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Sino Gas: climate change not a business risk

18 May 2017

18 May 2017

Sino Gas is a small Australian owned unconventional gas company which operates in China. Despite the known risks to land, water and human health associated with fracking, the Macquarie Bank has lent to Sino Gas, as have other international banks. Sino Gas held their annual general meeting in Perth today, and were questioned by shareholders over fugitive emissions and whether they considered climate change as a business risk.

According to the Melbourne Energy Institute, if fugitive methane emissions from unconventional gas fields exceed 3.2% of production, there would be “no carbon benefit gained by using gas for electricity generation.” Shareholders today asked the company if they measure fugitive emissions, and if not, why they didn’t. The board evaded the question by talking about gas as a transition fuel, admitting that “renewables are much cleaner than gas,” and discussing the pollution in China. They did not, however answer the question, which would lead one to believe that Sino Gas does not measure their fugitive methane emissions. It is ironic that the board thought it was appropriate to state how much cleaner gas is than coal, when the study clearly showed that if fugitive methane emissions exceed 3.2% of production, there is no carbon benefit gained from unconventional gas.

In a legal opinion published in 2016, Mr Noel Hutley SC recommends that directors of companies “should be considering the impact on their business of climate change risks – and that directors who fail to do so now could be found liable for breaching their duty of care.” A shareholder asked the auditor if ‘the auditor consider the risks posed by climate change to Sino Gas’ business model, and if so, why are the risks from climate change not considered a “material business risk”?’ The board admitted to shareholders that they did not include climate change as a material business risk, despite the importance of climate change.

Despite the boards efforts to greenwash Sino Gas’ operations, it was clear that the company had not measured fugitive emissions, nor ensured that climate risk was included in their business model.
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