Aussie investors reluctant to opine on Origin’s trade group climate claims

Australian investors have remained tight-lipped about Origin Energy’s claim that none of its trade associations are misaligned with the goals of the Paris climate agreement.

In its fourth industry association review, published this month, the Aussie utility found bodies like the Australian Petroleum Production and Exploration Association (APPEA) and Queensland Resource Council (QRC) to be “aligned” and “partially aligned” with Paris, respectively.  

None of the 20-plus trade groups assessed were judged to be in “misalignment”, which is defined as “a formal climate change policy that is materially different to Origin’s in a negative way… or actively and consistently promotes anti-climate change messages or seeks to blur and confuse climate change messages or policies”. 

The Aussie utility has faced substantial and sustained shareholder pressure on its industry group memberships in recent years.  

Last October, 36.6 percent of investors, including US behemoth BlackRock, supported a lobbying proposal calling on the company to suspend membership of trade bodies whose advocacy is inconsistent with the Paris Agreement.   

That was not the first climate-related lobbying proposal at Origin, nor was it the biggest tally. In 2018, 46 percent of shareholders supported a resolution calling for greater transparency on the utility’s indirect advocacy activities. The result, at the time, was the largest vote on a shareholder proposal in Australian corporate history.  

Both proposals were filed by the Aussie non-profit the Australasian Centre for Corporate Responsibility (ACCR). 

Responsible Investor reached out to large Australian super funds to get their reaction to the review, but none directly responded to the question on the credibility of Origin’s assessment.  

Most of the funds contacted are members of Climate Action 100+, the investor engagement initiative targeting the world’s biggest emitters. They include Aware Super and Perennial Partners, which co-lead engagement with Origin under the auspices of CA100+. 

A spokesperson for Perennial said the fund was unable to comment within the deadline.

Aware Super’s spokesperson shared a statement explaining that it has engaged with Origin on “many ESG matters, including its annual Industry Association Review”. 

“While the company has made pleasing progress in broadening and enhancing this review since it was launched, we still think there’s room for improvement, and accordingly last year we abstained from voting on a shareholder proposal relating to the company’s industry association memberships,” they added.  

Cbus and Christian Super also declined to comment. The Australian Council of Superannuation Investors (ACSI), the ESG-focused body representing 26 super funds, told RI it does not comment on specific engagements.  

Last year, ACSI updated its policy to include the expectation that companies should “ensure their policy and advocacy activity is consistent with the goals of the Paris Agreement, including activity undertaken both directly and via industry associations”.   

Australian Ethical had not responded to a request for comment on the credibility of Origin’s assessment at the time of publication.  

A spokesperson for HESTA told RI that it is still assessing Origin’s disclosure and “it will form a part of our ongoing engagement and how we come to voting decisions at the AGM”. 

CareSuper’s representative said that it will work with its fund manager, ACSI and CA100+ to review and assess Origin’s upcoming ‘Say on Climate’, report including its industry associations. 

‘Misaligned with Paris’

In contrast with Origin’s assessment, InfluenceMap, the lobbying think tank and data partner to CA100+, regards many of the company’s trade groups as misaligned.  

Joe Brooks, programme manager at InfluenceMap, told RI that its analysis indicates three of Origin’s trade bodies – the QRC, APPEA and Australian Industry Greenhouse Network – are misaligned with the Paris Agreement and five others are “potentially misaligned”.  

The QRC, for instance, is ranked by the NGO as “E”. The only association ranked lower for Oceania is NSW Minerals Council, which is “E-“. 

Brooks pointed to Origin’s review, where the utility stated it would “exit any industry association that has a formal policy of climate change denial or actively and consistently promotes anti-climate change messages or lobbies against the goals of the Paris Agreement”. He added: “It is clear that some of Origin’s key industry associations fall under this category.”  

Origin declined to comment on InfluenceMap’s analysis. In the review, it stated that it “may remain a member of an industry association with which it does not have complete alignment on the basis that there is opportunity for constructive industry dialogue and advocacy”. 

In its 2021 review, Origin revealed that it had “suspended and subsequently reinstated” its membership to the QRC, after it was “satisfied that the QRC had made key changes to its policies on political lobbying”. 

Anglo-Australian miner Rio Tinto also exited QRC this year, a decision that came just a couple of months after the ACCR agreed to withdraw its climate lobbying proposal.  

In an interview published earlier this month in the Australian press, QRC’s CEO Ian Macfarlane is quoted as saying there was still a future for coal and gas producers. 

According to IEA’s 2050 net zero scenario, published last year, no further investments can be made in new oil and gas if the goals of the Paris Agreement are to be met. 

Lobbying disclosure has been a key focus since inception for CA100+, which includes it as part of its engagement on good governance. Under the initiative’s corporate benchmark, Origin is judged to have met all the criteria for climate policy engagement, including the demonstration that it “has a process to ensure its trade associations lobby in accordance with the Paris Agreement”. 

When asked if the benchmark considers the outcome of trade body reviews, Marshall Geck, senior specialist, stewardship at the Principles for Responsible Investment (PRI), told RI that this is not currently assessed. He added: “This is something we might address in future iterations of the benchmark.” 

On the sub-indicator relating to measures taken to ensure trade associations are not misaligned on climate, he said: “The assessment is only based on the criteria of whether the company discloses the process it takes. It is not an assessment of the quality or credibility of the process – or the outcome of the review undertaken by a company.” 

On Origin specifically, Geck said: “Origin’s ‘organisational score’ and ‘relationship score’ from InfluenceMap suggest there is room for improvement in the company’s real-world lobbying activities.”