renewable energy rollout and electrification policies.
• Advocating for the adoption of best practice technologies to accurately measure methane fugitives from coal mining, including the use of local ground based monitors, satellites and aerial surveys.
• Lobbying governments to establish enabling policy for a global green iron and steel industry.
• Working to ensure none of its industry associations are lobbying against a 1.5°C trajectory.

It is expected that our company considers the climate implications of all of its direct and indirect policy advocacy and aligns its approach to 1.5°C.

ACCR urges shareholders to vote for this proposal.

Resolution 3 - Ordinary resolution on climate accounting and audit

Shareholders request that from the 2023 financial year, the notes to our company’s audited financial statements include a climate sensitivity analysis that:

• includes a scenario aligned with limiting warming to 1.5°C,
• presents the quantitative estimates and judgements for all scenarios used, and
• covers all commodities.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.

Supporting statement to resolution 3 (941 words including footnotes)

Our company ‘believe[s] the world must pursue the aims of the Paris Agreement’ and it aims to ensure its ‘capital expenditure plans are not misaligned with the Paris Agreement’s aim to pursue efforts to limit global warming to 1.5°C’.^[20] Despite this, and against investor expectations, our company does not adequately consider climate change in its audited financial statements.

In the 2022 CA100+ Net Zero Company Benchmark, our company’s 2021 financial statements and audit report were reviewed for the provisional Climate Accounting and Audit assessment.^[21] Our company met one of the seven assessment criteria. The audit report^[22] in our company’s 2022 financial statements discloses qualitative information regarding climate change, which may meet one further criteria, leaving five criteria unmet. This exclusion of climate risks from our company’s financial reporting and audit “reduces an investor’s ability to make investment, engagement and voting decisions”.^[23]

Implementation of this resolution

By adhering to the ask of this resolution, our company is expected to include the following in the notes to its financial statements:

• Scenarios and assumptions: Explain which scenarios have been used and the quantitative assumptions they include. Explain and justify any deviations from commonly used scenarios, such as the IEA or the Network for Greening the Financial System Net Zero by 2050 scenarios. This includes detail on 1.5°C overshoot and key variances in commodity price assumptions.
• Results: Disclose how the transition and physical risks affect asset valuation and impairments, provisions and credit losses in the different climate scenarios. Provide results by commodity.

It is also expected that the audit report demonstrates the auditor has assessed the impacts of climate-related matters, ensured the veracity of the scenario(s) selected and identified inconsistencies between the financial statements and other information, such as climate change disclosures.

Our company’s value is sensitive to climate change

Our company states it “is exposed to a range of transition risks that could affect the execution of our strategy or our operational efficiency, asset values and growth options, resulting in a material adverse impact on our financial performance, share price or reputation, including litigation. The complex and pervasive nature of climate change means transition risks are interconnected with and may amplify our other risk factors”.^[24] Changing weather patterns and more extreme weather events, driven by climate change, also directly confront our company's business operations.

Whilst the energy transition presents significant upside for a number of our company’s commodities, transition risks have been realised for the New South Wales Energy Coal Cash Generating Unit (CGU), as seen in the restated 2021 financial statement, when it was impaired by $1,057 million due to “changes in energy coal prices”.^[25]

Many credible agencies, including the Reserve Bank of Australia,^[26] have published data showing reduced demand for Australian metallurgical coal in low carbon scenarios. This suggests our company’s metallurgical coal assets may also be at risk of impairment in a below 2°C or 1.5°C pathway.

Consistent with investor expectations

In 2020, investor groups representing over US$103 trillion AUM globally issued a letter seeking that companies reflect climate-related risks in financial reporting.^[27]

Subsequently, the Institutional Investors Group on Climate Change (IIGCC) outlined its 'unequivocal' expectation that companies and auditors will deliver 'Paris-aligned accounts', defined as "accounts that properly reflect the impact of getting to net zero emissions by 2050 for assets, liabilities, profit and losses".^[28] IIGCC expects directors to: affirm that the Paris Agreement goals were considered in preparing the accounts; explain, in the Notes, how critical accounting judgements are consistent with NZE by 2050 (or if these assumptions are not used, why not); present results of sensitivity analysis around Paris-aligned assumptions; state any implications for dividend paying capacity of Paris-alignment. IIGCC also expects companies to account for any inconsistency between its narrative reporting on climate risks and the assumptions made in accounting.

CA100+'s Net Zero Benchmark assesses whether company accounting disclosures and practices adequately reflect climate change risk, and the global movement towards NZE GHG emissions by 2050 or sooner. The CA100+ initiative —representing more than 700 global investors managing AUM $68 trillion— expects that 'net zero aligned' companies and auditors will provide investors with oversight of how accelerating decarbonisation, in line with the 2050 trajectory, will affect a company's financial position and profitability.^[29]

Some investors are already expressing their expectations around reflection of climate in company financial statements and audits in their voting decisions.^[30]

Consistent with accounting standards

Existing Australian and global accounting standards set an expectation that climate-related risks are integrated into financial statements.

The Australian Accounting Standards Board (AASB) Practice Statement 2, Making Materiality Judgements, is clear that 'information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity'.^[31] Therefore, and as the AASB/AUASB noted in 2019, investor statements on the importance of climate-related risks to their decision-making will often render these risks 'material' to a company, requiring them to be reflected in financial statements.^[32]

Our company considers climate change to be ‘a material governance issue and a strategic issue’.^[33]

In 2020, the International Financial Reporting Standards (IFRS) board issued an implementation document explaining how elements of 12 separate IFRS standards may introduce requirements to make climate disclosures in financial statements.^[34]

Finally, if Australia develops sustainability-related reporting requirements that are aligned with the ISSB [Draft] IFRS S2 Climate-related Disclosure standard,^[35] the AASB has stated these will ‘supplement and complement’ information provided in financial statements.^[36] Consequently this shareholder resolution is a complementary extension of the anticipated sustainability standards.

ACCR urges shareholders to vote for this proposal.

Australasian Centre for Corporate Responsibility

Commenting on the resolutions, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Since 2020 BHP has been telling its shareholders that limiting warming to 1.5°C is the best outcome for the company. BHP needs to move beyond its industry associations by positively advocating for the ambitious policy needed to get Australia on track for a 1.5°C pathway.

“BHP is Australia’s largest company with huge political influence and a massive opportunity to align business interests and policy with a safe climate.

“In its 2022 report on the mitigation of climate change, the IPCC identified the influence of the fossil fuel lobby as a major barrier to decarbonisation. The industries with the most to gain from decarbonisation must speak up and counter the policy stranglehold of the oil, gas and coal lobby.

“BHP remains a member of industry associations that have a toxic influence on Australia’s climate policy. This resolution does not let BHP off the hook from also having to constrain the advocacy of those associations.

“We have already seen members of the LNG industry seeking to undermine the Safeguard Mechanism. BHP must step up as it has a critical role in advocating for comprehensive, effective policy that drives the swift decarbonisation of Australia’s industrial sector.

“BHP is generally regarded as a leader in climate disclosures and yet it is still playing catch up on the incorporation of climate change in its financial statements.

“With the demerger of BHP Petroleum and the decision to wind down Mt Arthur, BHP is less exposed to climate transition risks. However shareholders need further detail on how its metallurgical coal business will perform in a credible 1.5°C scenario.

“The need to reflect climate change in financial statements is not specific to BHP.  All companies exposed to the transition and physical risks of climate change need to show shareholders what the financial consequences might be.”

Background

In 2021, BHP supported an ACCR shareholder resolution which sought that it review its industry associations, identify areas of inconsistency with the Paris Agreement, and suspend membership if inconsistency was identified.

ACCR has filed the same shareholder resolution seeking a climate sensitivity in the audited notes to its financial statements to Origin Energy’s 2022 AGM.

Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Origin states that it unequivocally supports the Paris Agreement, but continues to allocate capital to exploring for new fossil fuel reserves.

“Investors can no longer accept such contradictions.

“In a feat of mental gymnastics, Origin claims the current and future emissions from its exploration activities don’t count, since they may not amount to anything. This begs the question: why is Origin wasting investor funds on exploration activities that will either breach their climate targets or fail?

“The decision to exclude the significant new Beetaloo, Canning and Cooper-Eromanga gas basins from its medium term targets means the company is ignoring major potential emission sources.

“Origin enthusiastically promotes the massive resource potential of these gas basins to justify capex spending, yet falls silent when it comes to admitting the greenhouse pollution impacts.

“If Origin was serious about limiting warming to 1.5°C, it would stop spending shareholder money on gas expansion.

“Ernst & Young signed off on this approach, saying that it is “reasonable” and “defensible”. The role of auditors in facilitating potential greenwash must be addressed as a governance issue.”

Background

ACCR will be producing a detailed analysis of Origin Energy’s Climate Transition Action Plan in the coming weeks, which will be made available on our website.

ACCR has filed a shareholder resolution to Origin’s 2022 AGM requesting the company include a climate sensitivity in the audited notes to its financial statements. This request is designed to address the way climate change is handled separately in sustainability reporting, often with conflicting assumptions to those used in financial statements.

Last year the Australasian Centre for Corporate Responsibility (ACCR) commenced proceedings in the Federal Court alleging that Santos Ltd has breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to its “clean energy” claims and its Net Zero plan in its 2020 Annual Report.

This was the first court case in the world to challenge the veracity of a company’s net zero emissions target, and raises important questions about the role of carbon capture and storage (CCS) and blue hydrogen in the transition to zero emissions.

ACCR has now filed to expand its case to include alleged greenwashing in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report, following additional information produced by Santos in the litigation discovery process. Acting on behalf of the ACCR, lawyers from the Environmental Defenders Office (EDO) have filed the amended pleadings in accordance with orders of the Court.

Some of the additional allegations raised by ACCR include:

• Santos’ representations that hydrogen produced from natural gas with CCS (blue hydrogen) is “clean” or “zero emissions” constitutes misleading or deceptive conduct. ACCR says that blue hydrogen production would increase Santos’ greenhouse gas emissions, and it is not practical or commercially viable for Santos to capture all of the increased emissions using CCS.
• Santos’ Net Zero representations failed to disclose that:
  • its Net Zero plan does not account for expected production and/or emissions growth from oil and gas exploration opportunities beyond 2025;
  • the ‘CCS Expansion’ portion of the Net Zero plan actually reflects offsets which Santos will apparently seek to procure.  It does not represent modelled reductions in Santos’ own emissions, but instead is a nominal number making up the difference to net zero;
  • the ‘Hydrogen with CCS’ portion of the Net Zero plan also reflects offsets which Santos will apparently seek to procure.  Again, it does not represent modelled reductions in Santos’ Scope 1 and 2 emissions, but instead depends upon Santos receiving offsets for reducing its customers’ Scope 1 and 2 emissions through the sale of blue hydrogen.
  • the ‘Hydrogen with CCS’ portion of the Net Zero plan also assumed that Santos would blend 30-50% hydrogen into the natural gas network, whereas Santos had no reasonable basis for assuming it could blend more than 10%.

Commenting on the Federal Court proceedings, Brynn O’Brien, Executive Director of ACCR, said:

“The litigation discovery process has revealed further instances where we contend that Santos has engaged in greenwashing.

“We allege that Santos misled investors and the public about its plan to achieve ‘net zero’ by 2040 and to produce "zero-emissions" blue hydrogen. The documents produced by Santos have heightened our concerns that these plans lacked sufficient detail to be put into the market.

“Investors rely on company disclosures and have a right to complete, open and honest information relating to a company they are investing, or considering investing, in.

“Unfortunately ACCR isn’t able to share the Amended Concise Statement at this time.  Santos has opposed the document being made freely available on the Federal Court website.

“We look forward to the court’s review and adjudication of Santos’ conduct.”

Zoe Bush, Senior Solicitor at the EDO, said:

“About 70% of the ASX200’s market capitalisation is now covered by net-zero claims. As companies rush to convince the market that they are part of the global energy transition, full and frank disclosure has never been more important.

“There are serious questions about the future of the gas industry in the face of the global energy transition. Gas companies such as Santos increasingly pin their hopes on carbon capture and storage and blue hydrogen to remain financially viable during that transition. It is critical that companies are transparent about the greenhouse gas emissions associated with these processes, and their risks and uncertainties.

“Misleading information can impede an effective and timely response to the climate crisis. It may also leave investors vulnerable to major losses and potentially unfairly skew the market away from companies that are acting responsibly.”

Background

ACCR claims that by making the above representations, Santos has engaged in conduct that was misleading or likely to mislead in contravention of s 1041H of the  Corporations Act 2001 (Cth) and/or s 18 of the Australian Consumer Law (ACL) (Schedule 2 of the  Competition and Consumer Act 2010 (Cth)). Further, in making representations that gas is a ‘clean’ fuel or energy source, and blue hydrogen is ‘zero emissions’ or ‘clean’, ACCR claims that Santos engaged in conduct that was liable to mislead the public as to the nature,  characteristics, suitability and quality of Santos’ goods (being ‘natural’ gas and blue hydrogen), contrary to s 33 of the ACL.

ACCR is not able to share the Amended Concise Statement at this time. Santos has opposed the document being made freely available on the Federal Court website.

At the present time, the Amended Concise Statement is available to members of the public by applying to the Federal Court using the process outlined at https://www.fedcourt.gov.au/services/access-to-files-and-transcripts/court-documents

More detailed information can be found here.

Commenting on South32’s announcement, Naomi Hogan, Strategic Projects Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is an extremely welcome announcement from South32, particularly as CEO Graham Kerr has stated the company will instead reserve the ~US$700m capex for mining projects that are supportive of the energy transition.

“The alternative mine options considered due to the major risks the original plan posed to Sydney’s drinking water catchment have undermined the project’s economics.

“The fact that South32 is walking away rather than lobbying to revert to the original mine plan is a great outcome for the people of Sydney and investors who would have been carrying the risks associated with this project.

“There were some concerning signs of corporate and political influence on the process to get the Dendrobium mine extension classified as State Significant Infrastructure in order to avoid the Independent Planning Commission process. This outcome renders those efforts null and void.

“As coal mining recedes in the Illawarra region, the community must be prioritised by South32 and the NSW government to ensure transition opportunities are maximised as the region diversifies.

“This outcome should provide a further driver for Bluescope Steel to accelerate its ambition for green steel processing opportunities going forward.

“South32 is providing shareholders with a vote on its climate transition plan at its October AGM. The company’s decision to no longer pursue this coal mine expansion and to prioritise future facing metals bodes well for what investors might expect from this plan.”

Commenting on AGL’s annual results, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Today’s results drive home why it is in shareholders’ interests to bring forward the closure of AGL’s antiquated coal fired power stations.

“The Loy Yang A unit outage occurred in the midst of a raging energy crisis, failing not only AGL shareholders but all consumers across the national electricity market.

“AGL also burned around $145 million of shareholders' money on the abandoned demerger.

“The company states that its strategy review process will be completed in September and yet we still have no new Chair and CEO. These unexplained delays in appointing new leadership put the new strategy at risk.

“Today AGL has confirmed it will release a Climate Transition Action Plan to be voted on at the 2022 AGM. Whilst ACCR encourages the provision of a Say on Climate, shareholders will understandably question the timing of this particular vote.

“It is absurd that the same board that oversaw the failed demerger and extraordinary value destruction is responsible for forward-looking strategy. How can investors have confidence in a transition plan developed without the involvement of future company leadership?

“There is increasing agitation amongst AGL investors around the pace of board renewal and CEO recruitment.

“A market announcement from June stated that the Chair replacement process was ‘well advanced’ and yet the same language is being used today, two months later. Diane Smith-Gander, who was due to exit the board today, is also staying on until the November AGM.  Chair Peter Botten must urgently and transparently explain the reasons for the recruitment delays.

“At this point, AGL seems to be managing their board renewal and recruitment about as well as they managed their demerger.”

Background

The 30 May 2022 ASX release announcing the board departures and recruitment plans can be found here

Commenting on the release of the Safeguard Mechanism discussion paper, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Ever since the repeal of the Gillard government’s carbon price, heavy carbon emitters in Australia have essentially been unregulated.

“There has been no consequence for them using the atmosphere as a carbon dumping ground.

“Whilst the Safeguard Mechanism was introduced in 2016, it was intentionally configured to be toothless by the Coalition government.

“The commencement of this consultation is the potential dawn of a new era for regulation of heavy emitters in Australia - subject to the extent of industry influence on this process.

“Lobbying to diminish the effectiveness of the scheme will be like a blood sport for groups such as the Australian Petroleum Production and Exploration Association (APPEA), the Minerals Council of Australia and the Australian Industry Greenhouse Network.

“These industries are used to getting their way when it comes to climate policy in this country. The climate wars have suited them just fine.

“Industry will be arguing for maximum flexibility, minimum obligation in the final scheme design.

“ACCR strongly encourages investors to monitor the conduct of companies and their industry associations throughout this policy design process. Companies supposedly committed to net zero by 2050 will very likely be lobbying against that outcome.

“Key aspects for consultation relate to the level of ambition built into the scheme, treatment of new entrants, the role of carbon credits and assistance for emissions intensive, trade exposed industries.

“The final settings for all of these scheme features will dictate whether this policy can drive actual emissions reductions or whether again, it will kick the can down the road.

“Australia can’t afford another ten years of climate inaction because of heavy industry’s tight grip on our climate policy.”

Commenting on the results, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Last week ACCR filed a shareholder resolution with Origin Energy seeking that the company include a climate sensitivity analysis that reflects a 1.5°C scenario in its financial statements from the 2023 financial year.

“In Origin’s full year results for the 2022 financial year we have observed improved recognition of climate change scenarios but it still fails to deliver the information investors need to understand the financial implications.

“Whilst recognising there would be an impairment of its APLNG holding under a 1.5°C scenario, Origin clearly has no intent of disclosing the value.

“The company has provided no comment on the impact that 1.5°C-aligned decarbonisation efforts would have on its exploration assets in the Beetaloo, Canning and Cooper Basins.

“These shortcomings will need to be addressed for investors to understand how climate risk impacts their investment in Origin.

“The improvements do show, however, that Origin has the analytical capability to properly embed their climate transition plan in their  financial statements. ACCR expects Origin’s Board to support our resolution and properly disclose climate risk in their FY23 financial statements.

“At the 2022 AGM Origin shareholders will be asked to vote on the company’s climate transition strategy where, in an act of bold mental gymnastics, the company will likely claim its gas expansion activities are compatible with a 1.5°C carbon budget.

“Shareholders must critically assess such claims and benchmark them against the science.

“The need to reflect climate change in financial statements is not specific to Origin Energy.  All companies exposed to the transition and physical risks of climate change need to show shareholders what the financial consequences might be.”

Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Origin Energy has perfected the art of wilful blindness by refusing to acknowledge that many of its industry associations are pushing for new coal, oil and gas at the expense of the Paris Agreement.

“Advocating for these new large scale fossil fuel projects is like taking a wrecking ball to our climate.

“No amount of industry spin can change the physics when it comes to the massive emissions profiles of the fossil fuel projects being pushed by the likes of APPEA and the Queensland Resources Council.

“This industry association review yet again demonstrates that Origin is mocking this process by prioritising its cosy relationships with  fossil fuel pushers over its supposed - and well publicised - goal of limiting warming to 1.5°C.

“The whole concept of industry association reviews is a farce if a company like Origin can claim to be committed to 1.5°C and yet also claim there is no difference between what it and APPEA wants.

“Far greater disclosure on the fundamentals of political influence is required. This includes detail on the political donations, ministerial meetings, major submissions and advertising campaigns executed by industry associations.

“These reviews persistently fail to address the actual advocacy that is relevant to meeting the Paris Agreement rather than top line policy statements.

“If advocacy and policy submissions are not carefully interrogated and reconciled against public statements and disclosures these industry reviews are not worth the paper they are written on.”

Background

Origin is a member of several lobby groups of concern, including APPEA and the QRC. For example, in a 2021 submission to an Australian parliamentary inquiry, APPEA suggested that Australia can only meet the Paris Agreement by developing new gas resources.^[1] In February 2022, APPEA claimed that, “Australia’s gas industry will enjoy strong growth in demand stretching through to 2050”.^[2]

In March 2022, the QRC used the situation in Europe following Russia's invasion of Ukraine to push for ongoing legal and assessment processes to be disregarded in order to approve New Hope's New Acland thermal coal mine in Queensland.^[3] In November 2021, the QRC put out a media release where it stated, "Right now, steel can only be produced commercially by using metallurgical coal, and thermal coal is the only 100 percent reliable way to produce energy."^[4]

The QRC has said it will campaign to fight Queensland Labor’s policy of increased royalty payments on coal at the next Queensland election in 2024.^[5] The QRC has a poor track record for partisan political campaigning. In 2020, Origin Energy previously temporarily suspended membership for the QRC’s attack on the Greens, yet the QRC continued the advertising.^[6]

Commenting on the results, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“BHP’s results continue a key theme of this reporting season: companies in the business of fossil fuels are thriving whilst communities suffer in the face of war and escalating climate-fuelled catastrophes.

“Coal delivered a whopping 24% of BHP Group total revenue in FY22, up from just 9% in FY21.

“Whilst it’s easy to forget the scale of BHP’s coal business compared with other divisions, its annual coal production for FY22 was more than double that of producers like Whitehaven Coal.

“A key difference between BHP and the pure play fossil fuel producers is that it positions itself as a climate leader.

“Climate leaders don’t develop new coal mines.

“BHP is progressing a number of new coal mines and expansions in its joint venture with Mitsubishi, including pursuit of a staggering 90 year mine licence for the Blackwater South mine.

“Even though BHP is enjoying a 225% increase in prices for metallurgical coal, it is persisting to cry poor about the recent changes to Queensland’s coal royalties regime.

"As a major iron ore and metallurgical coal producer, valid questions need to be asked about whether BHP is acting in good faith with regard to the urgent need to decarbonise the steel sector.

"The company's messaging on the potential for decarbonising steel is sorely lacking the ambition that is needed to limit warming to 1.5C.”

Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Climate change is a material risk that firmly belongs in audited financial statements.

“This is not a radical request. Australian regulators have been expecting this since 2018.

“A Climate Action 100+ assessment of Origin’s 2021 financial statements and audit report found  there was no consideration of climate change risks. This is absurd for a fossil fuel company.

“Origin has already suffered significant impairments due to climate transition risks at Eraring, which has led to the early closure of the asset.

“For too long climate change has been handled separately in sustainability reporting, often with conflicting assumptions to those used in financial statements.

“Incorporating climate risks into audited financial statements is where the rubber hits the road.

“In a 1.5°C scenario, which Origin states that it supports unequivocally, its exploration assets in the Beetaloo, Canning and Cooper basins would likely be rendered worthless.

“At the 2022 AGM investors will be voting on Origin’s climate transition plan. It is critical that this plan is embedded in the company’s financial statements.

“Investor groups such as the IIGCC and CA100+ have been demanding that carbon intensive companies reflect the financial implications of climate change in their audited accounts.

“A failure to reflect climate change in financial statements calls into question the governance of directors and the diligence of auditors.”

Background

The resolutions and supporting statements for Origin can be found here.

For further context, see 2021 report “Flying Blind: the glaring absence of climate risks in financial reporting” released by Carbon Tracker and UNPRI

The Climate Action 100+ Net Zero Company Benchmark is now assessing company financial statements and audit reports against indicators. See here for the indicators and the methodology. See here for Origin Energy’s scores in the 2022 assessment.

Similar resolutions were filed with Chevron and Exxon this year, receiving 38.7% and 51% support respectively.

Read media release.

This page contains the resolutions and supporting statements.

Resolution 1 - Special resolution to amend our company’s constitution

Member resolutions at general meeting

The Members in general meeting may by ordinary resolution express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution must relate to an issue of material relevance to the company or the company’s business and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company.

Resolution 2 - Ordinary resolution on climate accounting and audit

Shareholders request that from the 2023 financial year, the notes to our company’s audited financial statements include a climate sensitivity analysis that:

• includes a scenario aligned with limiting warming to 1.5°C
• presents the quantitative estimates and judgements for all scenarios used, and
• covers all business segments, including exploration assets in Integrated Gas

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.

Supporting statement to resolution 2 (978 words including footnotes)

Our company states that its support of the Paris Agreement, including the target of limiting warming to 1.5°C, is 'unequivocal'.^[1] Despite this, and against investor expectations, our company does not adequately consider climate change in its financial statements. For example, it is unclear how a 1.5°C scenario, which our company calls for, could impact our company's financial position.

In the 2022 CA100+ Net Zero Company Benchmark, our company’s 2021 financial statements and audit report were reviewed for the provisional Climate Accounting and Audit assessment.^[2] Our company failed to meet any of the seven assessment criteria. This exclusion of climate risks from our company’s financial reporting and audit “reduces an investor’s ability to make investment, engagement and voting decisions”.^[3]

Implementation of this resolution

By adhering to the ask of this resolution, our company is expected to include the following in the notes to its financial statements:

• Scenarios and assumptions: Explain which scenarios have been used and the quantitative assumptions they include. Explain and justify any deviations from commonly used scenarios, including the IEA’s Net Zero by 2050 scenario.
• Results: Disclose how the transition and physical risks affect asset valuation and impairments, provisions and credit losses in the different climate scenarios. Provide results by segment, including exploration assets in Integrated Gas.
  It is also expected that the audit report demonstrates the auditor has assessed the impacts of climate-related matters and identified inconsistencies between the financial statements and other information, such as climate change disclosures.

Our company’s value is sensitive to climate change

As an owner of fossil fuel assets our company acknowledges it is exposed to reputational, legal and market risks associated with the ongoing decarbonisation of energy markets, including: decreased fossil fuel demand; increased demand for low-carbon energy; shortened lifespan of carbon-intensive assets; changing energy market dynamics; regulatory intervention and policy; litigation; and the introduction of new low-carbon technologies.^[4] Changing weather patterns and more extreme weather events, driven by climate change, also directly confront our company's business operations.

Climate transition risks have played out for the Eraring Power Station, as seen in the FY21 financial statement, when our company’s Generation Cash Generating Unit (CGU) was impaired by $998 million, due to “lower outlook for wholesale electricity prices driven by new supply expected to come online, including both renewable and dispatchable capacity”.^[5] Subsequently, the closure date of the Eraring Power Station was brought forward from 2032 to 2025.^[6]

Such risks also apply to our company’s Integrated Gas segment. LNG demand and pricing varies under different scenarios, therefore revenue and asset value will also vary.

In FY21, our company was carrying $245 million of exploration and evaluation assets.^[7] Research shows that already producing fossil fuel reserves will exceed the remaining 1.5°C carbon budget, suggesting that there is no room for new gas resources to be developed without breaching this climate outcome.^[8] It is therefore likely that under a 1.5°C scenario, these exploration assets would have no value. This however cannot be confirmed without a diligent assessment by our company and assurance by our company’s auditor.

Consistent with investor expectations

In 2020, investor groups representing over US$103 trillion AUM globally issued a letter seeking that companies reflect climate-related risks in financial reporting.^[9]

Subsequently, the Institutional Investors Group on Climate Change (IIGCC) outlined its 'unequivocal' expectation that companies and auditors will deliver 'Paris-aligned accounts', defined as 'accounts that properly reflect the impact of getting to net zero emissions by 2050 for assets, liabilities, profit and losses'.^[10] IIGCC expects directors to: affirm that the Paris Agreement goals were considered in preparing the accounts; explain, in the Notes, how critical accounting judgements are consistent with NZE by 2050 (or if these assumptions are not used, why not); present results of sensitivity analysis around Paris-aligned assumptions; state any implications for dividend paying capacity of Paris-alignment. IIGCC also expects companies to account for any inconsistency between its narrative reporting on climate risks and the assumptions made in accounting.

CA100+'s Net Zero Benchmark assesses whether company accounting disclosures and practices adequately reflect climate change risk, and the global movement towards NZE GHG emissions by 2050 or sooner. The CA100+ —representing more than 700 global investors managing AUM $68 trillion— expects that 'net zero aligned' companies and auditors will provide investors with oversight of how accelerating decarbonisation, in line with the 2050 trajectory, will affect a company's financial position and profitability.^[11]

Some investors are already expressing their expectations around reflection of climate in company financial statements and audits in their voting decisions.^[12]

Consistent with accounting standards

Existing Australian and global accounting standards set an expectation that climate-related risks be integrated into financial statements.

The AASB Practice Statement 2, Making Materiality Judgements, is clear that 'information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity'.^[13] Therefore, and as the AASB/AUASB noted in 2019, investor statements on the importance of climate-related risks to their decision-making will often render these risks 'material' to a company, requiring them to be reflected in financial statements.^[14]

Our company’s shareholders made it clear that climate change is material to their decision-making when, at the 2021 AGM, 44% supported a resolution for our company to align its capital allocation with 1.5°C.

In 2020, the International Financial Reporting Standards (IFRS) board issued an implementation document explaining how elements of 12 separate IFRS standards may introduce requirements to make climate disclosures in financial statements.^[15]

Finally, if Australia develops sustainability-related reporting requirements that are aligned with the ISSB [Draft] IFRS S2 Climate-related Disclosure standard,^[16] the AASB has stated these will ‘supplement and complement’ information provided in financial statements.^[17] Consequently this shareholder resolution is a complementary extension of the anticipated sustainability standards.

ACCR urges shareholders to vote for this proposal.

Please read the terms and conditions attached to the use of this site.

Australasian Centre for Corporate Responsibility

“Divestment should be a tool of absolute last resort. Climate-aware institutional investors considering divesting should be thinking very hard about what power they are giving up. If investors most agreeable to rapid decarbonisation sell their shares, they lose their influence. Decisions will be made by those around the table.

“Reducing real-world greenhouse gas emissions should be a higher priority for long term investors than scrubbing their portfolios of carbon.

“While divestment from fossil fuels stocks may be attractive to funds from a financial or marketing perspective, there is little if any evidence that it has an impact on real world carbon emissions.

“On the other hand, there is evidence that sustained and escalating shareholder pressure can have an impact on company decision-making.

“While we agree that companies like Woodside and Santos have left it too late for transformation into, for example, renewable energy businesses, there are still many decisions that shareholders can influence, including whether these companies spend shareholder money on new fossil fuels developments.

“Shareholders can play a crucial role in ensuring that assets are wound down rather than sold to operators who intend to extend their production lives. Take, for example, BHP’s recent decision to wind down, rather than sell, the Mt Arthur coal mine, a decision which will keep 240 million tonnes of coal in the ground. We need to see more of this.

“Shareholders can and should also take action, through strategic voting, to influence the composition of company boards.”

Commenting on the results, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Just like its local and global peers, Origin’s LNG business has benefited significantly from Putin’s invasion of Ukraine.

“And despite the gas industry spin of supporting Australia’s energy crisis, in reality companies like Origin are singularly focused on cashing in on the global conflict between Ukraine and Russia by filling the gas void.

“Whilst Origin appears eager to demonstrate an increase in domestic gas supply in Q4, APLNG’s FY22 exports increased by 136.2PJ whilst domestic supply increased by a paltry 0.6PJ.

“Unlike its pure play peers, Origin has been battered about as a fossil fuel customer at Eraring, having recently disclosed an expected plunge in earnings for its Energy Markets business.

“For now, the gas business is carrying the utility business but questions need to be asked how long this can be sustained in a decarbonising economy. At least there are transition pathways available for electric utilities.

“Concerningly, Origin is persisting with its gas expansion and associated spend in the Beetaloo and Canning basins. Again, these unconventional gas projects are in pursuit of international export customers, despite what Origin claims.

“At the 2022 AGM Origin shareholders will be asked to vote on the company’s climate transition strategy where, in an act of bold mental gymnastics, the company will likely claim its gas expansion activities are compatible with a 1.5C carbon budget.

“Shareholders must demand detail on how Origin could even claim this and question whether the company is serious about transition or whether it is lip-service.”

ACCR has a number of material concerns with the Proposal including:

• the immense scale of carbon pollution that will be generated from this project (scope 1 and 3 emissions);
• that Woodside may have provided false or misleading information to the EPA; and
• withheld information that is relevant to the unmitigated environmental impacts and options to reduce these impacts.

Commenting on the EPA Report and NWS Extension, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR), said:

“In the face of escalating climate threats, the WA EPA has buried its head in the sand and recommended that Woodside be licensed to unlock this carbon bomb out to 2070.

“This proposal beggars belief.

“The extension of the North West Shelf at full capacity to 2070 would facilitate the release of 3.8 billion tonnes of CO2 and pave the way for the opening of new gas basins, such as the Browse project and the Canning Basin.

“This proposal demonstrates that Woodside has no genuine intention of transitioning away from fossil fuels, even though half of its investors have voted in favour of the company setting scope 3 emission targets.

“The proposal, prepared by Woodside, includes potentially false and misleading information about its scope 1 GHG emissions and appears to have withheld information on viable options to reduce them.

“As such, the EPA’s recommendations are misinformed and overly generous. The ability for the NWS to meet these concerning targets using carbon offsets is scientifically flawed and at odds with WA’s Policy.

“The NWS emits 60% of Australia’s carcinogenic benzene emissions to air. The EPA has however accepted the NWS’s position that this does not pose a health risk, so has not recommended any requirement to reduce these emissions.

“The Karratha Gas Plant is Australia’s oldest and largest liquefied natural gas facility. It was an inefficient design even when commissioned in 1984 and yet this proposal would see it operating as is for 50 years.

“If the Federal and State Environment Ministers are tempted to approve this proposal on the basis of perceived economic benefits, they should consider that the North West Shelf joint venture participants, many of them being international oil and gas companies, have frequently over-stated the economic benefits they are delivering to Australians.”

Background

ACCR’s summary and recommendations are available here. For a PDF of our full submission, please contact ACCR.

The NWS Proposal is available here.

The EPA’s Report is available here.

The KGP production capacity is 18.5 million tonnes per annum of LNG, which is equivalent to 80.19 million tonnes of scope 3 greenhouse gases a year.

Total emissions from the Proposal beyond 2030 (MtCO2-e pa)

(Australian emissions assumes straight line from the current 2030 target to net zero in 2050)

NWS’ ‘estimated’ scope 1 emissions overstated by ~1 MtCO2-e pa

Scope 1 emissions limits and NWS production (% of production capacity and ‘estimated’ emissions)

BTEX Emissions (FY21 National Pollutant Inventory)

NOx Emissions, including EPA recommended target (FY21 National Pollutant Inventory)

Commenting on the results, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Woodside’s 160% increase in revenue over the last year was driven by the company’s enhanced commitment to fossil fuels through the BHP Petroleum merger, along with a doubling of realised energy prices thanks to war profiteering.

“Any tone of self-congratulation must be tempered by the reality that these results are the product of severe misfortune for many.

“This is not a testament to any particular talent of Woodside’s board or management.

“Rather, this is a missed opportunity for Woodside to accelerate its new energy plans.

“The current high prices are increasing the urgency for LNG importers to explore long term alternatives to gas. And yet Woodside is just doing what it does and shifting focus to projects like Browse.

“Demonstrating that any commitment to the Paris Agreement isn’t worth the paper it’s written on, the company is even using the current energy crisis as a reason to justify the extension of the North West Shelf for 48 years to 2070.

“It is absurd.

“Questions need to be asked about the capacity of a company like Woodside to transition.

“It is possible for investors to benefit from today's results whilst also pushing back against growth projects like Browse and Trion. These are not mutually exclusive concepts.

“With its new assets in the Bass Strait, Woodside is also now party to the chaos of the east coast energy market, where local manufacturers and householders are hugely exposed due to insufficient gas supply.

“As a direct beneficiary, we cannot see Woodside advocating for a gas reservation policy on the east coast anytime soon.”

Assessment documents for the Hail Creek coal mine extension obtained by ACCR from the Federal and Queensland governments contain an acknowledgement that the target coal seam had a “gaseous nature”. However, in response to methane satellite data gathered by the SRON Netherlands Institute for Space Research, Glencore downplayed any potential methane pollution from the mine.

Naomi Hogan, Strategic Project Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Preventing the release of methane to the atmosphere is one of the most effective ways to reduce global heating in the near term. Methane is a ticking time bomb, and tackling this issue is recognised internationally as a crucial climate change solution.

“There is an increasingly glaring gap between the methane emissions being reported to shareholders and the methane emissions being measured via new technologies and satellites.

“Methane measurement technology is improving all the time, and coal miners like Glencore cannot continue to bat off the unwanted attention on Scope 1 emissions.

“If Glencore is serious about its climate commitments, the company would immediately demonstrate good corporate practice by utilising new measurement technologies, accurately reporting and seeking to reduce methane emissions.

“Methane scientists carefully screened and quantified the satellite data over Hail Creek, and it’s irresponsible for Glencore to dismiss the research, as it puts investors’ money at risk.

“It is absolutely critical that companies like Glencore prioritise investment to reign in fugitive methane emissions as soon as possible, to prevent the potent greenhouse gas escalating climate risks.

“Investors need more certainty that Glencore and other coal producers are using all technologies available to most accurately monitor, report and ultimately bring down harmful methane emissions.

Marking a significant moment in Japanese investor relations, 26% of shareholders have voted in support of a shareholder proposal calling on Electric Power Development Co., Ltd, known as J-Power, to set credible emissions reduction targets and disclose plans to achieve them. This, alongside substantial support for accompanying shareholder proposals regarding aligning capital expenditure and remuneration with decarbonisation goals, sends a clear signal to J-Power to accelerate its decarbonisation strategy in order to remain competitive in Japan’s transition to a low carbon economy.

The set of three climate shareholder proposals were co-filed by three major institutional investors representing US$3 trillion of assets under management – Man Group, one of the world’s leading global active investment management firms, Amundi, Europe’s largest asset manager, and HSBC Asset Management – alongside Australasian Centre for Corporate Responsibility (ACCR). The proposals received the near-complete backing of the two major proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis.

The proposals called on J-Power to:

● set a business plan and short- and medium-term emissions reduction targets aligned with the goals of the Paris Agreement (receiving 26% support),

● disclose how it assesses the alignment of future capital investment against those targets (18% support), and

● disclose how its remuneration policy incentivises the company’s executives to work towards its climate goals (19% support).

The first-ever institutional investor group backed set of proposals and substantial show of shareholder support mark an important milestone in sharply rising investor engagement on climate change in Japan. J-Power operates Japan’s largest coal fleet and derives more than 40% of its operating revenue from coal according to a company engagement profile published by TransitionZero.

The investor group’s filing stated that it sees J-Power’s corporate value depending upon a credible decarbonisation strategy and science-based short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations. The group believes that their absence presents a range of material financial risks to shareholders.

The J-Power shareholder proposals are among an increasing number of climate shareholder proposals filed in 2022.

Jason Mitchell, Head of Responsible Investment Research at Man Group, said, “We have called for J-Power, as Japan’s largest coal power operator, to lead the sector in setting a clear decarbonisation strategy with Paris-aligned, company-wide targets. We are pleased to see strong shareholder support for this position.”

Sachi Suzuki, Senior Stewardship Specialist at HSBC Asset Management, added, “Long-term investors in J-Power see its corporate value dependent upon a credible plan to decarbonise. We hope this result encourages a shift from the current high-cost, coal-based strategy to a more credible decarbonisation strategy, including increased renewable investment in line with investor expectations.”

Caroline le Meaux, Head of ESG research, engagement and voting at Amundi added, “We remain concerned by the high emissions from J-Power’s coal power business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s Blue Mission 2050. We believe accelerated action to decarbonise, including increased renewable energy development, will best manage stranded asset risk and position the company for success in the transition.”

Brynn O’Brien, Executive Director at ACCR added, “A credible, detailed business plan supported by Paris-aligned targets and transparent annual reporting on progress is in the best interests of the company and its shareholders. J-Power’s current strategy would see shareholder capital wasted to prolong the life of the company’s coal-fired power generation business. This AGM result sends a clear message that the company board and executives need to act now for the company to thrive in a decarbonised world.”

For media enquiries:

ACCR
Brynn O’Brien
+61(0) 423 951 316
brynn@accr.org.au

HSBC GAM
Paul Allen
+81(0)3 520 33 953
paul.allen@hsbc.co.jp

Man Group
Georgiana Brunner
+44(0) 791 7404 108
media@man.com

Amundi
Jais Mehaji
+44(0) 750 0558 924
jais.mehaji@amundi.com

Background

About HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 31 March 2022, HSBC Asset Management managed assets totaling US$618bn on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.4 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility 

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com 

*As at 31 March 2022. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Amundi

Amundi, the leading European asset manager, ranking among the top 10 global players^[1], offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets.

With its six international investment hubs^[2], financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 5,300 employees in 35 countries. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2.0 trillion of assets^[3].

Amundi, a trusted partner, working everyday in the interest of its clients and society.

Commenting on BHP’s NSW divestment review update, Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Following repeated concerns raised by investors, ACCR and civil society, BHP has finally made the right call by abandoning its pursuit of the Mt Arthur thermal coal mine extension to 2045 and its plans to divest the mine.

“Use of asset divestment as a tool to lower carbon footprints and avoid responsible closure is not acceptable.

“BHP has sat on this decision for far too long. If it had been willing to act sooner, affected communities would have avoided a prolonged period of uncertainty and the mine extension from 2026 to FY2030 could have been avoided.

“The IEA Net Zero scenario stated there can be no new coal mines or extensions from 2021 so the decision to still seek a mine life extension from 2026 to 2030 is completely inconsistent with the Paris Agreement and limiting warming to 1.5 degrees.

“The approach to closure, affected workers and communities will be a big test for BHP. Investors expect BHP to commit to decarbonising in accordance with just transition principles.

“The current US$700M provision for closure does not appear to match the enormous scale of the likely clean up bill. BHP has an opportunity to draw on the returns from current record high thermal coal prices to properly fund high quality remediation.

“We remain concerned that BHP is still seeking to open a new greenfield coal mine, Blackwater South, to operate for 90 years in Queensland. It’s time for BHP to stop proposing new and expanded coal mines.

“Investors will continue to keep BHP accountable for its coal mining impacts and expansion plans.”

Glencore is the largest producer of thermal coal in Australia, which is the second largest coal exporting nation in the world.

Glencore is required within six months of the AGM to publish an update on the views received from shareholders and actions taken under the UK Corporate Governance Code*.

ACCR has outlined key concerns with Glencore's pursuit  of new and expanded thermal coal mines in Australia, which is in stark contrast to the Company’s stated commitment to emissions reductions in line with net zero and 1.5C. Satellite data has also demonstrated that Glencore’s Australian coal mines are potentially underreporting fugitive methane emissions.

The Company has come under scrutiny recently due to revelations Glencore is progressing plans with the Australian government to open up a new greenfield coal mine, which counters the Company's previous commitments to shareholders to 'run down' the existing coal portfolio.

Investor pressure on Glencore continues to increase on several fronts including Bluebell Capital Partners releasing a statement and proposal.

Naomi Hogan, ACCR Strategic Projects Lead said:

“Six weeks ago Glencore received a clear message from almost a quarter of its shareholders: fix your climate plan and your approach to coal.

“There is currently a disconnect between Glencore’s statements on coal and climate change and the activities of its coal subsidiaries in Australia.

“Now is not the time for double speak and confusion around Glencore’s forward coal portfolio.

“In Australia, Glencore is advocating for large new and expanding thermal coal projects well into the 2040s and beyond.

“Glencore is pushing ahead with several expansion plans, two potential new greenfield coal mines and seeking more coal exploration licences.

“Investors clearly share ACCR’s concerns about the Company’s coal expansion plans. To better assess the risk, more granular disclosures are required from Glencore on its coal production projections.

“Glencore is in the enviable position of having a diverse portfolio and a huge amount to gain from properly addressing the climate change challenge.

“Glencore’s shareholders have been asking critical questions of the company and providing input to help shape the next iteration of the Climate Plan. Investors must see tangible changes to Glencore’s Climate Plan and approach to new and expanding coal.”

The UK Corporate Governance Code states: “When 20 per cent or more of votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders in order to understand the reasons behind the result. An update on the views received from shareholders and actions taken should be published no later than six months after the shareholder meeting.”

The Investment Association maintains a Public Register tracking shareholder dissent at publicly listed companies, and includes Glencore’s Climate Progress Report vote.

Background

ACCR set out the following five recommendations for Glencore to provide to its shareholders:

1. A clear inventory of all Glencore’s coal projects and expected annual production, demonstrating an alignment of production decline over time with net zero.
2. A projection of expected emissions from fossil fuel extraction from now until 2050.
3. A 2030 emissions reduction target to provide further assurance that emissions from coal production will not expand between 2026 and 2035.
4. Coal mine methane emissions totals for all sites that are quantified using available best practice technologies, such as satellite, aerial and on ground methane surveys.
5. An increase in capital expenditure allocated to reducing operational emissions.

Read the full letter to Glencore.

On 10 June the ABC reported that WA Minister Dr Tony Buti has accused WA First Nations leaders of “rehashing” concerns about the recently-enacted Aboriginal Cultural Heritage Act 2021 (WA), and has told them to “move on”: https://www.abc.net.au/news/2022-06-10/traditional-owners-told-move-on-from-cultural-heritage-concerns/101142238

James Fitzgerald, Legal Counsel/First Nations Engagement at ACCR said:

“In the aftermath of the Juukan Gorge Caves destruction, responsible investors demanded accountability, as well as assurance that new WA cultural heritage protection law would prevent recurrence of similar incidents in the future.

“The new WA Act does not deliver that assurance and maintains key elements of the status quo which allowed the Juukan Gorge Caves destruction.

“Contrary to the recommendations of the bipartisan Juukan Gorge Parliamentary Inquiry, the Act stills empower the Minister to approve the destruction of cultural heritage without any right of appeal to an independent tribunal. This was identified by the Inquiry as a key cause of the Juukan Gorge Caves destruction.

“The Act’s use of regulations to address substantive legislation issues is also poor practice in law-making and is a clear demonstration of the unreliability of this Act.

“The WA Government has shown that it cannot manage to a reasonably acceptable standard its conflict of interest between promoting revenue from mining on one hand, and protecting cultural heritage on the other.

“On these questions, the interests of responsible investors are closely aligned to the interests of Aboriginal heritage custodians.

“The Minister’s quoted statements tend to reinforce the Juukan Inquiry’s recommendation, supported by First Nations leaders, that the Commonwealth should legislate national standards for the protection and management of cultural heritage, co-designed with First Nations leaders. In that case, states could either implement those standards, or the Commonwealth law would apply. “

The board has committed to a strategic review and board renewal.

In 2021 shareholders demonstrated their support for Paris-aligned targets for both demerged entities—Accel Energy and AGL Australia—voting 54% in favour of ACCR’s  shareholder resolution.

Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The bloodbath in the boardroom of AGL today was years in the making and well overdue.

“Well before the demerger was announced in March 2021, institutional investors expressed their frustrations with the lack of leadership at AGL.

“With the abandonment of the demerger, the departure of four directors is a welcome step towards a brighter future for AGL shareholders.

“The longest-serving members of the board, particularly Hunt and Botten, have overseen the destruction of an enormous amount of shareholder value, and millions of dollars wasted on a now failed demerger.

“The proposed strategic review must have at its heart alignment with the Paris Agreement, and with that the accelerated transition out of coal-fired power generation.

“The current board of AGL wasted 18 months on the demerger, and five years of underinvestment in renewable energy. New leadership must be brought in to take the company forward.

“AGL is in desperate need of directors that have direct experience in developing clean energy at scale.

“By failing to set Paris-aligned targets for the proposed demerged entities, the board of AGL ignored a fundamental demand of a majority of shareholders less than a year ago, and they’ve now paid the price.”

Background

Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is also a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of a 11% interest in AGL. This potential conflict has been disclosed and Ms Rosenberg has had no role in ACCR’s decision-making on this matter. Ms Rosenberg is currently on parental leave.

AGL Energy - Electricity output by primary energy source

Source: https://www.2021datacentre.agl.com.au/environment

JFE today announced in its Notice of the 20th Ordinary General Meeting of Shareholders the following measures designed to enhance the company’s climate governance structure and promote ongoing conversation with shareholders about its decarbonisation plans:

• A commitment to an annual consideration of its emissions reduction target, with a focus on exceeding its current target of 30% reduction by 2030
• An annual conversation with shareholders about the alignment of its technology investment with its target
• A commitment to link executive remuneration with its target in the company’s medium term business plan

The shareholder group, comprising Man Group, Storebrand and the Australasian Centre for Corporate Responsibility (ACCR), has had dialogue with JFE in recent months with a focus on enhancements to climate governance.

Jason Mitchell, Head of Responsible Investment Research at Man Group said: “This outcome demonstrates the strong alignment of company and shareholder interests in respect of JFE’s decarbonisation plans. Remuneration-climate linkage is an increasingly important marker of credibility in company plans, and long term investors can take comfort in JFE’s commitment in this regard. This engagement is testament to the positive outcomes that the collaboration between investors, corporates and civil society can achieve.”

Victoria Lidén, Senior Sustainability Analyst at Storebrand Asset Management, said: “Decarbonisation of the steel industry is a critical global challenge. We are pleased that JFE recognises the need for strong governance structures, and the need for ongoing revision of targets based on technology advancements and investments, to support company decarbonisation. As shareholders, we are looking forward to a continued and constructive engagement with JFE.”

Brynn O’Brien, Executive Director, at ACCR, said: “Constructive investor-company engagement is an extremely promising accelerator of decarbonisation around the world, and we commend JFE for their responsive approach to dialogue that has resulted in an outcome designed to protect long term corporate value. We are looking forward to engaging with JFE and other Japanese companies to promote long term value and achieve planetary climate goals."

For media enquiries:

Background

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.4 billion* and operate across multiple offices globally.  We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com

*As at 31 March 2022. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Storebrand

Storebrand Asset Management is a highly regarded player in the Nordic markets and a pioneer in the field of sustainable investments. Storebrand Asset Management manage over NOK 1 000 bn in both private and public markets and all assets are managed in accordance with a strict and innovative strategy for sustainable investments.

98.66% of shareholders supported the Woodside and BHP Petroleum merger

48.97% of shareholders voted against Woodside’s climate plan.

12.4% of shareholders supported ACCR’s resolution on climate-related lobbying.

12.06% of shareholders supported ACCR’s resolution on decommissioning.

Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said:

On Woodside’s Say on Climate vote

“At 48.97% against, Woodside has surpassed Santos (36.93% against) as the company with the lowest level of shareholder support for a transition plan since the inception of the Say on Climate mechanism.

“Extraordinarily, despite the low shareholder support for the climate plan, all four directors up for election, including chair of the Sustainability Committee Ann Pickard, obtained at least 95% support. This sends conflicting messages to the Woodside board regarding how seriously shareholders are taking climate change.

“Woodside’s paltry climate targets cover just 10% of its emissions footprint and rely almost completely on offsets to meet these targets.

“Woodside has made it very clear to investors that it has no real intention of shifting its business model away from fossil fuels. Recent comments from Meg O’Neil about dusting off Browse and Sunrise only reinforce the company’s steadfast commitment to climate destruction.”

On the climate-related lobbying resolution:

“As a major member of the Australian Petroleum Production and Exploration Association (APPEA), Woodside is funding advocacy that conflicts with its stated commitment to the Paris Agreement.

“Regardless of the fact that warming of 1.5 degrees could occur as soon as 2026, Woodside and its industry associations continue to advocate for a massive expansion in the oil and gas industry.

“Woodside shareholders have failed to connect the dots between Australia’s climate policy paralysis and the conduct of the company. This has portfolio-wide consequences for institutional shareholders.

“Regardless of the election outcome, Australia will remain an international climate laggard if the oil and gas industry continues to stand in the way of climate action.”

On the decommissioning resolution:

“Be it the Northern Endeavor fiasco, a recent ASIC investigation into provisioning or repeated compliance actions by regulator NOPSEMA, Woodside has severely mishandled its decommissioning obligations.

“The unanimous support for the BHP Petroleum merger only enhances Woodside’s exposure to decommissioning risks and associated costs.

“Considering the escalating risks around decommissioning for Woodside, shareholders have squandered this opportunity to demand heightened disclosure. We anticipate shareholder understanding and concerns about the issue will only grow in coming years.”

Background

ACCR’s analysis of Woodside’s climate plan can be found here 

ACCR’s briefing on the two resolutions is available here

ACCR’s questions for Woodside auditor Ernst and Young are available here 

The Taskforce for Climate-related Financial Disclosure recognises this and has been recommending that climate disclosures are integrated into financial statements since 2017. This has resulted in more detailed climate disclosures, but they still often lack substance and are separate to the financial statements.

The Climate Action 100+ Net Zero Company Benchmark has recently established a Climate Accounting and Audit indicator. The most carbon intensive listed companies were assessed against the following criteria^[1] for the first time in March 2022:

1. The audited financial statements and notes thereto incorporate material climate-related matters. This includes a review for consistency between the financial statements and the company’s other reporting.
2. The audit report demonstrates that the auditor considered the effects of material climate-related matters in its audit. This includes a requirement that the audit report disclose how the assessment was undertaken and any identified inconsistencies between the financial statements and ‘other information’.
3. Whether the audited financial statements incorporate the material impacts of the global drive to net-zero greenhouse gas emissions to 2050 (or sooner).

The Climate Action 100+ assessment concluded that WPL’s 2020 financial statements and audit report (issued in 2021) do not meet any of the above criteria^[2].

Based on ACCR’s review of WPL’s 2021 financial statements, audit report and climate disclosures, we have drafted the below questions for Ernst and Young to address at WPL’s AGM on Thursday, 19 May 2022. This has been done in line with s250PA of the Corporations Act (2001).

We invite shareholders to review these questions and carefully consider the responses provided by Ernst and Young at WPL’s 2022 Annual General Meeting.

Questions for Ernst and Young (EY) as the auditor of Woodside Petroleum Limited’s 2021 financial statements

We note the Taskforce for Climate-related Financial Disclosure (TCFD) recommends organisations provide climate-related financial disclosures in their mainstream (ie public) annual financial filings. However, Woodside chose to provide this information in its separate Climate Report 2021.

Despite this separation of highly interdependent information, we gained comfort in reading the 2021 Audit Report that EY has a responsibility to read this ‘other information’ and, in doing so, consider whether the other information is materially inconsistent with the financial report, or its knowledge obtained in the audit.

We appreciate that determination of the effects of climate change on an entity’s financial statements may require significant effort and judgement, and we anticipated the Annual Report 2021 would provide robust disclosures on the most significant assumptions, estimates and judgements made related to climate change.

Yet, upon review of the Annual Report 2021, we were disappointed by the lack of transparency relating to the most significant assumptions, estimates and judgements made. Where these assumptions have been disclosed, they do not appear to align with the objectives of the Paris Agreement, which enshrines a target to limit global warming to well below 2°C, and to make efforts to limit warming to 1.5°C.

To perform our own reconciliation of the two reports, and to understand whether any material inconsistencies exist between the two reports, we have prepared questions for EY, which are provided in Attachment A.

Attachment A: Australasian Centre for Corporate Responsibility questions for Ernst and Young (EY) as the auditor of Woodside Petroleum Limited’s 2021 financial statements

1. Sensitivity testing using a low carbon scenario

A future that meets the objectives of the Paris Agreement (either a well below 2°C or a 1.5°C future) would present significant transition risks for Woodside and materially impact its financial position.

Question (a) for EY: Did EY undertake any sensitivity testing using a 2°C or 1.5°C scenario (such as the IEA’s Net Zero Emissions scenario)? If so:

1. Why were the results of this scenario(s) modelling not disclosed in the financial statements or mentioned in your audit report?
2. Relative to the base case, how did Woodside’s credit rating(s), access to debt and cost of debt vary under this scenario(s)?

If you didn’t complete this sensitivity testing, please explain why.

2. EY’s consideration of changing climate policy in Australia

We acknowledge that carbon cost pricing has been explained in Note B.4: ‘US$80/tonne of emissions (real terms 2022) […] is applicable to Australian emissions that exceed facility-specific baselines in accordance with Australian regulations, as well as global emissions that exceed voluntary corporate net emissions targets.

Question (b) for EY: Noting that all of Woodside’s revenues are derived from fossil fuel producing assets in Australia, did you assure the impact of potential changes to Australia’s climate policy, such as changes that would make all of Woodside emissions subject to a carbon price?

3. EY’s consideration of the impairment reversal of the Pluto CGU

In the sell down of 49% of Pluto 2 to Global Infrastructure Partners (GIP), Woodside retained additional risk, relative to a typical joint venture arrangement, specifically relating to construction schedule, construction cost, regulatory approvals and a portion of ongoing carbon pricing risk.

Question (c) for EY: What impact did Woodside’s atypical risk profile have on the discount rate, cash flows, valuation and/or impairment reversal for the Pluto CGU? How was this assured by EY? If this was not assured, why not?

4. Treatment of climate change as a Key Audit Matter.

The TCFD recommends that corporate disclosures should be comparable across industries. The treatment of climate change in the audit of the financial statements of Woodside’s peers and joint venture partners is not however consistent. For example, the audit of Shell’s latest financial statements conducted by EY, provided an expansive description of the testing undertaken to assure the treatment of climate change in Shell’s financial statements. It was the first Key Audit Matter.

Question (d) for EY: Why is climate change not included as a Key Audit Matter? What procedures have you conducted to assess the risk of climate change to Woodside?

Alex Hillman, Carbon Analyst

Australasian Centre for Corporate Responsibility

The proposals, co-filed with Australasian Centre for Corporate Responsibility (ACCR), call on J-Power, the largest coal plant operator in Japan, to set credible emissions reduction targets and disclose plans to achieve them.

This first-ever institutional investor group backed set of proposals seeks to protect J-Power’s long-term value given the risks and opportunities associated with the global shift away from fossil fuels, and marks an important milestone in sharply rising investor engagement on climate change in Japan.

The filing follows months of engagement between J-Power and the investor group, about concerns that J-Power’s current decarbonisation strategy, dubbed Blue Mission 2050, would see the company lose competitiveness as Japan moves to cut greenhouse gas emissions to net zero by 2050. These concerns, along with concerns about the feasibility and cost of coal-based technologies J-Power plans to deploy, are highlighted in analysis released today by TransitionZero. Japan’s current energy crunch also underlines the need to diversify away from reliance on imported fossil fuels to domestic renewable energy and storage.

Jason Mitchell, Head of Responsible Investment Research at Man Group said, “As Japan’s largest coal power operator, J-Power is uniquely placed to lead the sector in setting a clear decarbonisation strategy with Paris-aligned, company-wide targets. We welcome the company’s 2050 carbon neutrality commitment, but as shareholders we recognise the need for credible near-term targets and reassurance that future investment is consistent with those targets and will not over-rely on coal-based technologies at risk of stranding.”

The proposals call on J-Power to set a business plan and short- and medium-term emissions reduction targets aligned with the goals of the Paris Agreement, disclose how it assesses the alignment of future capital investment against those targets and how its remuneration policy incentivises the company’s executives to work towards its climate goals.

Although J-Power has set a ‘carbon neutrality’ 2050 ambition, its current targets fall short of those required by the Paris Agreement and do not cover emissions from its growing operations outside Japan.

Sachi Suzuki, Senior Stewardship Specialist at HSBC Asset Management added, “Long-term investors in J-Power see its corporate value dependent upon a credible plan to decarbonise. We are concerned by their focus on a high-cost, coal-based strategy, relying on speculative technologies without a clear plan for coal retirement, instead of more credible near-term action.”

Caroline le Meaux, Head of Engagement, Voting Policy and ESG Research at Amundi added, “Given the high emissions from J-Power’s coal power business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s Blue Mission 2050, the current direction of travel is highly concerning.  The decrease of gross emissions should be prioritised.  We consider that corporate value would be better protected with greater disclosure of how the company, which we hold in some passive funds, will align its business plan and capital expenditure with Paris-aligned decarbonisation targets.”

The J-Power shareholder proposal builds on the growing momentum in Japan behind shareholder action since the first climate-related proposal was filed in 2020 against Mizuho Bank.

Brynn O’Brien, Executive Director at ACCR said, “The decisions that need to be taken to set companies up to thrive in a decarbonised world need to be taken by the company boards and executives of today, not deferred to future leadership. Every major emitter in every economy needs a credible, detailed business plan consistent with the goals of the Paris Agreement. J-Power’s current strategy would see shareholder capital wasted to prolong the life of the company’s coal-fired power generation business. Supporting these resolutions would be the start of a stronger future for J-Power.”

For media enquiries:

Background

About HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 31 March 2022, HSBC Asset Management managed assets totalling US$618bn on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.4 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com
*As at 31 March 2022. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Amundi

Amundi, the leading European asset manager, ranking among the top 10 global players^[1], offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets.

With its six international investment hubs^[2], financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 5,300 employees in 35 countries. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2.0 trillion of assets^[3].

Amundi, a trusted partner, working everyday in the interest of its clients and society.

Owing to local legal requirements, the shareholder group has presented a package of three proposals, each framed as a partial amendment to the company’s Articles of Incorporation. Each proposal stands alone legally, but we believe the package is in the interests of shareholders.

This page contains the resolutions and supporting statements.

Resolution 1

Partial amendment to the Articles of Incorporation

The following clause shall be added to the Articles of Incorporation:

1. To promote the long-term value of the Company, given the risks and opportunities associated with climate change, and in accordance with the Company’s commitment to achieve net-zero GHG emissions by 2050, the Company shall set and disclose a business plan with science-based short-term and mid-term GHG emissions reduction targets aligned with Articles 2.1(a) and 4.1 of the Paris Agreement.
2. The Company shall report, in its annual reporting, on its progress against such business plan on an annual basis.

Supporting statement to Resolution 1

Long term institutional investors in the Company see its corporate value depending upon a credible decarbonisation strategy and science-based short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations.

While we welcome the Company’s intention to achieve carbon neutrality by 2050, the Company’s targets are not yet aligned with the goals of the Paris Agreement. This presents a range of material financial risks to shareholders. We consider that setting science-based targets, and disclosing a business plan to achieve them, would best manage these risks and protect corporate value.

Resolution 2

Partial amendment to the Articles of Incorporation

The following clause shall be added to the Articles of Incorporation:
The Company shall disclose, in its annual reporting, details of how it assesses the alignment of capital expenditure plans with the Company’s GHG emissions reduction targets.

Supporting statement to Resolution 2

Long term institutional investors in the Company see its corporate value depending upon a credible decarbonisation strategy and science-based short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations.

Capital expenditure aligned with such targets is of particular significance for the Company’s corporate value given the high emissions from its coal-fired power generation business, and the low level of economic and feasibility certainty attaching to technologies detailed in the Company’s Blue Mission 2050. We consider that corporate value would be better protected with greater disclosure of how the Company assesses the alignment of its capital expenditure with GHG emissions reduction targets.

Resolution 3

Partial amendment to the Articles of Incorporation

The following clause shall be added to the Articles of Incorporation:
The Company shall disclose, in its annual reporting, details of how the Company’s remuneration policies will incentivise progress against the Company’s GHG emissions reduction targets.

Supporting statement to Resolution 3

Long term institutional investors in the Company see its corporate value depending upon a credible decarbonisation strategy and science-based short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement and investor expectations.

We consider that a direct linkage between remuneration and achievement of GHG emissions reduction targets to be in the Company’s interests, as an important mechanism to incentivise executive performance against decarbonisation goals and protect corporate value.

ESG engagement initiative of the year, Asia: Investor coalition at J-Power

The initiative, representing around $3 trillion, became the first institutional investors to file a climate resolution in Japan when it called for more ambitious action by J-Power. The coalition was formed in January 2022 by the Australasian Centre for Corporate Responsibility and is made up of Man Group, HSBC Global Asset Management, and Amundi.

In 2021, ACCR’s shareholder resolution to AGL Energy requesting the company include Paris-aligned targets for both demerged entities—Accel Energy and AGL Australia—in the demerger scheme documents, was supported by 54% of shareholders.

The demerger scheme booklet published today includes the following targets (Sections 3.2.2.2 and 4.2.2.6):

The demerger scheme booklet does not satisfy the request of ACCR’s 2021 shareholder resolution. ACCR is therefore opposed to the demerger.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“AGL has ignored the majority of its shareholders by failing to set Paris-aligned targets for Accel Energy in its demerger scheme documents.

“In the absence of further detail on AGL Australia’s Scope 3 emissions, particularly its electricity offtake arrangements and upstream gas emissions, it is difficult to determine whether its targets are Paris-aligned.

“Alignment with the Paris Agreement across both demerged entities was a fundamental demand of a majority of AGL’s shareholders less than a year ago.

“We don’t expect AGL’s largest shareholders will take well to being ignored. According to the IEA and the IPCC, alignment with the Paris Agreement means closing coal-fired power stations in OECD countries by 2030.

“While AGL has tiptoed towards Paris alignment, by bringing forward the closure of Bayswater to 2033 and Loy Yang A to 2045, it is simply not moving quickly enough.

“AGL has underestimated the pace of the energy transition for years, and shareholders have paid the price.

“The board of AGL is asking shareholders to trust them with the demerger. This is the same board that has not invested a cent in additional clean energy since 2016.

“AGL’s recently announced Energy Transition Investment Partnership with Global Infrastructure Partners is too little, too late. AGL should be planning and investing on a scale five to ten times larger than what it announced this week.

“Other than Graham Cockroft and Vanessa Sullivan who joined the board this year, no other director has purchased shares in the company since 2020.

“The board of AGL continues to gamble with other people’s money.”

Background

Armina Rosenberg, who sits on ACCR’s Office Bearers’ committee, is also a portfolio manager at Grok Ventures. Grok Ventures is a business name used by the private investment group controlled by Mike Cannon-Brookes. "Grok Ventures" is a registered business name of Cannon-Brookes Services Pty Limited (ACN 616 170 542) (CBS). An affiliate of Cannon-Brookes Services Pty Limited, the Galipea Partnership, is the holder of a 11% interest in AGL. This potential conflict has been disclosed and Ms Rosenberg has had no role in ACCR’s decision-making on this matter. Ms Rosenberg is currently on parental leave.

AGL Energy - Electricity output by primary energy source

Source: https://www.2021datacentre.agl.com.au/environment

AGL Energy - Operational greenhouse gas footprint (material sites and fuels)

Source: https://www.2021datacentre.agl.com.au/environment

Rio Tinto failed to disclose voting results at the meeting.

James Fitzgerald, Legal Counsel at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The board received probing questions about long-standing and escalating grievances of  communities affected by QMM’s Madagascan mineral sand mining operation.

“The response of outgoing Chair Simon Thompson conveyed a concerning lack of willingness to accept accountability, and raises more questions than it answers.

“According to Thompson,  everything but QMM’s mining operation is causing water pollution issues. The cognitive dissonance by attributing this to the boom in fertility rates, the  local farming practices and the Madagascan authorities beggars belief.

“QMM is in danger of losing its social licence to operate. The situation in Madagascar appears to represent another failure resulting from  Rio Tinto’s degraded social performance function.

“Rio Tinto is urged to take immediate steps to resolve the community’s short- and longer-term grievances in a just and respectful way, and consistently with its own published standards.

“Shareholders and institutional investors are urged to keep a watchful eye on this operation.”

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“While shareholder support for Rio Tinto’s Climate Action Plan is likely to be strong, the company must improve its climate-related advocacy, including support for carbon pricing, if it’s to have any chance of meeting its 2030 and 2050 net zero emissions targets.

“Rio Tinto’s withdrawal from the Queensland Resources Council (QRC) took far too long, and companies like BHP, Origin Energy and South32 should follow suit. The QRC remains one of the most obstructive industry associations on climate and energy policy in the world.

“Despite CEO Jakob Stausholm signing the International Council of Mining and Metals (ICMM) net zero statement which encourages targets be set for Scope 3 emissions, Rio Tinto has failed to commit to when it would announce such targets.”

Background

ACCR filed and subsequently withdrew a shareholder resolution to Rio Tinto in February, calling on the company to suspend membership of industry associations that continue to advocate for the development of new and expanded coal mines.

25.32% of shareholders voted against Santos’ remuneration report, amounting to a first strike.

36.93% of shareholders voted against Santos’ climate plan.

14.58% of shareholders supported ACCR’s resolution on climate-related lobbying.

15.63% of shareholders supported ACCR’s resolution on decommissioning.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

On the climate-related lobbying resolution:

“Santos shareholders have revolted against the board’s climate plans while rubber-stamping the company’s lobbying activities.

“Investors have effectively sanctioned Australia’s ‘gas-fired recovery’, and the associated emissions that will come from the development of multiple new gas basins.

“Santos and its industry associations continue to advocate for a massive expansion in the oil and gas industry.

“The International Energy Agency (IEA) concluded that we cannot afford to develop any new coal, gas or oil projects if we are to limit global warming to 1.5°C.

“The Australian Petroleum Production and Exploration Association (APPEA) has repeatedly lobbied for policies to incentivise $350 billion investment in new oil and gas projects over the next 20 years, including in a pre-budget submission earlier this year.

“Santos shareholders have failed to connect the company’s advocacy for oil and gas expansion with escalating, climate-induced disasters across Australia and the world.

“We have little hope of ambitious climate policy while the oil and gas industry continues to stand in the way.

On the decommissioning resolution:

“Santos shareholders failed to support a simple request for improved transparency of Santos’ decommissioning liabilities at a time when a significant number of the company’s assets are at or nearing end of life.

“Santos claims that enhanced decommissioning disclosure would require the release of commercially sensitive information, but  its peers Woodside and Esso have demonstrated this is not the case. Its resistance to transparency around this material risk is concerning.

“Under provisioning is a real risk that improved disclosure can help manage. Peer reviewed research on decommissioning provisions in the North Sea found that actual spend was on average 76% higher than estimated.

“The repurposing of end of life assets for offshore wind or CCS is not guaranteed to be feasible. Investors need to be updated on the outcome of feasibility studies in a timely manner due to the direct impact this has on decommissioning liabilities.”

Background

ACCR cannot comment on the vote on Santos’ climate plan, due to ongoing proceedings in the Federal Court. Further information on the case is available here.

ACCR’s briefing on the two resolutions is available here.

23.7% of Glencore shareholders voted against the approval of Glencore’s 2021 climate progress report.

Under the UK Corporate Governance Code, Glencore will have to publish an update on its engagement with shareholders about its Climate Transition Action Plan within six months of the 2022 AGM.

Glencore Chair Kalidas Madhavpeddi was re-elected with 89.3% support, and the Chair of its Health, Safety, Environment and Communities Committee, Peter Coates, was re-elected with 96.2% support.

ACCR previously published analyses of Glencore’s progress against its climate plan, and its underreporting of methane emissions.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Glencore shareholders have delivered a rebuke to the board over its supposed commitment to a ‘responsible managed decline’ of its coal portfolio.

“Nearly 24% of shareholders voted against Glencore’s progress on its climate plan—a significant decline after near unanimous support (94%) for Glencore’s climate plan in 2021.

“Many Glencore shareholders are clearly unhappy about its lack of disclosure of its plans for new and expanded coal mines in Australia, which are capable of producing more than 100 million tonnes annually.

“We look forward to Glencore updating its climate strategy in the six months ahead.
“Glencore’s total emissions will likely increase by 17% in 2022, with its forecast increase in coal production.

“Its coal expansion plans are in direct conflict with its commitment to a ‘responsible managed decline’ of its coal portfolio and its commitment to the Paris Agreement.

“To date, Glencore has not disclosed to shareholders how it measures and manages methane emissions from its coal mines, nor how it intends to reduce those emissions in order to meet its emission reduction targets.

“Unlike many of its peers, Glencore has failed to commit any material capital expenditure to reduce its operational and Scope 3 emissions.

“InfluenceMap found Glencore to be the 8th most obstructive company blocking climate policy action globally, and remains one of the few diversified miners still promoting thermal coal.

“Despite the significant dissatisfaction with Glencore’s progress on its climate plan, Peter Coates, the Chair of the Health, Safety, Environment and Communities Committee was disappointingly re-elected with more than 96% support. Though the near 11% opposition to Glencore Chair Kalidas Madhavpeddi is noteworthy.

“Investors must be prepared to hold directors accountable when climate progress is clearly insufficient.”

Background

ACCR’s analysis of Glencore’s progress against its climate plan is available here.

ACCR’s analysis of Glencore’s underreporting of methane emissions is available here.

There were 19 ‘Say on Climate’ votes on company transition plans at 17 companies in 2021, most of which were supported by more than 90% of shareholders. Only BHP’s (84.9%) and Shell’s (88.7%) were supported by less than 90% of shareholders.

Seven superannuation funds supported all Say on Climate resolutions at companies they held in 2021: Active Super (8 votes), AMP (1), AustralianSuper (16), CareSuper (5), NGS Super (5), QSuper (15) and Unisuper (2).

Fifteen global investment managers supported all Say on Climate resolutions at companies they held in 2021: Abrdn (18), AllianceBernstein (16), Allianz Global Investors (18), APG (16), BlackRock (19), Capital Group (10), Fidelity (11), Goldman Sachs (13), JP Morgan (13), Morgan Stanley (12), Pendal Group (3), State Street Global Advisors (17), Vanguard (19) Wellington (18), and Wells Fargo (11).

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Investors are rubber-stamping ‘tick-a-box’ climate plans and rewarding companies for transparency and their ‘direction of travel’ as opposed to how their plans will align with the Paris Agreement.

“By endorsing climate plans that include fossil fuel expansion, investors are complicit in ensuring emissions will continue to increase rather than the opposite.

“The Say on Climate mechanism will only be as strong as investors are willing to make it. Approving every climate plan that crosses their desks is not that.

“The significant number of Say on Climate votes coming up in 2022 provide investors with an opportunity to correct this dismal record, elevate their ambition and demand Paris-aligned transition plans from some of Australia’s largest extractive and energy companies.

“These votes will come thick and fast as the AGM season gets going: Glencore this week, Santos next week, and Woodside a couple of weeks after that. Investors must assess these companies’ climate plans on their merits, rather than direction of travel.

“Companies are unlikely to change their behaviour without significant opposition to their plans at annual general meetings.

“2021 may have been the first year of Say on Climate, but 2022 must be the year investors make it count.”

Background

ACCR’s new analysis is available here.

ACCR is a supporting partner of the ‘Say on Climate’ initiative in Australia.

ACCR filed (then later withdrew) shareholder resolutions at Oil Search, Santos and Woodside Petroleum in 2021 calling on the companies to provide shareholders with a ‘Say on Climate’.

To date, ACCR has published analysis of the climate plans of BHP, Rio Tinto, Glencore and Woodside Petroleum.

Based on estimates from the SRON Netherlands Institute for Space Research, ACCR conservatively estimates that Glencore has underreported its operational emissions by 11-24% between 2018 and 2021.

Glencore’s 2019 emissions baseline is understated by at least 6.9 million tonnes CO2e or 24%. Glencore’s 2019 emissions are significant, because it is the baseline year for its 2026, 2035 and 2050 emissions reduction targets.

Methane emissions from the Hail Creek coal mine in Queensland were at least 13 times greater than what Glencore disclosed in its 2019 emissions inventory. Methane emissions from the Oaky North coal mine were at least double what was included in its 2019 emissions inventory.

Methane is a critically important greenhouse gas, and far more potent than carbon dioxide in the short term.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The satellite data is damning for Glencore, as it has failed to disclose to shareholders the excessive methane emissions from its Bowen Basin coal mining operations.

“The underreporting of methane emissions is a material risk for shareholders, and this analysis is yet another reason to vote against Glencore’s progress on its climate plan at its AGM on 28 April.

“Whether this is a mistake or a blatant misreporting of emissions, the Board needs to be held to account. As such, shareholders should oppose the re-election of Peter Coates given his role as Chair of the Health, Safety, Environment and Communities Committee.

“Of utmost concern are Glencore’s 2019 emissions as that is the baseline year for its 2026, 2035 and 2050 emissions reductions targets.

“Glencore’s entire climate strategy should be called into question.

“Glencore has previously attempted to discredit the peer-reviewed research which identified excessive methane emissions from its Hail Creek and Oaky North coal mines. Given Glencore’s record of disputing climate science, this is hardly surprising.

“It’s possible that the excessive methane emissions from the Hail Creek mine were intentional—the result of a process known as premining degasification, where methane is intentionally vented or flared for safety reasons. If Glencore knowingly excluded the emissions from its disclosures, then it points to a much more critical governance issue within the company.

“Glencore has not disclosed to shareholders how it measures and manages methane emissions from its coal mining operations, nor how it intends to reduce those emissions in order to meet its emission reduction targets.

“Even the International Energy Agency believes that Australia is underreporting fugitive methane emissions in its national inventory.

“In addition to this issue with methane emissions, Glencore’s coal expansion plans are at odds with its commitment to a ‘responsible managed decline’ of its coal portfolio and in clear conflict with its commitment to the Paris Agreement.”

Background

ACCR’s analysis—Glencore’s methane problem—is published here.

ACCR’s analysis of Glencore’s progress against its climate plan is published here.

Glencore’s operational emissions, adjusted for additional methane emissions (MtCO2e)

Source: Glencore plc, Sadavarte et al (2021), Clean Energy Regulator
*2021 ESG Data Book not yet published, so 2020 Scope 1 emissions were used as a proxy.

Glencore’s Scope 1+2 2019 emissions baseline, existing and adjusted (MtCO2e)

ACCR filed and subsequently withdrew a shareholder resolution to Rio Tinto in February, calling on the company to suspend membership of industry associations that continue to advocate for the development of new and expanded coal mines.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Rio Tinto has finally acknowledged the damage and destruction of the QRC and realises it won’t ever align its advocacy with a safe climate.

“While Rio Tinto’s exit from the QRC may have been triggered by ACCR’s shareholder resolution, the company was under increasing pressure from its shareholders to rein in obstructive lobbying by its industry associations.

“In 2021, the board of Rio Tinto supported an ACCR shareholder resolution calling for the advocacy of its industry associations to be aligned with the Paris Agreement. Rio Tinto has finally acted on the substance of that resolution.

“Over two decades, the QRC has proven to be a consistent roadblock to climate action.

“After more than four years of engagement with Rio Tinto on climate-related lobbying, Rio Tinto has recognised that continued advocacy for the expansion of Queensland’s coal and gas industry is not consistent with the Paris Agreement.

“The QRC exploited the COVID-19 pandemic to encourage the Queensland government to accelerate new coal projects and subsidise new gas infrastructure.

“In 2020, BHP and Origin Energy suspended their membership of the QRC following an advertising campaign targeting the Greens in the Queensland state election.

“Those members of the QRC that claim to be supportive of the Paris Agreement - including Anglo American, BHP, Origin Energy and South32 - must follow Rio Tinto and exit the QRC.

“Last week’s IPCC report confirmed the negative role that organisations like the QRC have played in opposing climate policy for the better part of two decades.

“Investors must call time on anti-climate lobbying by forcing companies to suspend membership or exit industry associations opposed to ambitious climate action.”

Background

ACCR’s 2022 shareholder resolution to Rio Tinto on climate-related lobbying:

Consistent with the board’s support for Resolution 20 at the Rio Tinto Ltd 2021 annual general meeting, shareholders request that our company suspend membership of industry associations that continue to advocate for the development of new and expanded coal mines.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.

ACCR’s 2021 shareholder resolution to Rio Tinto on climate-related lobbying, which was supported by the board and >99% of shareholders.

Oleg Deripaska and Viktor Vekselberg were sanctioned by the Australian government on 17 March. Foreign Minister Marise Payne announced a ban on alumina exports to Russia on 20 March.

• Queensland Alumina Ltd is a joint venture between Rio Tinto (ASX:RIO) (80%) and Rusal International PJSC (20%).

  • Russian oligarch Oleg Deripaska owns approximately 44.5% of En+ Group International PJSC which in turn owns 56.9% of Rusal International PJSC.
  • Russian oligarch Viktor Vekelsberg owns approximately 32.3% of Rusal International PJSC through subsidiary companies SUAL Partners Ltd (21.6%) and Zonoville Investments Ltd (10.7%).

• Origin Energy (ASX:ORG) (77.5%) operates a joint venture with Falcon Oil & Gas Ltd (22.5%) in the Beetaloo Basin.

  • Russian oligarch Viktor Vekelsberg owns approximately 16% of Falcon Oil & Gas Ltd through subsidiary company Lamesa Group Holding SA.
  • Vekelsberg representative Maxim Mayorets resigned from the board of Falcon Oil & Gas on 1 March 2022.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“We welcome Rio Tinto’s decision to take on the capacity and governance of Queensland Alumina.

“However, until Rio Tinto provides further details we remain concerned that Deripaska and Vekselberg may still financially benefit from Queensland Alumina.

“At Rio Tinto’s annual general meeting in London later today, the board is likely to face questioning from shareholders about its relationship with Rusal.

“Unlike Rio Tinto, Origin Energy has failed to take action on its Beetaloo Basin joint venture with Falcon Oil & Gas.  Viktor Vekselberg controls at least 16% of Falcon Oil & Gas, and nearly 80% of Falcon’s shareholders are undisclosed.

“To date, Origin has claimed that: ‘neither Lamesa Holdings nor Mr Vekselberg are a party to the Beetaloo Basin joint venture.’

“Origin is clearly attempting to weather the storm. We have to ask what is the point of sanctions, if Vekselberg can still profit from any successful exploration in the Beetaloo Basin.

“Origin Energy should suspend its joint venture with Falcon Oil & Gas until Viktor Vekselberg’s interest in Falcon is quarantined.”

Background

Top five shareholders in Falcon Oil & Gas Ltd as at 7 April 2022:

Top five shareholders in Rusal International PJSC as at 7 April 2022:

Top five shareholders in En+ Group International PJSC as at 7 April 2022:

NB: All data sourced from S&P Capital IQ

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“UN Secretary-General António Guterres rightly described countries planning to increase fossil fuel production—including Australia—as dangerous radicals.

“Guterres added that vested interests were “choking our planet” based on their investments in fossil fuels, while renewable energy is cheaper, and provides energy security and price stability.

“The full version of the latest IPCC report repeatedly refers to vested interests—especially corporations and trade associations—lobbying against climate action.

“Their business as usual approach - and opportunistic exploitation of geopolitical events, will create a reckoning of future climate disasters.

“While standing in their ivory towers, these vested interests continue to roadblock those industries that stand to benefit from a rapid transition.

“In Australia, this includes the Australian Petroleum Production and Exploration Association (APPEA), the Minerals Council of Australia (MCA), the NSW Minerals Council and the Queensland Resources Council (QRC).

“The IPCC identified “the realities of political economy and lobbying”, as the primary obstacles to carbon pricing. The experience of Australia’s short-lived price on carbon showed the power of industry associations representing incumbent industries.

“Just yesterday, the Department of Industry published its Resources and Energy Quarterly Report which forecast flat or increasing export volumes for gas, metallurgical and thermal coal over the medium term.

“The companies and industry associations responsible for lobbying against ambitious climate policy must be held to account by their shareholders. This starts with voting against climate plans and the re-election of directors.”

Key findings from the latest iteration of the benchmark include:

• While 69% of the focus companies have committed to net zero emissions by 2050 or sooner, just 17% of companies have medium-term targets aligned with a 1.5C pathway
• Only 5% of focus companies have committed to align their capital expenditure with their emissions reduction targets
• Just 42% of focus companies have set emissions reduction targets that include their Scope 3 emissions

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The vast majority of the world's largest emitting companies are not responding to the urgency of climate change by setting Paris-aligned targets, or aligning their capital expenditure to ensure a safe level of warming.

“In the fifth year of the Climate Action 100+ initiative, investors have failed to lay out what the consequences will be for companies that fail to improve.

“Investors have spent too much time offering the carrot, and not enough threatening the stick in order to change company behaviour.

"Investors must be prepared to escalate their engagement, by filing or supporting shareholder resolutions, or voting against the re-election of directors.

“Investors should take the opportunity this AGM season to vote against climate plans that are misaligned with the Paris Agreement, including Glencore and Woodside.

"Investors should oppose the re-election of Peter Coates at Glencore, Peter Hearl at Santos and Anne Pickard at Woodside, the respective Chairs of each company's board sustainability committee.

“Glencore's satisfaction of all indicators on climate policy engagement is a sick joke. According to InfluenceMap, Glencore is the 8th most obstructive company on climate and energy policy in the world.

"Glencore continues to oppose ambitious climate policy in Australia through direct advocacy and its membership of industry associations like the NSW Minerals Council and the Queensland Resources Council.”

Background

Key observations on the 15 Australian companies included in the benchmark:

• Of the 15 companies, only Boral has a medium term (to 2035) emissions reduction target that satisfies the indicator by covering scope 1, 2 and material scope 3 emissions. In September 2021 Boral announced significantly enhanced emissions reduction targets and a commitment to obtaining accreditation via the Science Based Targets initiative.
• 14 companies didn’t satisfy any criteria on the capital allocation indicator, with only Rio Tinto seeing improvement with a Partial score. This is a material concern since allocation of capital is one true measure for how companies are prioritising decarbonisation.
• 60% of Australian companies (9 of 15) don’t have decarbonisation strategies in place to meet emissions targets. Importantly, even those companies that score well, this indicator is not a comment on the Paris-alignment of the targets of the appropriateness of the strategy.
• A new Net Zero Analysis indicator for oil and gas companies verifies that Woodside, Santos and Origin all are materially exposed to transition risks in a pathway that is consistent with the International Energy Agency’s Net Zero Scenario.

ACCR’s analysis of Glencore’s progress against its climate plan is available here.

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Investors must vote against Glencore’s second ‘Say on climate’ vote to ensure they are not tacitly supporting new and expanded coal mines inconsistent with the Paris Agreement.

“Glencore is asking shareholders to trust that its coal production will decline, despite its plans for new and expanded coal mines in Australia capable of producing more than 100 million tonnes per annum.

“Glencore’s total emissions will likely increase by 17% in 2022, with its forecast increase in coal production.

“Glencore is expanding several coal mines in Australia, applying for new coal exploration areas and seeking approval for a major new greenfield coal mine—Valeria—which will destroy habitat for the iconic koala.

“Its coal expansion plans are at odds with its commitment to a ‘responsible managed decline’ of its coal portfolio and in clear conflict with its commitment to the Paris Agreement.

“Glencore is likely underreporting its fugitive methane emissions from ‘super emitting’ coal mines in Australia, and the Scope 3 emissions from its investments (including EN+ Group and Rosneft).

“Unlike many of its peers, Glencore has failed to commit any material capital expenditure to reduce its operational and Scope 3 emissions.

“Glencore is the 8th most obstructive company blocking climate policy action globally, and remains one of the few diversified miners still promoting thermal coal.

“Investors in Glencore do not have a clear picture of Glencore’s forward coal production plans in Australia, nor of how stated emission reduction targets can be realistically met.

“Opposing the re-election of Peter Coates is also warranted given Glencore’s coal growth plans, and his role as Chair of the Health, Safety, Environment and Communities Committee.”

Background

ACCR’s analysis of Glencore’s progress against its climate plan is available here.

Glencore’s coal expansion plans in Australia (Table 8)

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“AEMO has confirmed that in order to avoid a gas shortfall in 2023, governments at all levels must incentivise energy efficiency measures and electrification in order to reduce gas demand in line with the Step Change scenario.

“The solution to the remote possibility of gas shortfalls is not more supply, but less demand. The only party arguing for more supply is the oil and gas industry.

“The uncertainty of the forecasts rests on government policy to reduce demand, and the potential use of fossil gas to produce hydrogen. The latter must be avoided, and priority given to renewable hydrogen.

“Fossil hydrogen makes no economic sense - it’s the equivalent of double taxation. Paying for a resource to make a resource is ludicrous - especially when you could create hydrogen with free renewable energy.

“While some local councils have taken the lead on phasing out gas connections to new buildings, state governments must take more action to reduce gas demand.

“The Victorian Gas Substitution Roadmap presents a huge opportunity to lay out a plan to get Victorians off gas as quickly as possible.

“Gas industry scare campaigns about shortfalls and demand destruction must be called out for what they are: opportunism and blatant self-interest.

“The IEA recently published a 10-point plan to wean Europe off Russian oil and gas. Australia should borrow those ideas and reduce gas demand in favour of efficiency and electrification, as quickly as possible.”

Background

IEA’s 10-point plan to reduce the European Union’s reliance on Russian natural gas.

Tracey Winters said: “The reality is the scale of investment required in the Beetaloo can’t be supported by the domestic market in Australia alone.”

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“At long last, the truth behind the gas-fired recovery has been revealed.

“The Federal government has long claimed that the gas-fired recovery was about meeting a supposed shortfall in domestic supply.

“Taxpayer subsidies are being used to prop up dud investments by gas companies, plain and simple.

“More than a billion dollars of taxpayer’s money has been thrown at developing new gas basins for the benefit of a handful of gas companies - most of whom have made political donations (Origin and Santos).

“The reality is that the development of the Beetaloo Basin, and other new basins, is entirely about supplying LNG export terminals.

“APPEA, Origin Energy and Santos have lobbied the Federal government for more than two years for government support to develop new gas basins, which would otherwise be uneconomic.

“Origin and Santos’ LNG terminals at Gladstone and Darwin will likely run out of gas later this decade or early next decade. Without more gas, they could become stranded before the end of their economic lives.

“These subsidies are contradictory to the so-called free market this government claims to defend. The general public and Origin and Santos shareholders should be appalled.”

Background

In March 2021, AEMO Gas Statement of Opportunities found that future gas field developments would be needed to feed Gladstone LNG export terminals.

ACCR published a report on APPEA’s advocacy relating to the gas-fired recovery in 2021.

Oleg Deripaska and Viktor Vekselberg were sanctioned by the Australian government on 17 March. Foreign Minister Marise Payne announced a ban on alumina exports to Russia on 20 March.

• Origin Energy (ASX:ORG) (77.5%) is in a joint venture with Falcon Oil & Gas Ltd (22.5%) in the Beetaloo Basin.

  • Russian oligarch Viktor Vekelsberg owns approximately 16% of Falcon Oil & Gas Ltd through subsidiary company Lamesa Group Holding SA.
  • Vekelsberg representative Maxim Mayorets resigned from the board of Falcon Oil & Gas on 1 March 2022.

• Queensland Alumina Ltd is a joint venture between Rio Tinto (ASX:RIO) (80%) and Rusal International PJSC (20%).

  • Russian oligarch Oleg Deripaska owns approximately 44.5% of En+ Group International PJSC which in turn owns 56.9% of Rusal International PJSC.
  • Russian oligarch Viktor Vekelsberg owns approximately 32.3% of Rusal International PJSC through subsidiary companies SUAL Partners Ltd (21.6%) and Zonoville Investments Ltd (10.7%).

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said:

“We welcome the Federal government’s ban on alumina exports to Russia, which addresses the concern that Australian alumina may have been used in Russian arms manufacturing.

“We remain concerned, however, that Deripaska and Vekselberg may still profit from their investments in Australia.

“To date, neither Origin Energy or Rio Tinto has made an announcement to the exchange to inform shareholders what the sanctions may mean for their respective joint ventures.

“Origin is burying its head in the sand by claiming that: ‘neither Lamesa Holdings nor Mr Vekselberg are a party to the Beetaloo Basin joint venture.’

“This is simply not true. The joint venture is with Falcon Oil & Gas of which Mr Vekselberg controls at least 16%. Nearly 80% of Falcon’s shareholders are undisclosed.

“Both Origin Energy and Rio Tinto must act immediately to ensure that neither Deripaska nor Vekselberg profit from the respective joint ventures.

“The government must consider imposing sanctions on Rusal, in order to prevent Deripaska and Vekselberg from profiting from Queensland Alumina.

“In the absence of sanctions on Rusal, Rio Tinto must take immediate action to protect its reputation, by taking complete control of the Queensland Alumina joint venture and quarantining any profits from Rusal shareholders.

“Origin Energy should suspend its joint venture with Falcon Oil & Gas until Viktor Vekselberg’s interest in Falcon is quarantined. Origin must ensure that Vekselberg does not benefit from any successful exploration in the Beetaloo Basin.”

Background

Top five shareholders in Falcon Oil & Gas Ltd as at 13 March 2022:

Top five shareholders in Rusal International PJSC as at 13 March 2022:

Top five shareholders in En+ Group International PJSC as at 13 March 2022:

NB: All data sourced from S&P Capital IQ

Oleg Deripaska and Viktor Vekselberg were sanctioned by the US Department of the Treasury on 6 April 2018, with further sanctions imposed on Vekselberg on 11 March 2022.

Oleg Deripaska and Viktor Vekselberg were sanctioned by the British government on 10 March and 15 March, respectively.

• Origin Energy (ASX:ORG) (77.5%) is in a joint venture with Falcon Oil & Gas Ltd (22.5%) in the Beetaloo Basin.

  • Russian oligarch Viktor Vekelsberg owns approximately 16% of Falcon Oil & Gas Ltd through subsidiary company Lamesa Group Holding SA.
  • Vekelsberg representative Maxim Mayorets resigned from the board of Falcon Oil & Gas on 1 March 2022.

• Queensland Alumina Ltd is a joint venture between Rio Tinto (ASX:RIO) (80%) and Rusal International PJSC (20%).

  • Russian oligarch Oleg Deripaska owns approximately 44.5% of En+ Group International PJSC which in turn owns 56.9% of Rusal International PJSC.
  • Russian oligarch Viktor Vekelsberg owns approximately 32.3% of Rusal International PJSC through subsidiary companies SUAL Partners Ltd (21.6%) and Zonoville Investments Ltd (10.7%).

Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said: