Shareholders concerned about LNG Limited’s attitude

17 November 2017

Liquefied Natural Gas Ltd. does not regard climate change as a material risk to business. As the globe begins a transition towards low carbon energy solutions, many commentators are warning that assets such as oil and gas are increasingly likely to become stranded. It’s surprising then that a fossil fuel company like LNG Ltd is not planning for the future, and doesn’t consider climate change as a material business risk.

In response to a shareholder’s question at LNG Ltd’s annual general meeting yesterday in Melbourne, the company’s auditor failed to define climate change as a material risk. The auditor also claimed that it wasn’t their job to assess matters of business risk. An unusual answer considering that in other companies, this is specifically the auditors role. Regardless, it’s financially imprudent for a company like LNG Ltd, a company that deals with fossil fuels, to not consider climate change as a material risk. 

The intensity of the gas sector’s emissions have been heavily underestimated according to a new report. The report, produced by The Tyndall Centre for Climate Change Research, indicates that unless gas use is scaled down, the 2 degree goal as stipulated in the Paris Climate Agreement won’t be met. Present global gas emissions are projected to add 0.6°C to global warming, a number that is already too high according to the report.

On the 2016 CDP Climate Scorecard, which rates companies based on their emissions reporting and transparency, LNG Ltd received an F. The gas industry has been tasked with playing a pivotal role in the curbing of emissions, so it’s disappointing to see companies such as LNG Ltd failing to adequately report reduction efforts. 

With the company experiencing losses this year of A$29.3 million, following a loss of A$115 million the year before, it’s unsurprising that concerned shareholders should seek increased transparency from LNG Ltd. One shareholder attending the AGM asked Chairman Paul Cavicchi if the board would implement the recommendations set forth by the Task Force on Climate-Related Financial Disclosures. The recommendations call for scenario analysis of the physical and transitional risks associated with climate change. These recommendations were snubbed by the company.

There was laughter and confusion when the board was asked whether they would be implementing the TCFD recommendations, and Cavicchi eventually said the recommendations didn’t apply to LNG Ltd, but that the company might consider them going forward.

LNG Ltd is apparently failing to take climate change and its associated risks seriously.