|Woodside Petroleum Ltd.||2020||N/A||https://www.blackrock.com/corporate/literature/press-release/blk-vote-bulletin-woodside-may-2020.pdf|
In our recent engagement with the company’s board, we had extensive discussions on a range of material issues including, but not limited to, the company’s approach to the Task Force on Climate-related Financial Disclosures (TCFD), board composition and diversity, broad refreshment and supply chain-related issues.
…Based on Woodside’s existing reporting and our engagement to date, we believe the company recognizes the priority it must place on carbon disclosure and reduction targets. While we are supportive of the goals underlying the resolution, its bundled structure presents a challenge as Scope 3 emissions remain particularly complicated in the natural gas sector and will require time to define and implement as they encompass all indirect emissions of a company’s entire value chain. Nevertheless, we encourage the company to continue to review and set ambitious emissions targets as the natural gas sector improves its ability to understand and manage them.
- Ordinary Resolution on Paris Goals and Targets
Our view that the company is responsive to shareholder concerns regarding carbon disclosure and emissions targets draws on the fact that Woodside publicly recognizes the science of climate change, has committed to the Paris Goals, and stated its ambition of being carbon neutral by 2050. It has also established a Sustainability Division, which holds responsibility for carbon offsets and hydrogen business development, and publishes a separate sustainability report that discloses its climate change strategy, emissions reduction targets, and historical emissions performance. Finally, it’s most recent annual report also included a reasonable start to continuously improve climate risk evaluations and disclosures by mapping them to the TCFD framework.
…On our assessment, Woodside already substantively addresses the request made in the resolution. Woodside’s capital expenditure disclosures incorporate the International Energy Agency’s (IEA) Sustainable Development Scenario (SDS) into the values it uses to calculate levels of resilience and prioritize investments. While it is only one of several internal and external scenarios, the IEA’s SDS does align to the Paris Agreement objective of holding the increase in the global average temperature to well below 2 °C above pre-industrial levels, this century.
…With regard to remuneration, Woodside’s Corporate Scorecard includes a 25% component on “Material Sustainability Issues”, including personal and process safety, environment, emissions reductions, and social license to operate. It also discloses performance outcomes against the scorecard, on metrics like emissions reduction improvements. BIS maintains the view that compensation committees are best placed to determine effective performance measures given members’ knowledge of the company’s strategic plans, the industry in which the company operates, and other issues internal and/or unique to the company.