Investors revolt as Woodside expands in oil and gas

Canberra: Major investors are opposing Woodside Energy Group Ltd’s climate plans and the chairman’s re-election, raising questions about the strategy of Australia’s largest energy company as it rushes to expand oil and natural gas output.

Funds including the California State Teachers’ Retirement System and Australia’s Aware Super both voted against Richard Goyder’s reappointment and rejected proposals for emissions reduction before an annual meeting yesterday. Other shareholders backed directors but rejected the green plans.

Woodside’s climate plans have been criticised as too slow or unclear, and investors have raised objections to Goyder’s handling of those issues.

Climate activists also oppose Woodside’s push to advance a US$24bil slate of expansion projects, including the flagship Scarborough liquefied natural gas development in Western Australia.

“We still have some ongoing concerns about Woodside’s plan to be net zero by 2050,” Shaun Manuell, head of Australian equities at AustralianSuper, the country’s largest pension fund and a holder of more than 3% of the producer, told a Parliamentary hearing Monday.

“Based on that we’ve decided to vote against it and we’ll continue our discussions with the company.”

The results of the ballot on the climate plan are non-binding, though Woodside insists that it responds to investor feedback when developing its policies.

Electronic voting instructions and voting forms were due by Monday, with full results expected at yesterday’s meeting.

Woodside is targeting a 15% reduction to its net equity Scope 1 and 2 greenhouse gas emissions by 2025 and 30% by 2030, it said in a presentation in February.

The measure reflects the company’s share of jointly owned operations, includes the use of offsets and is relative to an annual average over 2016 to 2020.

The company also aims to take investment decisions by 2030 on projects able to lower Scope 3 emissions by five million tonnes a year.

That pollution – mainly from the burning of the fossil fuels it sells – is by far its biggest source of carbon dioxide pollution, at about 72.8 million tonnes in 2023, according to the company.

“Woodside’s net-zero target is 500 words long and it’s incomprehensible,” Polly Hemming, director of the climate and energy programme at the Australia Institute, a think tank that opposes new fossil fuel developments, told the Parliamentary hearing.

“It’s like ChatGPT wrote it.”

The producer expects gas demand to rise 50% over the next decade, propelled by rising consumption in Asia. That bullish outlook helped spur Woodside’s failed attempt to merge with smaller rival Santos Ltd in a tie-up that would’ve created one of the Asia-Pacific region’s biggest liquefied natural gas producers.

“We are being honest about the energy transition,” Goyder told investors earlier this month in a letter ahead of the annual meeting. “We are concerned that some stakeholders’ and investors’ requests to drastically change Woodside’s strategy and investment priorities risk eroding value.” — Bloomberg