Investors press Australian oil & gas firm Santos on TCFD disclosure despite climate change document

Australian Ethical rallying investors ahead of AGM tomorrow

SRI firm Australian Ethical is calling on fellow investors to back a resolution forcing ASX-listed oil and gas company Santos to disclose in line with the Financial Stability Board’s Taskforce on Climate-related Financial Disclosure.

The A$2bn (€1.37bn) asset manager, which runs a superannuation fund as well as managed funds, is working with NGO Market Forces to pass a resolution at Santos’ AGM on Thursday May 4. The resolution – relatively rare in Australia – proposes that Santos:

• Incorporates climate-related risks and opportunities and their implications for its strategy and financial planning into mainstream financial reporting
• Discloses the metrics and targets used to assess climate-related risks and opportunities
• Provides “further information on how its risk management framework influences capital investment decisions. Acquisitions and exploration expenditure should be weighed against the likelihood of assets becoming stranded before the end of their economic life”
• Provides investors with more detail on potential climate-related risks
• Discloses all political donations and ensure consistency between the views of the organisation on climate change with those of industry bodies of which it is a member (Santos is not a member of any ‘responsible investment’ bodies or initiatives).

“It’s a relatively conservative resolution,” said Stuart Palmer, Head of Ethics Research at Australian Ethical. “But that’s because it’s aimed at trying to get something up which will attract the whole range of institutional investors on board, not just narrowly defined ethical investors but much bigger mainstream pension funds to support the resolution.”

Australian Ethical does not invest through its main strategies in Santos, as it excludes all fossil-fuel companies, but it has a nominal holding in the firm for advocacy purposes.It is supporting the resolution which was filed by 100 retail investors – the required number of investors needed in Australia.

“The reporting by Santos lags: it’s a long way from best practice. They haven’t disclosed effectively how they’re addressing climate risk and opportunity in their business,” Palmer told RI, adding that “the hope and expectation is that the TCFD guidelines will make it easier to engage in future because it’s a credible body driven by representatives from across the economy”.

In response to the proposed resolution, Santos has now published a statement on climate-change disclosure. The four-page document states that Santos already “tests existing and new projects against a low, base and high-carbon price assumption”. It also says “the world has to balance the twin objectives of limiting climate change and providing affordable energy”, adding that “natural gas is the perfect partner for renewables”.
Santos also committed to “review the FSB’s TCFD for future reporting and will look to ensure that the following reporting requirements are met”:

1 “Santos will introduce a Climate Change report which explores and assesses the impact of climate change on our business”.
2 “Santos will continue to measure and collate our Sustainability Performance Data and make it available on our website”.
3 “Santos will participate in select carbon disclosure and sustainability surveys”.

Market Forces said the document was “evidently in response to scrutiny from institutional investors”, but that it “provided no new climate-related risk information to investors and very little by the way of commitments to disclose additional information in the future”.

Market Forces is also submitting a resolution at Oil Search, the largest oil and gas exploration firm in Papua New Guinea.

Elsewhere, the Australian Council of Superannuation Investors (ACSI) holds its annual conference in Melbourne starting tomorrow.