Climate in Origin’s financial statements: Closer but no cigar

The Australasian Centre for Corporate Responsibility​ (ACCR)  is commenting on Origin Energy’s Full Year Results, in which it reported a 30% increase in underlying profit.

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.”