Media release

Santos adopts ‘Say on Climate’

The Australasian Centre for Corporate Responsibility​ (ACCR) has welcomed the move by Santos (ASX:STO) to adopt the Say on Climate initiative and provide shareholders with a non-binding vote on the company’s Climate Change Report at next year’s AGM.

Commenting on the announcement, Dan Gocher, Director of Climate and Environment, said:

“We welcome Santos’ commitment to transparency and its acknowledgement of shareholders’ appetite to provide formal input into transition planning. We will continue to engage with the company over the coming weeks about a recurring annual vote beyond 2022.

“However, while Santos has committed to net zero operational emissions by 2040, it has no plans to address the largest part of its carbon footprint—the Scope 3 emissions from the oil and gas they sell—despite investors demanding it sets targets on those emissions. Any credible future report must address this gap.

“Santos is planning to increase production by more than a third by 2025-26, which will come at the expense of emissions reductions in the critical decade to 2030.

“Santos’ emissions reduction targets rely heavily on carbon offsets in the short-term and carbon, capture and storage (CCS), in the long-term. Phase 1 of its Moomba CCS project—which is yet to be sanctioned—will capture just 1.7 Mt CO2e annually, or 4.4% of Santos’ total carbon footprint.

“Due to the rapid transition taking place in the energy sector, it is imperative that shareholders are provided with the information required to assess the future earnings and value of these companies.

“The pressure is now on Woodside, Oil Search and others to adopt Say on Climate voluntarily.

“The Say on Climate framework will provide shareholders with the opportunity to send a clear signal to the board about whether the company is effectively managing the risks of climate change.”

Background

Investor briefing on our Say on Climate resolution to Santos.

Say on Climate  is a major, global climate-corporate governance initiative launched in 2020 by TCI Fund Management, the activist fund run by Chris Hohn, and its related charitable foundation, the Children’s Investment Fund Foundation (UK) (CIFF).

The aim of the initiative is to generate a widespread increase in focus of listed companies and their investors on developing and delivering Paris-aligned plans, with increased accountability around substance of and performance against those plans through annual shareholder votes.

Resolutions have been filed with a number of companies globally, and statements of support made by various asset managers and asset owners. Mark Carney (UN Special Envoy for Climate Action and Finance) is a public supporter of the initiative.

Why Say on Climate in Australia

Few major Australian listed companies have made credible commitments, supported by detailed plans, to align their activities with the goals of the Paris Agreement. Australian law does not compel companies to disclose in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), nor to set meaningful and realistic emissions reduction targets.

In this context, Say on Climate is an attractive mechanism to promote change in the behaviour of Australian companies. Delivered successfully at scale, it has the potential to drive transformational change in major companies’ approach to emissions disclosure and planning, across the Australian market.

  • The management of climate risk by major companies has portfolio-wide and economy-wide implications.
  • These resolutions are designed to ensure that, in the absence of law reform, immediate investor demand for information to be disclosed in a timely and consistent fashion is met, so that a structured conversation between companies and their shareholders can take place.
  • An annual vote would allow shareholders to express their approval or disapproval of the company’s decarbonisation strategy
  • For example, both Santos and Woodside intend to rely heavily on offsets in the short term, and CCS in the long term. There is a lot of shareholder chatter about the deficiencies in this approach, but no established formal avenues to express concern.

Global Say on Climate activity to date. 

Companies which have voluntarily adopted it:

Resolutions passed:

Resolutions filed:

  • Canadian Pacific Railway
  • Canadian National Railway
  • Moody’s Corp
  • S&P Global
  • Union Pacific Railroad
  • Charter Communications
  • Alphabet Inc.

Asset Managers support:

Asset Owners support:

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