By Nick Toscano
Britain’s biggest asset manager says it will vote to remove Richard Goyder as chairman of Australian oil and gas giant Woodside as a shareholder backlash continues building against the board for refusing to do more to tackle global warming.
Legal & General Investment Management (LGIM), which manages more than $2.3 trillion, flagged its intention to vote against Goyder’s re-election at Woodside’s annual investor meeting next week, saying the board was “lagging our minimum expectations” on climate change.
Richard Goyder is chairman of Australian oil and gas giant Woodside, Qantas and the AFL Commission.Credit: Tony McDonough
The London-based insurer and asset manager will also vote down Woodside’s climate transition and action plan – the company’s strategy for how it intends to curb emissions and keep operating in a carbon-constrained world.
LGIM’s decision will add to pressure facing Woodside from a growing number of powerful critics, including institutional investors and proxy advisers, who argue the climate targets are too weak, and point to its ongoing lack of “tangible plans” to tackle the vast carbon footprint of the customers it fuels around the world. While the vote on the climate plan is not binding, its rejection would mark an embarrassing blow for the board of the Perth-based company after it spent two years engaging with shareholders to improve its strategy.
The last time Woodside put its climate report to vote in 2022, it suffered an extraordinary rebuke as 49 per cent of investors refused to endorse it – the biggest backlash ever recorded at a so-called “say on climate” shareholder vote globally.
LGIM on Wednesday noted that some progress had been made in Woodside’s updated climate plan, but it did not believe those changes were material enough, and still considered the overall strategy “insufficiently robust”.
“While we view in a positive light some of the steps that have been taken by Woodside, primarily around methane, and in better aligning executive compensation to climate-related targets, we remain concerned about the insufficiently robust emissions targets, lack of quantifiable disclosure on climate-related risks and the quantum of capital to be allocated to low carbon solutions,” LGIM said.
As the April 24 ballot looms, three of the four biggest proxy advisers that guide investors on how to vote – CGI Glass Lewis, Institutional Shareholder Service (ISS) and the Australian Council of Superannuation Investors (ACSI) – also say they do not believe Woodside’s climate plan has been improved enough, and are recommending rejecting it once again.
CGI Glass Lewis is also recommending shareholders vote against Goyder’s re-election as chairman, but all other top proxy advisers are recommending support for his re-election.
Investors’ concerns about Woodside’s climate strategy centre on whether it is setting itself adequate decarbonisation targets, doing enough to diversify revenue away from purely fossil fuels and providing adequate disclosure about possible risks of its plans for gas production from new fields in Australia and overseas, despite uncertainty about what future demand might look like if the world moves to slash emissions more aggressively.
So far, however, it has only set an “aspiration” rather than a hard target to be a net-zero emitter by 2050, while efforts to address its “Scope 3″ emissions – greenhouse gases released when customers burn or process the products it sells across the world – have also fallen short of some investors’ expectations. Although a new target to give the financial go-ahead to “new energy” products capable of abating 5 million tonnes of carbon dioxide a year by 2030 has been welcomed as a positive step, it is yet to set a target to reduce its Scope 3 footprint, estimated at 72.8 million tonnes in 2023.
Goyder, one of Australia’s most recognisable business leaders, is also chairman at Qantas and the AFL Commission.
Woodside is hoping investors will re-elect Goyder this year, as it considers him to be a highly capable and effective leader who provides “valuable insight, stewardship and strength to the board”. It is also pitching its updated climate transition plan as a well-considered and realistic pathway that articulates the company’s plans to reduce the risks it faces from climate change.
In a letter to shareholders earlier this week, Goyder pushed back on calls for Woodside to drastically change its strategy because it risked “eroding value for all shareholders and contributing to a disorderly energy transition”. He said Woodside’s board believed its plans were aligned with the Paris Agreement, which aims to keep global heating well below 2 degrees and to try to limit the rise to 1.5 degrees.
“The energy transition will take time and significant investment, and I am confident that Woodside’s disciplined approach is the right path for our shareholders,” he said.
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