Woodside promises action after protest vote on climate report
Woodside CEO Meg O’Neill will hold talks with shareholders after a giant climate protest vote overshadowed its mega BHP Petroleum merger.
Woodside Energy will hold talks with shareholders to understand their grievances over its climate plan after its $63bn merger with BHP Petroleum was dampened by a huge protest vote against its climate report.
A non-binding vote on the company’s climate report copped a 48.9 per cent protest vote, which chief executive Meg O’Neill conceded had surprised the Perth-headquartered gas producer, given it had already held talks with shareholders on the issue.
“We value the input we’ve received from our investors but obviously the vote yesterday shows that we didn’t quite get the outcome that we wanted. It is still a strong strategy in terms of the two pillars: reducing our net equity Scope 1 and 2 greenhouse gas emissions and investing in products and services that help our customers reduce their emissions. But obviously, our investors want to see a little bit more from us,” Ms O’Neill told The Weekend Australian.
“So following the vote, we will continue with that shareholder engagement to really understand what they’re hoping to see from us, and how to reconcile the very strong support for the merger with the commentary we’ve received on the climate report.”
Proxy adviser CGI Glass Lewis had told shareholders to reject the climate report due to issues over Scope 3 emissions disclosure and carbon offsets. UBS said the vote marked a clear warning from investors.
“While the report was only subject to a non-binding advisory vote, key shareholder groups have made it clear that further detail on Woodside’s decarbonisation plans and reduced dependence on offsets is required,” UBS analysts said.
The Woodside chief said she had heard from some investors who wanted the company to include Scope 3 emissions targets from its customers. Big miners including BHP and Rio Tinto have set Scope 3 goals, while Santos has also set a target for dealing with customers’ pollution.
However, Woodside said it had no current plans for a Scope 3 goal and said it could contribute by creating energy sources for its customers with less emissions.
“Scope 3 is a challenging one. We could put a Scope 3 numeric target out there, but I think there‘s a bit of funny math around Scope 3. And at the end of the day, our Scope 3 is our customers’ Scope 1. So the way we can have the biggest impact on Scope 3 is by helping our customers bring down their Scope 1.”
Shareholders have also told Woodside they would like to see more clarity on the use of carbon offsets as an emissions reduction method, compared with carbon capture and storage, the sometimes maligned technology which oil and gas producers are increasingly relying on to boost their climate credentials.
Still, Woodside appeared to offer mixed messages at its AGM on Thursday, with chairman Richard Goyder pulling back from making the non-binding climate vote an annual affair.
Ms O’Neill said the immediate priority was to listen to shareholders’ concerns.
“I’ll echo the chairman’s comments, which is that we haven’t decided. We were asked to put it to an advisory vote and we’ve done that just to try to understand shareholder feedback. And we’ve made no commitments around future votes of this nature.”
The BHP deal has catapulted the company into the top 10 oil and gas producers in the world with assets spread through Australia, the Gulf of Mexico and Trinidad.
Ms O’Neill expects it will entice new shareholders interested in backing a company that derives more than half of its earnings from LNG, with a different capital model than unconventional shale suppliers in the US.
“From the perspective of conventional versus unconventional, one of the challenges with the unconventional – which is the shale business – is you need to continually invest capital to keep your production up. Our conventional business is one where the capital dollars up front are quite substantial. But once you‘ve made those investments, they generate cash returns for the very long term.
“So we think we’ll be very unique in the marketplace. And from our early engagements with shareholders in the UK and in the US, we’re recognised for those attributes and shareholders are quite interested in getting into the new Woodside.”
Its first big decision as a unified company will be whether to give the go-ahead on its Trion oil discovery in the Gulf of Mexico.
Woodside shares fell 3.7 per cent to $28.77 on Friday.
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