Origin’s climate risk is material, must be in financial statements

The Australasian Centre for Corporate Responsibility​ (ACCR) has filed a shareholder resolution with Origin Energy (ASX:ORG), seeking that the company include a climate sensitivity analysis in its audited financial statements:

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.