26 November 2019
Another week, another Australian fossil fuel company belies super funds’ climate engagement claims.
Earlier this year, Market Forces named oil and gas producer Beach Energy as one of the 21 big Australian companies undermining climate action. With plans to spend around $750 million each year to massively expand fossil fuel production for at least the next five years, it’s not hard to see that Beach’s business model is completely inconsistent with the climate goals of the Paris Agreement.
On the back of that research, Market Forces and over 1000 members called upon super funds to divest from Beach and its fellow climate-wreckers. But super funds refused to divest, telling us they prefer to engage with fossil fuel companies to help improve their climate performance.
This claim has been called into question at a number of recent fossil fuel companies’ AGMs, and the same happened at today’s Beach Energy meeting.
Beach Energy is planning to set greenhouse gas emission reduction targets next year, so a shareholder asked the company to confirm that these targets will:
- cover short, medium and long term timeframes;
- cover our entire value chain; and
- be verifiably aligned with the climate goals of the Paris Agreement?
Beach’s chairman Glenn Davis couldn’t provide these commitments, and revealed that the companies’ institutional shareholders – including our super funds – had provided “very little questioning” about climate change.
“Trust us” on a secret carbon price
Beach Energy’s Sustainability Report states: “Investment screening and decision making takes into account the greenhouse gas emissions from a particular project and the economic impact a carbon price would have on our business.”
Given the IEA’s Sustainable Development Scenario (SDS) projects carbon prices of US$100 per tonne of CO2 by 2030 and $140 by 2040, shareholders were keen to know what shadow carbon prices, over what timeframes Beach applies to its investment decisions. In particular, have the company’s significant expansion spending plans been tested against the prices set out in the SDS?
Davis wouldn’t disclose the carbon price(s) Beach applies to its investment decisions, claiming they are commercial in confidence and asking shareholders to “take me and the rest of my colleagues on the Board on trust in relation to that issue.”
However, this is in direct contradiction to the recommendations of the G20 Financial Stability Board’s Task force on Climate-related Financial Disclosures, which states “Organisations should provide their internal carbon prices” as part of robust climate risk disclosures to shareholders.
Super funds are letting Beach off the hook by not demanding evidence that its plans are consistent with the Paris Agreement goals, such as Paris-aligned carbon price assessments.
We know there is no room for new oil and gas projects in a 1.5°C emissions reduction pathway. So while super funds remain invested in Beach’s expansion plans, they are continuing to undermine the Paris Agreement with our retirement savings!
Local impacts called out
Community representatives also attended today’s AGM, with local anti-gas campaigners challenging the Beach Energy board over the company’s impacts on the local environment and communities.
“Why is Beach Energy still prepared to risk contamination of air, soil and water in the South East prime agricultural area… when our area should be kept as a food bowl priority?”
The crux of Mr Davis’ response was “Whether you like it or not, the world needs hydrocarbons.”
However, the rapid transition away from fossil fuels required to meet the goals of the Paris means the world will need fewer and fewer hydrocarbons going forward, essentially phasing out fossil fuel use by 2050 if we are to meet our global climate commitments.