Australian oil and gas firms Woodside Petroleum and Santos have denied shareholders a vote on climate proposals filed by the Australasian Centre for Corporate Responsibility (ACCR) on a technicality.
The rejected resolutions would have called on the companies to disclose how they plan to align with the Paris climate agreement, including provision on capital expenditure, remuneration, and trade associations.
Brynn O’Brien, Executive Director at the ACCR, told RI that the resolutions had been rebuffed due to a “legitimate” technical deficiency in the paperwork evidencing that they were supported by the necessary 100+ shareholders.
She added, however, that “it was within both companies’ discretion to allow us to correct the deficiency”, which is something that other companies have allowed the ACCR to do in the past. But neither Santos or Woodside did.
It comes as Rio Tinto – following engagement by the ACCR – has set out its expectations to industry associations, such as lobbying group the Minerals Council of Australia (MCA), on what their position on climate change should be, including that they should “support” the Paris climate agreement and be “neutral” on energy policy, decarbonisation and carbon pricing.
Australian trade associations are, additionally, expected to publicly “argue against” coal subsidies.
As a result, the ACCR will not file a resolution on the issue this year at Rio Tinto – last year’s was supported by 20% of the company’s shareholders.
O’Brien said Rio Tinto had given its industry associations “a strong warning” that would be “looked upon very favourably” by Rio Tinto’s major investors.
But the Anglo-Australian mining giant will still face a climate resolution at the annual meeting of its Australian-arm on May 9 filed by Australian non-profit Market Forces on its transition plans, covering scope one, two and three emission targets, executive remuneration, and capital expenditure.
The ACCR’s resolutions at Santos and Woodside were endorsed by Dutch campaign group Follow This. Its founder Mark van Baal told RI: “When these companies do not want to ask their shareholders to support Paris targets, we can only conclude they do not want to set targets for the emissions of their products (Scope 3)”.O’Brien told RI that there are “no formal grounds” to pursue the issue further with either Santos and Woodside, since the matter is discretionary.
She added that even if there were grounds in “Australia, there is no equivalent of the [US regulator] SEC – the company decides, and the only recourse shareholders have is to litigate the matter in the Federal Court”.
The Australian proxy system has been increasingly criticised by the country’s asset owners, some of whom regard it as a “barrier” to ESG. See RI’s recent Australia country profile.
Both Woodside and Santos have been a target of climate conscious investors over the years: Woodside was subject to Australia’s first ever climate related resolution in 2011 and Santos was at the centre of a political storm three years later when Australia National University opted to divest it and several fossil fuel companies.
Last month, representatives of Santos and Woodside were among a delegation that met with the Premier of Western Australia, Mark McGowan; the same day he instructed the state’s environmental protection authority to withdraw proposed emissions guidelines.
The ACCR announced this month that it will scrutinise the anti-climate lobbying by trade associations in the build-up to the federal elections on 19 May 2019.
It has also been a prominent convener of ESG resolutions over the last few years, the highlight being the 46% support for its anti-climate lobbying resolution at Origin Energy last year – which prompted the Australian energy giant’s chairman to agree to ramp up disclosures on its trade associations.
In 2017, Rio Tinto’s rival BHP reviewed its trade associations, following investor pressure, ultimately leading it to withdraw its membership from the World Coal Association due to what it described as “material differences” with the trade body.
The ACCR currently has resolutions co-filed with Follow This at oil majors BP and Equinor on climate targets. Follow This also has a resolution filed at Chevron.
A spokesperson for Woodside told RI that the “specific resolutions were not validly submitted so could not be accepted”. But she added that climate change is discussed in the firm’s Annual Report, Sustainable Development Report, on its website and at its AGM.
Santos had not responded at the time of writing.