Oil Search urged to adopt ‘Say on Climate’ as momentum builds

The Australasian Centre for Corporate Responsibility​ (ACCR) has filed a shareholder resolution with PNG-domiciled oil and gas company Oil Search (ASX:OSH) urging the company to adopt the Say on Climate initiative and provide shareholders with an annual, non-binding vote on the company’s Climate Change Report.

This comes as ACCR prepares to withdraw a similar resolution to Santos (ASX:STO), on the basis of the company’s voluntary commitment to a climate vote at its 2022 AGM.

ACCR has also filed a Say on Climate Resolution with Woodside Petroleum (ASX:WPL).

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

“Oil Search should follow the lead of Santos and Rio Tinto by voluntarily committing to giving shareholders a vote on their climate strategy.

“Oil Search’s only climate target relates to emissions intensity. It has no plan to reduce emissions over the short-, medium- or long-term.

“If the company is confident, as it claims, that its planned expansion projects are ‘Paris-aligned’, it should put those plans to a vote.

“This week, Santos committed to giving its shareholders a vote on its climate plan at its 2022 AGM, joining Rio Tinto, Glencore, Shell and Unilever in doing so.

“The pressure is now on Woodside and Oil Search to follow suit.

“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.”

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 concern about the deficiencies in this approach, but no established formal avenues to express concern.

Background

The Oil Search resolution.

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.

Glencore, Moody’s, Rio Tinto, Santos, Shell and Unilever have committed to a Say on Climate voluntarily.

Learn about global Say on Climate activity on their website.