Australia’s securities regulator ASIC has warned that it will take “regulatory action” against companies it believes are making misleading Net Zero claims.
The supervisor confirmed that it has already “intervened” in the initial public offering of an unnamed energy company to “seek clarification” about its Net Zero emissions statements.
The identity of the company has not been confirmed, but the Australian Financial Review reported in July that Australian gas explorer Tamboran Resources had been scrutinised by ASIC over the Net Zero commitment in its IPO prospectus. RI has contacted Tamboran for comment – it could not be immediately reached outside local office hours.
“We continue to monitor ‘Net Zero’ statements in both fundraising documents and in the market generally,” ASIC said in an update published this month. “We will take regulatory action where warranted”.
“Where there are no reasonable grounds to underpin a ‘Net Zero’ statement that is predictive in nature, the disclosure may be misleading,” it added.
As a result of its intervention, the company in question made a number of changes, including removing Net Zero statements “that inferred near-term implications”, ASIC said. The company also provided additional disclosure on how it planned to realise its Net Zero ambition and shared details on the “uncertainties and risks associated with achieving [it]”.
Joel Riddle, CEO of Tamboran Resources, was quoted by the AFR as saying that the gas firm had been “tested quite considerably by ASIC on our business plan and our vision around being net zero” – the climate pledge he said was a key element behind the success of the floating of the firm on the Australian stock exchange, ASX.
On the level of scrutiny Tamboran Resources faced over its Net Zero claims, Riddle told AFR: “When I look at the other top 13 [Australian oil & gas] companies I don’t think any of them has gone through the level of scrutiny we have gone through … so that is coming. That is coming for a lot of these players.”
Sustainability claims by corporates and investors are increasingly being examined by financial regulators. Last month, for instance, it was revealed that both German and US financial regulators had launched investigations into asset manager DWS over accusations that it made misleading statements about its use of sustainability criteria. DWS has denied the accusations.
Today also saw the publication of a new Net Zero standard for the oil & gas sector by the Institutional Investors Group on Climate Change. The new standard, which is backed by global investors representing assets of $10.4trn and draws on the work of the Transition Pathway Initiative, acknowledges ‘winding-down’ as a legitimate strategy for oil & gas companies.