|Does the company have a clear reduction target or deadline for its greenhouse gas (GHG) risk management program and if so, how do those goals compare to industry peers? Does the company disclose scope 1, 2, and 3 emissions reduction targets? How are planned investments consistent with these targets and the goals of the Paris Agreement?|
|Not disclosed - Energy Company||2020||Australia||2019 Invesco Climate Change Report||https://www.invesco.com/corporate/dam/jcr:c245615a-f0ae-4c32-a467-d4a0676ec797/TCFD%20Report_FINALJuly%202020.pdf|
Among the highest conviction investments for one portfolio is an Australian energy company. This Australian energy company faced two climate-related shareholder resolutions in their 2020 annual general meeting (AGM). The first called for a disclosure of scope 1, 2 and 3 emissions reduction targets and an explanation of how planned investments in fossil fuel assets are consistent with the goals of the Paris Agreement…
Members of Invesco’s ESG and investment teams met with the company’s chairman and head of investor relations prior to the AGM. The company objected to the resolutions, explaining that it is already taking steps to reduce its internal carbon emissions, that as a major producer of liquefied natural gas (LNG) it is contributing to the low-carbon transition by displacing coal…We did not find the arguments persuasive. Unlike peers, the company had not yet set scope 3 emissions reduction targets and had limited plans for investment in low-carbon energy.
(see Voting Details)
The proposal on emission reduction targets was not binding and it remains to be seen how the company’s management will respond. However, Invesco will continue to monitor the situation closely and will factor the
company’s response into our future voting and investment decisions.
- Shareholder Proposal
- Disclosure of scope 1, 2, and 3 emissions reduction targets and how planned investments in fossil fuel assets are consistent with the goals of the Paris Agreement
- Shareholders would benefit from the additional disclosure and target setting, and the proposal was not unreasonably prescriptive
Due to the high exposure oil and gas companies have to the physical and transition risks of climate change, it was felt that shareholders would strongly benefit from the additional disclosure and target setting…In addition, neither proposal was unreasonably prescriptive on management. Accordingly, all Invesco shareholders voted in support.
The resolution on setting scope 1, 2 and 3 emissions was adopted with 50.1% of shareholder votes. This result was unprecedented for an Australian energy company, illustrating an increasing desire on the part of investors for energy companies to reduce their scope 3 emissions, not just scope 1 and 2. In addition, while gas will play an important role as a transition fuel, this vote suggests that shareholders are yet to be convinced that increasing LNG production is consistent with the goals of the Paris Agreement.