By Nick Toscano and Peter Milne
Australian oil and gas giant Woodside has been rocked by the biggest investor uprising ever seen against a major emitter’s approach to climate change as 58 per cent of its shareholders rejected the company’s decarbonisation plans as inadequate.
The country’s top producer of the fossil fuels and its high-profile chairman, Richard Goyder, faced extensive criticism at Woodside’s annual shareholder meeting in Perth on Wednesday for refusing to do more to align the business with hastening international efforts to restrain rising global temperatures.
Woodside's Karratha gas plant.Credit: Aaron Bunch
The Woodside investor revolt is significant because it is the first time a majority of shareholders at a publicly traded company have defied the board in a so-called “Say on Climate” vote over the credibility of its plans to continue operating in a carbon-constrained world.
While the vote is not binding, its 58 per cent rejection marks an embarrassing blow for the board after it spent two years engaging with shareholders to improve its strategy.
“The scale of this rejection is globally unprecedented,” said Harriet Kater of activist group the Australasian Centre for Corporate Responsibility.
“The board must now act on investor feedback and begin the long-overdue work of credibly de-risking its business.”
Nearly 17 per cent of Woodside investors also voted on Wednesday against the re-election of Goyder, one of corporate Australia’s most recognisable business leaders, meaning he was returned as chairman despite an activist-led push to have him removed.
ASX-listed Woodside is among a growing number of carbon-intensive businesses to agree to adopt the “Say on Climate” initiative, giving shareholders the chance to vote on a company’s climate actions, plans and disclosures at annual meetings.
However, scrutiny of Woodside has only intensified over the past two years. Activists and powerful investors have criticised its climate targets as too weak and questioned its plans to develop new fossil fuel production fields.
Large investors are seeking to reduce their exposure to systemic risks posed by global warming and have been more often casting votes against boards deemed to be not acting quickly enough.
Woodside chairman Richard Goyder.Credit: Tony McDonough
The last time Woodside put its climate report to a vote in 2022, the board was dealt an embarrassing rebuke – 49 per cent of shareholders rejected it.
Goyder, who also chairs Qantas and the AFL Commission, said on Wednesday that the complexities of chairing an energy company while the world worked to decarbonise were many.
He insisted he had listened to investors’ climate concerns, having held 83 meetings on the topic since 2023. He had been pitching the new strategy as a material step forward.
However, some of Woodside’s biggest shareholders say it remains insufficient and out of step with the Paris Agreement’s aim of limiting global warming to 1.5 degrees.
“Investors don’t just want meetings,” said Rebecca Mikula-Wright, head of the Investor Group on Climate Change, whose members manage funds on behalf of 14 million Australians.
“To protect their beneficiaries, investors want to see companies with credible plans for long-term success.”
Concerns about Woodside’s climate strategy mostly centre on whether it is setting itself adequately concrete and ambitious decarbonisation targets, relying too heavily on buying carbon offsets rather than direct emissions, doing enough to reduce the vast carbon footprint of its customers, and providing adequate disclosure about possible risks of its plans for gas production from new fields in Australia and overseas.
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 emissions – greenhouse gases released when customers burn or process the products it sells across the world.
Woodside and other producers of liquefied natural gas point to projections that it will remain an indispensable part of the global energy mix, particularly in Asia, as a vital “transition” fuel that is less emitting than coal but one that can still be used as a back-up to renewable energy sources.
Other forecasts, however, suggest its future use could be far more limited as countries increase ambitions to burn fewer fossil fuels and slash greenhouse gas emissions. Modelling from the International Energy Agency in 2021 found no new oil and gas fields could be developed for the world to achieve the Paris Agreement’s 1.5-degree goal.
Woodside chief executive Meg O’Neill said she was proud of the role LNG was playing in supporting decarbonisation and economic growth in Asia. She said some of Woodside’s bigger rivals, including European supermajors, had recently walked back from climate commitments amid uncertainty about the energy transition.
“We are determined to play our role in addressing climate change, but we won’t make promises that we can’t deliver,” O’Neill said. “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.”
Goyder said he was grateful to shareholders and would seriously consider the outcome of the vote. “We take the shareholder feedback seriously,” he said.
Will van de Pol, chief executive of Friends of the Earth affiliate Market Forces, said the support for Goyder’s re-election on Wednesday represented one of the “lowest votes for an ASX50 director in the last 10 years”, but this would not be enough to shake Woodside from its plans to develop more oil and gas fields.
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