Members’ statement for resolution relating to the re-election of Richard Goyder

ACCR has filed a members' statement with Woodside Energy Group (ASX:WDS) against the re-election of Richard Goyder.

This will be voted on at Woodside Energy's AGM on Wednesday 24 April 2024 in Perth, Western Australia.

Members’ statement for resolution relating to the re-election of Richard Goyder (985 words inc footnotes)

The Woodside board, chaired by Richard Goyder, has been persistently unresponsive to shareholder concerns on climate risk management and is pursuing a growth strategy that is not in shareholders’ interests.

A central function of Woodside’s board is to “set the strategic direction of the company”^[1] and this includes the company’s management of climate risk. However, under the chairmanship of Richard Goyder, the current board has resisted change in the wake of major shareholder votes at the last four annual general meetings (AGMs), each relating to its failure to deliver a credible strategy that will maximise shareholder value in the face of the global energy transition.

Most recently, long-standing director Ian Macfarlane suffered a record-breaking^[2] vote of 35% against his re-election at the 2023 AGM over these concerns. Company disclosures since then, in particular those made at the 2023 Investor Briefing Day, indicate Woodside is persisting with its carbon-intensive growth portfolio that appears less value-accretive than a capital return strategy.^[3]

The chair carries ultimate responsibility for the company’s direction, and therefore it is the chair who must be held accountable for Woodside’s current approach.

Investor concerns with Woodside’s climate strategy and governance

The primary elements of concern that investors have held regarding Woodside’s climate strategy and governance over the last four years are:

• Woodside is continuing to allocate the majority of its capital to developing new oil and gas projects
• Woodside’s scope 1 and 2 decarbonisation targets are not Paris-aligned
• Woodside has not set a scope 3 target to drive the decarbonisation of its products and value chain, even though scope 3 emissions constitute 92%^[4] of total equity emissions
• offsets dominate Woodside’s scope 1 decarbonisation strategy, which applies to 8%^[5] of equity emissions
• the company has been persistently unresponsive to the above concerns.

Woodside’s board is still not listening

Based upon available disclosures, Woodside’s strategy has not materially changed since the 2023 AGM. We say this noting that Woodside mandated the filing date of this members’ statement prior to the publication of its 2023 Climate Report. Unlike last year, Woodside refused a request for a modest period to assess the 2023 Climate Report for any substantive updates. Therefore the assessment below is primarily based upon the presentations at the 2023 Investor Briefing Day.^[6]

• Oil and gas expansion remains the priority: Having not sanctioned a significant ‘new energy’ project, all of Woodside’s sanctioned capex has been allocated to oil and gas expansion. When adding Browse, Calypso, Sunrise and Woodside’s $5bn ‘new energy’ capex target, ACCR estimates that 88% of greenfields capex is still targeting fossil fuels.^[7]
• Operational targets (8% emissions) unlikely to be credibly strengthened: With Scarborough, Sangomar and Trion coming online before 2030, scope 1 emissions are expected to increase and the probability of Woodside credibly strengthening its operational targets is low.
• Credible Scope 3 target (92% emissions) not possible: While Woodside continues to actively develop projects that will result in an additional 475 MtCO2e of scope 3 emissions^[8], we see no pathway for a credible Scope 3 target to be announced by the company.
• Offsets will remain integral to meeting operational targets: Despite a growing emphasis on unsanctioned and ‘indicative’ scope 1 reductions that cost up to US$500 /tCO2e^[9], Woodside has not disclosed the potential emissions increases associated with the oil, gas and hydrogen projects it is pursuing. ACCR estimates that scope 1 emissions from Browse, Calypso and Sunrise will be 80 MtCO2e.^[10] This exceeds the upper estimates of Woodside’s potential scope 1 emission reductions. With potential new emissions exceeding potential reductions, offsets will inevitably remain a key lever for Woodside to claim it is decarbonising its operations.

When presenting at the Investor Briefing Day, CEO Meg O’Neill stated “Our company strategy is a climate strategy, we don’t have two separate strategies”.^[11] If the company’s current strategy is progressed as stated, investor concerns will remain unaddressed.

Is it all worth it? Woodside’s carbon-intensive growth portfolio creates less value than capital return

Between 2007 and 2023, with no overall change in oil price despite significant volatility, Woodside doubled its production and only delivered a total shareholder return of 3.5% p.a.^[12]

Despite lacklustre returns, Woodside remains committed to a production growth strategy. Its investment framework is more bullish than peers, with lower hurdle rates and/or higher oil price assumptions than BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Equinor, Shell and TotalEnergies.^[13] This has real world impacts for shareholders, with ACCR finding it unlikely that any of these peers, possibly aside from Shell, would have invested in Trion.^[14] In fact, ACCR analysis concluded that Woodside's oil and gas growth opportunities deliver less value than a share buyback would.^[15]

Richard Goyder’s record as an ASX Chair

With poor responsiveness to shareholders a feature of the Goyder-led Woodside board - for example, lack of responsiveness to major shareholder votes and a last minute commitment to a second Say on Climate vote only after prolonged shareholder pressure^[16] - we have doubts about whether the Chair possesses the leadership style to transition Woodside into a thriving, modern energy company.

In October 2023 Qantas announced significant board renewal plans “in recognition of the reputational issues facing the Group and to support the restoration of trust in the company.”^[17] This included an announcement that the chair Richard Goyder will retire prior to the 2024 AGM.^[18] Mr Goyder’s announced exit was endorsed by the Australian Shareholders Association and the Australian Council of Superannuation Investors.^[19] The announcement was followed by a record 83% vote against the company’s remuneration plan at the 2023 AGM.^[20]

We encourage members to take the concerns outlined above alongside Woodside’s recent history with regard to climate strategy and governance into account when considering their vote on the re-election of the Chair at the 2024 AGM.

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