Say on Climate
ACCR has joined hedge fund activist investor Chris Hohn’s Children’s Investment Fund Foundation’s (CIFF) Say on Climate initiative to campaign for company transparency on climate reporting and annual non-binding votes by shareholders.
Say on Climate resolutions call for (at a minimum):
- Annual disclosure of emissions
- A strategy to reduce emissions
- An annual vote on the plan at the AGM
In early February, ACCR filed Say on Climate resolutions with Santos (ASX: STO) and Woodside Petroleum (ASX: WPL), asking for an annual vote on the adoption of a Climate Report consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Action 100+ Net-Zero Company Benchmark as developed by institutional investors.
Rio Tinto became the first Australian company to adopt Say on Climate on 17 February 2021.
On 16 March, Santos adopted the Say on Climate initiative, committing to provide shareholders with a non-binding vote on the company’s Climate Change Report at its 2022 AGM. ACCR will continue to engage with the company over the coming weeks about a recurring annual vote beyond 2022.
Woodside committed to adopting Say on Climate on 19 March 2021.
On 17 March, ACCR filed a Say on Climate resolution with PNG-based oil and gas company Oil Search (ASX:OSH). It committed to adopting Say on Climate on 25 March 2021.
On 22 July, AGL Energy (ASX:AGL) announced that it will provide shareholders with a ‘Say on Climate’ at its 2022 AGMs for both of the proposed demerged companies.
Origin Energy (ASX:ORG) became the sixth ASX-listed company to commit to a ‘Say on Climate’ on 6 August.
In August, South32 (ASX:S32)also updated its climate target and made a commitment to provide shareholders with a ‘Say on Climate’ vote in 2022.
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 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 satisfaction or dissatisfaction with 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.
Frequently Asked Questions
What is the current situation with reporting on climate?
- Climate risk disclosure is not mandatory (NZ and UK govts are proposing this).
- TCFD-aligned disclosure is an emerging norm but still subject to company interpretation, so some components get a cursory mention or omitted altogether.
- According to ACSI, only 60 ASX200 companies (30%) disclose according to the TCFD.
What is the mechanism of Say on Climate?
- An annual, non-binding vote on a climate report issued by the company, based on the TCFD recommendations and the Climate Action 100+ Net-Zero Company Benchmark.
What happens if the resolution is adopted? So what?
- The company will need to prepare an annual climate report consistent with international reporting frameworks, which will be put to a vote of shareholders at each AGM from 2022.
How will this change things?
- Santos and Woodside already disclose some of the information required, but there is still a lot of uncertainty about both companies’ decarbonisation strategies, which could be addressed through binding each company to improved disclosure, through a change to the company constitution, as proposed by the resolution.
Global Voluntary adoption:
Moody’s: Moody’s Announces Commitment to Say on Climate Campaign
Royal Dutch Shell: Shell accelerates drive for net-zero emissions with customer-first strategy
Canadian National Railway: CN Continues to set Ambitious Goals for Sustainability with Advisory Vote on the Company’s Climate Action Plan
Glencore: 2020 Preliminary Results
Rio Tinto: Climate Change Report 2020
VINCI: Shareholders’ General Meeting
Ferrovial: Proposed Resolutions
National Grid: Climate transition action plan shareholder vote
Santos: Santos adopts shareholder advisory vote on Climate Change Report
Nestlé: Nestlé publishes 2020 Annual Report, spotlights sustainability at the Annual General Meeting
Woodside Energy: Woodside Petroleum (ASX:WPL) to adopt the Say on Climate initiative
Oil Search: ACCR has welcomed the announcement from PNG-based oil and gas company Oil Search (ASX:OSH)
- Aena: see case study
- Financial Times, 21 January 2021, UK urged to introduce mandatory climate votes at AGMs
- Financial Times, 23 October 2020, Billionaire Chris Hohn forces first annual investor vote on climate policy
- The Guardian, 15 December 2020, Unilever shareholders to get vote on climate transition plans
- Bloomberg, 22 December 2020, Moody’s Announces Commitment to ‘Say on Climate’ Campaign