Highlights of 2023
Here are some of the highlights of ACCR’s efforts and impact over this year. Without all of you, this work is not possible.
ACCR wins 'ESG engagement initiative of the year, Asia'
After coordinating the first group of institutional investors to file a climate resolution in Japan, ACCR and our institutional investor partners received Environmental Finance’s 2023 Sustainable Investment Award for 'ESG engagement initiative of the year, Asia'. Other investors included Man Group, HSBC Global Asset Management, and Amundi, representing around $3 trillion AUM.
Jason Mitchell, Head of Responsible Investment at Man Group told Environmental Finance that Man Group was "delighted to receive this award on behalf of the co-filing group.” He said this "recognises the significance of these pioneering climate shareholder resolutions by institutional investors in Japan”.
Woodside’s next “wave of growth” creates barely a ripple for shareholders
In August we published research into Woodside Energy Group’s portfolio of planned new oil and gas projects. It found 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 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,” says ACCR’s Lead Analyst, Alex Hillman.
BHP’s Industry 2023 Industry Association Review
BHP’s first Industry Association Review (IAR) in three years has not substantially improved the company’s transparency or accountability for its climate lobbying activities, according to an ACCR investor bulletin.
The bulletin also observed BHP isn’t yet systematically aligned with the Global Standard on Responsible Climate Lobbying, an investor-backed, best-practice framework for lobbying activity.
Glencore voting records released
BlackRock and MFS Investment Management both voted against Glencore’s climate plan, marking a rare break between the mining company and two of its largest institutional shareholders over environmental policy. Check out this coverage in The Financial Times.
ACCR has since updated its research and provided feedback for investors concerned about Glencore’s inadequate Climate Report and thermal coal expansion in Australia.
Climate Finance Day
As You Sow, Carbon Tracker, Australasian Centre for Corporate Responsibility (ACCR), and IEEFA, proudly presented a Climate Finance Day as part of NYC Climate Week 2023. The day brought together leading financial experts, investors, advocates, and innovators to engage in discussions, exchange ideas, and foster collaborations to find solutions.
We participated in two very thought-provoking discussions. Executive Director, Brynn O’Brien, led the panel on investor stewardship and corporate engagement. Our Company Strategy - UK Lead, Nick Spooner, featured on the panel looking at the future of Oil & Gas in a zero-emissions economy. Watch both discussions here.
Benchmarking for change: corporate political expenditure and climate lobbying in Australia
Our new research finds that large Australian companies have poor governance and disclosure of their political spending, compared to the top 500 listed companies in the US. Of the five energy and resources companies we assessed in detail (BHP, Origin, Rio Tinto, Santos and Woodside), none scored highly on the CPA-Zicklin Index, a key metric for the transparency of disclosure and governance of major S&P-listed companies. Watch our webinar presenting these key findings.
In November, ACCR also released an Investor Bulletin evaluating recent lobbying by the oil and gas industry in Australia, which you can read here.
Australia’s “golden era” of gas a dud for shareholders
New ACCR financial modelling showed eight major projects which reached Final Investment Decision (FID) during the peak of Australia’s LNG wave eroded US$19 billion of shareholder value, with each project running over budget and behind schedule.
“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,” said Lead Analyst, Alex Hillman.
Woodside directors called to account on climate
Successful shareholder strategy encompasses a whole tool-kit of options. After many years of corporate engagement with Woodside, and faced with a board unresponsive to material shareholder votes and steadfastly refusing to improve its climate strategy, ACCR decided to deploy the mechanism of filing a members’ statement - a longstanding shareholder right under section 249P of the Corporations Act.
Our research team also undertook a deep-dive into Woodside’s 2022 Climate Report, discovering that while this was an opportunity for Woodside to respond to shareholder concerns over the last three years, no substantive changes had been made.
At the meeting, a record-breaking vote was recorded against the re-election of long-standing director Ian MacFarlane, and significant votes were cast against the two other directors standing for re-election. This is a globally significant vote against incumbent directors of a top ten global independent fossil fuel producer, and shows that accountability for climate governance failures has finally reached board level, where it belongs.
Shareholders concerned by this were not out of options, though. As Executive Director, Brynn O’Brien, wrote in The Australian: “In Australia, shareholders only get the opportunity to vote on each director’s tenure every three years. At this year’s AGM, Woodside’s shareholders have every reason to demonstrate what effective engagement looks like.”
Rio Tinto commits to positive lobbying
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.
According to Company Strategy Lead, Harriet Kater: “Industrial-scale decarbonisation is an enormous challenge. Companies can show leadership by clearly signalling where government interventions can assist in addressing genuine barriers in order to expedite the decarbonisation of their assets and value chains.”
Rio Tinto has made a commitment to enhance its approach to climate advocacy by disclosing the policy settings it needs to meet its 2030 climate target of 50% reduction in scope 1 and 2 emissions. Whilst this is a positive step for lobbying practice, the proof will be in the pudding and ACCR will continue to engage with Rio Tinto and monitor its statements and actions.
Increase in votes against directors at Santos AGM
At Santos’ 2023 Annual General Meeting, sizable votes were recorded against all three directors facing re-election. Last year, the average vote against directors was 1%. This year it jumped to an average closer to 9%.
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.
Lead Analyst, Alex Hillman, said: “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”.
Investors demand Glencore comes clean on coal
Borders are no deterrent when it comes to ACCR hunting down carbon pollution. In the final hours of 2022, along with a global coalition of institutional investors spanning Europe, the United Kingdom and Australia, we submitted a shareholder resolution to mining-giant Glencore’s registered office in Jersey, supported by 69 individual shareholders from the UK.
Glencore is Australia’s biggest coal miner and one of the world’s largest coal traders, and 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.
Strategic projects lead, Naomi told the Sydney Morning Herald; “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.”
The resolution was voted on at the AGM in Switzerland in May.
Federal Court hearing for Santos greenwashing case gets closer
In 2021 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.
In 2022, we filed to expand the 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
This was the first court case in the world to challenge the veracity of a company’s net zero emissions target, and we anticipate that hearings will begin some time this year.
ACCR calls out the billion tonne elephant in the room
In early January, the Australian government released its proposed changes to the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule - a mechanism intended to manage and reduce carbon emissions from Australia’s biggest climate polluters.
ACCR’s Lead Analyst Alex 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.”
““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.”
Decommissioning time bomb
ACCR released research highlighting the multitude of decommissioning risks faced by Australia’s offshore petroleum industry.
Inexperience, a global history of cost overruns, and environmental risks all play into this being a significant liability for the industry, with shareholders needing more information about how liabilities are being measured and managed.
