ACCR files shareholder resolutions to Santos and Woodside

The Australasian Centre for Corporate Responsibility (ACCR) has led the filing of shareholder resolutions to Santos Limited (ASX:STO) and Woodside Petroleum Limited (ASX:WPL), calling on each company to disclose its strategy to reduce emissions in line with the Paris Climate Agreement, and review its membership of industry associations which obstruct sensible climate and energy policy in Australia.

The shareholder resolutions follow a period of engagement between ACCR and both companies, during which no credible decarbonisation plans were committed to by either company.

The Santos resolutions are being supported by Australian Ethical.

Two substantive resolutions have been be filed with each company (the resolutions to each company are identical). As required under Australian law, a third special resolution to amend the company constitution to permit ordinary resolutions of this kind will also be filed.

Resolution 1: Paris Alignment

The first resolution calls on Santos and Woodside to disclose scope 1, 2 and 3 targets, including emissions from the products sold. It also asks both companies to disclose how their planned capital expenditure aligns with the Paris Climate Agreement, and how executives will be incentivised to achieve the emissions targets.

Similar Paris-alignment resolutions have recently been filed by other activist shareholder groups to five overseas oil majors: Royal Dutch Shell, BP, Chevron, Exxon, and Equinor.

Resolution 2: Lobbying

The second resolution asks companies to commit to reviewing their membership of industry associations such as the Australian Petroleum Production and Exploration Association (APPEA),the Business Council of Australia (BCA) and the Queensland Resources Council (QRC), all of which have sought to obstruct climate policy for more than a decade.

Quotes attributable to Brynn O’Brien, Executive Director, Australasian Centre for Corporate Responsibility (ACCR):

“ACCR has engaged with both of these companies and has monitored their plans over several years. Neither company has made any reasonable commitment to transition.

“This is fundamentally a conversation about what these businesses will look like in a carbon constrained world. The IPCC 1.5 report is very clear. Gas cannot displace coal as a primary energy source if we want to limit global warming to well under two degrees. Gas has a role to play in transition, but that role is limited to supporting the availability of renewable energy, and only over the medium term. The IPCC 1.5 report contradicts the gas growth story put forward by both companies.

“In business terms, in investment terms, 31 years is not a long time for a total transformation to occur, and conversations about the strategy to achieve this must be had now.

“As it stands, the business of these companies is on a collision course with the future of humanity. Fortunately, there is still time for the collision to be avoided, but only if these companies do the difficult work of planning their transition now.

“European and American investors have recently filed very similar resolutions to these, to oil and gas majors overseas. Australian institutional investors, however, have been too slow and the burden of meaningful climate action has again fallen to civil society and retail shareholders. We do not have a moment to lose, let alone a year to waste until the next AGM. In a time of increasing pressure on carbon intensive business models, Australian companies are not well served by tepid and intransparent engagement, and will be left behind by their global peers unless stewardship practices become much more forceful.”

Quotes attributable to Stuart Palmer, Head of Ethics Research, Australian Ethical:

“It’s encouraging that Santos has set some targets, but the company needs to do more to show how their targets and strategy are consistent with limiting warming to meet the Paris agreement objectives of 2 and 1.5 degrees. Investors expect to see a business strategy and targets which demonstrate a credible plan for evolving a company which will thrive in the net-zero emissions world needed to avoid dangerous climate change.

“The need for urgent climate action has a place on all AGM agendas, particular energy companies like Santos. In cases where institutional investors aren’t forcing the issue, it’s great to see individual shareholders and organisations like ACCR stepping up.

“Santos has announced an appraisal program to investigate carbon capture and storage, and commencement of a scientific study to assess the scale of climate warming methane leakage from its gas operations. These are positive initiatives in themselves, but they also raise serious alarm bells. How can the company credibly make the climate case for a growing role for its gas when it relies on unproven CCS technology and unknown methane leakage levels? More urgent action is needed.”