20 November 2019
In response to shareholder questioning at Seven Group Holdings’ annual general meeting in Sydney today, Director Terry Davis confirmed the company has no exit plan for its oil and gas businesses.
With ownership stakes in a range of businesses and industries, SGH is able – but not willing – to avoid investments in sectors that are driving global warming and increasing exposure to climate change risks.
Along with its own oil and gas production business SGH Energy, the Group owns 28.6% of Beach Energy, an oil and gas exploration and production company. Both SGH Energy and Beach are expanding the scale of the fossil fuel industry, which is undermining the climate goals of the Paris Agreement.
The Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5°C demonstrates that, without relying on unproven carbon capture and storage technology, the role of gas for primary energy must decline globally (from a 2010 baseline) by 25% by 2030 and a further 74% by 2050, with oil’s role in primary energy falling 37% and 87% over the same time frames.
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With the devastating impacts of climate change being felt right now, and a massive and growing global community push to limit warming to 1.5°C, a rapid transition away from fossil fuels is required.
As a large diversified company, SGH is in a position to move ahead of the curve on this and ensure maximum value for its shareholders, rather than risk being left holding stranded assets as the world moves to meet its climate commitments. But the company clearly doesn’t agree, repeatedly talking up the prospects of its fossil fuels assets at today’s AGM.
The Group’s 2019 Annual Report refers to Bloomberg New Energy Finance and AEMO’s Neutral gas scenario to conclude the Group “remains well positioned to capitalise on growing gas demand in the long‑term and views its investment in Beach Energy and SGH Energy as creating a strong platform for sustainable growth in the long‑term.”
However, neither of these scenarios model the policy and market shifts required to meet the Paris climate goals. They assume business as usual, leading to the failure of the Paris Agreement.
A shareholder today queried if it was misleading to use these scenarios to talk up the future of Beach and SGH Energy without recognising the downside risk posed by impending action to curb emissions in line with the Paris climate goals, and asked: “Can the Board commit to stress testing its outlook for the oil and gas sector against a 1.5°C warming scenario and disclosing the results to shareholders as soon as possible?”
The best Mr Davis could offer was “We’ll look into it.”
Holding global warming to 1.5°C means no new oil and gas. SGH and Beach Energy’s failure to recognise this and stop expanding their fossil fuel reserves has seen them named among the 21 big Australian companies that are undermining climate action.