ACCR has joined hedge fund activist investor Chris Hohn’s Children’s Investment Fund Foundation’s (CIFF) Say on Climate initiative to campaign for company transparency on climate reporting and annual non-binding votes by shareholders.
ACCR’s first shareholder resolutions for 2021 have been filed to Santos (ASX: STO) and Woodside Petroleum (ASX: WPL), asking for an annual vote on the adoption of a Climate Report consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Action 100+ Net-Zero Company Benchmark as developed by institutional investors.
Say on Climate resolutions call for (at a minimum):
- Annual disclosure of emissions
- A strategy to reduce emissions
- An annual vote on the plan at the AGM
Why Say on Climate in Australia
Few major Australian listed companies have made credible commitments, supported by detailed plans, to align their activities with the goals of the Paris Agreement. Australian law does not compel companies to disclose in line with the recommendations of the TCFD, nor to set meaningful and realistic emissions reduction targets.
In this context, Say on Climate is an attractive mechanism to promote change in the behaviour of Australian companies. Delivered successfully at scale, it has the potential to drive transformational change in major companies’ approach to emissions disclosure and planning, across the Australian market.
- The management of climate risk by major companies has portfolio-wide and economy-wide implications.
- These resolutions are designed to ensure that, in the absence of law reform, immediate investor demand for information to be disclosed in a timely and consistent fashion is met, so that a structured conversation between companies and their shareholders can take place.
- An annual vote would allow shareholders to express their satisfaction or dissatisfaction with the company’s decarbonisation strategy.
- For example, both Santos and Woodside intend to rely heavily on offsets in the short term, and CCS in the long term. There is a lot of shareholder chatter about the deficiencies in this approach, but no established formal avenues to express concern.
Frequently Asked Questions
What is the current situation with reporting on climate?
- Climate risk disclosure is not mandatory (NZ and UK govts are proposing this).
- TCFD-aligned disclosure is an emerging norm but still subject to company interpretation, so some components get a cursory mention or omitted altogether.
- According to ACSI, only 60 ASX200 companies (30%) disclose according to the TCFD.
What is the mechanism of Say on Climate?
- An annual, non-binding vote on a climate report issued by the company, based on the TCFD recommendations and the Climate Action 100+ Net-Zero Company Benchmark.
What happens if the resolution is adopted? So what?
- The company will need to prepare an annual climate report consistent with international reporting frameworks, which will be put to a vote of shareholders at each AGM from 2022.
How will this change things?
- Santos and Woodside already disclose some of the information required, but there is still a lot of uncertainty about both companies’ decarbonisation strategies, which could be addressed through binding each company to improved disclosure, through a change to the company constitution, as proposed by the resolution.