Oil and gas exploration and production company Armour Energy today failed to define climate change as a material risk to its business, and refused to commit to implementing recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).
The company’s failure to report on climate risk, along with its external auditor’s explanation that assessing such risks is beyond the auditor’s role, demonstrate a massive lack of transparency at Armour. CEO Roger Cressey let shareholders know Armour wouldn’t be making any further comments on the issue, revealing an unwillingness to engage. Other Australian gas companies including Oil Search and Karoon Gas have committed to adopt the TCFD recommendations, so it’s extremely concerning that Armour has not even considered them. When asked about the recommendations, which among other things call for carbon constrained scenario analysis, the board refused to comment – we can only guess why.
Reluctance to adapt
Armour Energy recently began gas production from their Kincora Gas Project on the Roma Shelf in QLD and signed an oil exploration deal with the Ugandan government. As a fossil fuel explorer and producer, actively seeking to expand the scale of the industry, Armour’s failure to define climate change as a material risk to business and commit to TCFD compliance suggests a wilful blindness to the potential impacts climate change could have on its operations and profitability. With a large number of Armour’s licenses now subject to the fracking moratoriums in place in NT and Victoria, the question arises: what does Armour regard as a risk? If you had asked the company some years ago if the environmental and reputational risks of fracking were considered, it seems the answer would have been, no.
Losses for the company in FY2016 were over A$18 million and in FY2017 over A$11 million. Since its public listing on the ASX in 2012, Armour’s share price has tumbled from 0.28 to 0.09 cents. It could be argued that, had the company taken into account risks such as the environmental and reputational impacts associated with its activities (namely fracking), Armour would be in a better financial position. With this in mind, it’s unfortunate that Armour appears similarly short sighted in failing to identify climate change, with its physical and transitional hazards, as a material risk to business.
In response to a shareholder’s question about the company’s inability to properly communicate with Traditional Owners, CEO Roger Cressey said it had, but when asked when and who he had sat down with, he couldn’t provide an answer. It doesn’t fill us with confidence that Armour is truly lending its ear to the peoples living in its license areas.
Armour’s reputation is now on the line, it’s doubtful people will continue to support a company that is unable to do what’s necessary for the environment and its shareholders.
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