Home > FAR: ‘two degrees is laughable in the extreme’

FAR: ‘two degrees is laughable in the extreme’

29 May 2017

FAR is an Australian owned oil and gas company which operates in Guinea-Bissau, Kenya, Australia and Senegal, a country already facing severe impacts from climate change.

Currently the executive bonuses of FAR are tied to how much oil and gas they find. CEO Catherine Norman receives up to $100,000 per year in bonuses for finding new oil and gas reserves. Yet the latest research on the carbon budget suggests that at least 80% of existing fossil fuel reserves need to be left in the ground to give us a chance of avoiding 2C of warming. Incentivising the discovery of new oil and gas reserves that can never be exploited is the opposite of what a responsible company should be doing.

At their annual general meeting (AGM) in Melbourne today a shareholder asked how FAR could justify ongoing exploration and whether the company is assuming governments won’t act on climate change. This is the nonsensical response that their chairman Nicholas Limb gave:

‘We are in business as a petroleum exploration [company] and I can assure you that we will continue to reward our executives successfully….you are stepping on dangerous territory speaking to scientists about modelling the earth. We not only model the earth but unlike most academics we are accountable for the outcomes of our modelling, and that leads us to some different views from the views being spread. If I can express a personal view, after years of being involved in modelling the earth, the fact that someone is actually quantifying something like two degrees is  laughable in the extreme.’

This answer not only outs the FAR Chairman as a possible climate change denier, it also flies in the face of the results from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Among other things it has developed recommendations for all companies to disclose the physical, liability and transition risks associated with climate change, based on limiting global warming to less than two degrees. Over the last couple of months, Woodside Petroleum, Santos and most recently Oil Search have committed to review the TCFD with a view to implementation this year. A shareholder asked if FAR was prepared to make the same commitment. Mr. Limb answered:

‘No. We are not a producer – it is not appropriate for us to be dealing with those matters at this stage.’

A shareholder asked whether the auditor, Deloitte, includes climate change as a material business risk. Mr. Limb spoke on behalf of the auditor. He answered:

‘We are of course an explorer so we are not producing any CO2 or any other emissions at the moment, obviously we may well in the future. I guess we are just members of the community. We don’t see it as a material risk for our business…..I think we can all agree that the year of the hydrocarbon man is coming to an end, it’s just going to take another 50 years. Not a short term risk for us, but a longer term risk.’

With the impacts of climate change being felt right now across the world, more people and governments are recognising it as a clear and present danger. This should be ringing alarm bells in the corporate boardrooms of companies like FAR. Is your superannuation invested in companies like FAR limited? Find out here and tell your super you want to live in a habitable world.