Why Goyder survived even though his climate plan was panned

What kind of message is sent when Australia’s largest oil and gas company, Woodside, receives a record-breaking vote against its climate report but comfortably returns the chairman responsible for it?

A confusing and a weak one. The vote against the climate action plan is largely symbolic because it’s advisory and non-binding, but the vote for the chairman Richard Goyder gives shareholders a very real say over the company’s governance and arguably its decarbonisation path.

Richard Goyder looked set to be re-elected as chairman of Woodside at Wednesday’s annual meeting in Perth, with more than 80 per cent of proxies cast in his favour in advance of the official vote.Credit: Trevor Collens

Despite the climate protests outside the meeting, some fiery debate inside and some testy defensiveness from Goyder, shareholders delivered him a continued governance mandate.

For large investors such as pension and superannuation funds, a vote against what climate activists and experts and some shareholders believe is a vague and feeble plan to reduce emissions in line with the Paris Agreement is a no-brainer.

It has only set an “aspiration” rather than a hard target to be a net zero emitter by 2050, and initiatives to address its scope 3 emissions – the greenhouse gases released when customers burn or process the products it sells – have also fallen short of some expectations.

These big investors are under immense pressure to make good on undertakings to their own members to improve their climate bona fides. Investing in an oil and gas company such as Woodside may seem counterintuitive, but taking a stake in a big emitter that is turning from what the industry calls “brown to green” provides a lot of potential leverage.

This explains why such a small number of big investors voted in favour of Woodside’s less than ambitious plans to decarbonise – most need to be seen as pushing harder for climate action.

But the rubber really hits the road when it comes to the vote for Goyder because if his position was under serious threat, the company would be forced to revisit its climate action plan, add to its robustness and firm its targets with less reliance on buying offsets.

And although it might be tempting to think that votes against Goyder are personal and a hangover from his performance as chairman of the much-maligned Qantas, this won’t have factored much if at all into the Woodside vote, save for a smattering of retail investors.

As irritated as many shareholders are about the lack of progress on climate, they are also keen to enjoy the financial fruits of robust profits from Woodside.

The vote against Goyder (only about 16 per cent) on Wednesday is the real vote against the company’s climate action, and it wouldn’t matter who was sitting in that role.

His successful re-election suggests he has convinced most large shareholders of the view (as expressed in a letter earlier this month to all investors) that a drastic “change Woodside’s strategy and investment priorities risk eroding value for all shareholders”.

And that’s the rub.

As irritated as many shareholders are about the lack of progress on climate, they are also keen to enjoy the financial fruits of robust profits from Woodside. They want to have their cake and eat it too.

Attacking emissions too hard too early risks short- to medium-term profits and Woodside seems to be taking a cautious (some would say, laggard) position on climate.

It is clearly looking for comfort in numbers, with its chief executive Meg O’Neill telling shareholders at the meeting of the recent walk back by global peers from climate goals that were considered too ambitious.

She said: “We are determined to play our role in addressing climate change. But we won’t make promises that we can’t deliver. So I give you our commitment that we will set goals and make decisions informed by the available science, in line with our capital allocation framework and with our commitment to energy security front of mind.”

A testy Goyder, when asked at the meeting about the large shareholders rejecting its climate plan, suggested not all were necessarily big investors in the company.

He points to the numerous meetings he has had with large investors this year around action on climate change.

His comfortable re-election demonstrates that most were convinced. But that didn’t stop them from voting against the climate action plan and publicly advertising their disapproval of it.

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