Origin concedes to investor pressure, will include climate sensitivity in financial statements

The Australasian Centre for Corporate Responsibility​ (ACCR) is withdrawing its shareholder resolution calling for Origin Energy to include a 1.5°C climate change sensitivity analysis in its 2023 financial statements, after Origin agreed to deliver this information.

ACCR introduced the resolution because companies exposed to the energy transition and the physical risks of climate change need to show shareholders the financial consequences.

In the 2022 Notice of Meeting (pg 13), in response to the ACCR resolution, Origin stated: “We support including a climate sensitivity analysis using a 1.5°C scenario in our financial statements and commit to doing so from FY2023”.

Commenting on the commitment, Alex Hillman, Lead Carbon Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is a win for shareholders. Origin’s commitment to include a climate sensitivity analysis using a 1.5°C scenario in its financial statements is welcome and represents a significant step towards this commitment being normalised across the ASX.

“Climate risk is financial risk, it belongs in financial statements. Regulators and investors expect this. Origin’s plans to disclose a sensitivity to 1.5°C reflects growing global momentum to embed climate change in financial statements.

“Since filing the resolution, ACCR has received significant positive feedback from investors and we welcome Origin’s response. We are now pleased to withdraw the resolution.

“Although Origin did not commit to disclosing the climate risk associated with its exploration assets, it subsequently announced that it is exiting its exploration activities, meaning that this part of ACCR’s resolution became less relevant.

“Shareholders have been expected to vote on climate transition plans, but without the necessary information to understand how climate change impacts their investment. A failure to reflect climate change in financial statements calls into question the governance of directors and the diligence of auditors.

“Reflecting climate risk in financial statements is not a radical ask - it’s just good practice. As such, ACCR expects all ASX-listed fossil fuel producers to follow Origin’s lead.

“BHP is facing a similar resolution at its November AGM but has not yet made a commitment to support the resolution.

“ACCR will continue to monitor Origin Energy’s commitment to ensure the board undertakes disclosures that can give investors comfort that any assumptions and impairments under a 1.5°C pathway are transparent.”

Background

The resolutions and supporting statements for Origin can be found here.

For further context, see 2021 report “Flying Blind: the glaring absence of climate risks in financial reporting” released by Carbon Tracker and UNPRI.

The Climate Action 100+ Net Zero Company Benchmark is now assessing company financial statements and audit reports against indicators. See here for the indicators and the methodology. See here for Origin Energy’s scores in the 2022 assessment.

Similar resolutions were filed by As You Sow with Chevron and by the Christrian Brothers Investment Services at Exxon earlier this year, receiving 38.7% and 51% support respectively.