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Speaker 1: Welcome to zero. I'm Akshatrati this week rights representations and repercussions.

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Speaker 1: When it comes to fossil fuel companies and climate change,

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Speaker 1: it often becomes a conversation about us versus them, the

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Speaker 1: people versus the corporation, planet versus profits. Look, it's not

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Speaker 1: surprising given the fossil fuel industry's track record on climate action,

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Speaker 1: but it doesn't have to be that way if the

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Speaker 1: owners of those companies, the holders of capital, use the

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Speaker 1: immense power they have over corporations.

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Speaker 2: Shareholders have so much power that has been badly under exploited.

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Speaker 2: Today there's just power sitting on the table.

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Speaker 1: This is Bryn O'Brien, executive director of the Australasian Center

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Speaker 1: for Corporate Responsibility. Companies are core units of capitalism, and

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Speaker 1: Brinn makes the case that it's possible to harness the

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Speaker 1: forces of capitalism to be a solution for tackling climate

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Speaker 1: change rather than continuing to worsen it. And Britt has

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Speaker 1: shown it can be done. Recently, ACCR convinced the Japanese

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Speaker 1: company Nippon Steel to start investing in new low carbon manufacturing,

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Speaker 1: and it even got the Australian company BHP to set

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Speaker 1: a date to retire a coal mine, stopping roughly six

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Speaker 1: hundred million tons of carbon dioxide from entering the atmosphere.

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Speaker 1: Accr's strategy is to engage with companies. It starts simply

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Speaker 1: with sitting down with the company and talking it through.

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Speaker 1: Now that might sound simplistic. It's one reason why shareholder

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Speaker 1: engagement sometimes is criticized for being too conciliatory, even ineffective,

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Speaker 1: But Brinn says that if companies don't change just with dialogue,

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Speaker 1: then ACCR has other tactics.

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Speaker 2: Engagement that achieves results always has the credit threat of escalation.

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Speaker 1: The ultimate escalation is for an investor to divest, that is,

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Speaker 1: to sell off their shares in the company. There's a

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Speaker 1: movement that's been growing to try and get big owners

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Speaker 1: of capital to divest from fossil fuel companies because those

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Speaker 1: companies aren't changing fast enough. This is what groups like

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Speaker 1: Stop the Money Pipeline and Fossil Free want big shareholders

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Speaker 1: to do. And yet despite the movement, fossil fuel companies

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Speaker 1: continue to make record profits and make some shareholders very happy.

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Speaker 1: When I was in Australia this summer, I wanted to

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Speaker 1: talk to Brinn about her philosophy of engagement versus divestment,

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Speaker 1: Why shareholder activism is key to cutting real world emissions

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Speaker 1: and what happens when you have to make good on

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Speaker 1: a threat. So we're going to talk a lot about

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Speaker 1: shareholder activism, and that is active engagement with polluting companies

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Speaker 1: through owning their shares rather than divestment. The question of

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Speaker 1: engagement versus di investment is the kind of decision that

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Speaker 1: every investor who understands climate change and wants to mitigate

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Speaker 1: climate change while making an economic return has to grapple with.

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Speaker 1: So what's your case for engagement and against the investment?

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Speaker 2: Our objective is to seek changes to company strategy for

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Speaker 2: the companies and our portfolio to reduce real world emissions

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Speaker 2: in line with science for the benefit of shareholders. That

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Speaker 2: change that we want to see to company strategy is

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Speaker 2: possible to request and to push for using the rights.

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Speaker 3: That shareholders have.

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Speaker 2: So those rights include filing shareholder resolutions. It includes having

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Speaker 2: a say in who is on the board of a

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Speaker 2: company by voting on director elections or nominating directors. Those

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Speaker 2: are the.

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Speaker 3: Leavers that are available if you're.

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Speaker 2: A shareholder in a company to seek changes to the

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Speaker 2: company's behavior, So that might be to seek a company

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Speaker 2: not pursuing a fossil fuels expansion project, or it might

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Speaker 2: be to seek a company using their political influence to

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Speaker 2: transition our economies.

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Speaker 3: Those rights are.

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Speaker 2: Only available to those around the table. They're only available

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Speaker 2: to shareholders, So if you divest, then you abandon those rights.

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Speaker 2: So you would want to be very very sure that

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Speaker 2: if your objective is to seek real world emissions reductions,

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Speaker 2: that if you choose to divest, you have gone through

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Speaker 2: a thorough process of exercising and exploiting all of the

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Speaker 2: rights that you have. In my experience, there's effective engagement,

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Speaker 2: engagement that achieves results, and then there's ineffective engagement. And

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Speaker 2: the difference between those two things is effective engagement. Engagement

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Speaker 2: that achieves results always has the credible threat of escalation

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Speaker 2: through the use of formal shareholder rights. So going and

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Speaker 2: having a conversation with a company and trying to persuade

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Speaker 2: them through your advocacy alone without that threat of either

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Speaker 2: voting at a company annual general meeting or filing a

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Speaker 2: shareholder resolution or nominating directors that without that threat, results

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Speaker 2: are not achieved.

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Speaker 1: But there is an ultimate threat, which is after trying

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Speaker 1: all those things. If the company does not do what

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Speaker 1: you think they should be doing, the threat of escalation

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Speaker 1: could be as high as actually divesting because it's just

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Speaker 1: not working. And there is a case for divestment too,

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Speaker 1: which is if a large investor diverse and makes the

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Speaker 1: case for other shareholders to divest, then the stock price

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Speaker 1: of the company can fall, and can fall drastically. When

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Speaker 1: the stock price falls, the company may not have as

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Speaker 1: much ability to is money in the market as it

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Speaker 1: did previously. And so why is that not seen as

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Speaker 1: an option in the threat of escalating change that you

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Speaker 1: want from companies.

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Speaker 2: So I think it's always an option, But I'm not

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Speaker 2: sure that we have evidence to date of a divestment

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Speaker 2: campaign getting so much momentum that it actually results in

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Speaker 2: a material change to stock price. We do have evidence

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Speaker 2: that poor company decision making around transition risk has had

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Speaker 2: effect on stock prices, but we just haven't seen the

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Speaker 2: evidence from divestment. And I think the additional hurdle, or

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Speaker 2: the additional thing that we're looking for is those real

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Speaker 2: world emissions reductions. And we do have some examples of

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Speaker 2: where well executed shareholder strategy has resulted in quantifiable, real

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Speaker 2: world emissions reductions.

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Speaker 1: One of the big things Brinn and her organization were

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Speaker 1: involved in was replacing some of the members on the

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Speaker 1: board of Australia's largest utility AGL. It used to stand

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Speaker 1: for Australian Gas Light Company when it was founded in

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Speaker 1: eighteen thirty seven. Today it is Australia's largest greenhouse gasimeter.

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Speaker 1: ACCR got involved in trying to reform AGL in twenty fifteen.

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Speaker 1: It filed a shareholder resolution the kind of thing we've

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Speaker 1: been talking about, that asked the company to disclose its

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Speaker 1: climate plans. How is AGL going to run a thriving

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Speaker 1: business relying on so much coal and gas power generation

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Speaker 1: when the world is moving on to cleaner sources and

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Speaker 1: fossil fuels are becoming more expensive. That shareholder resolution was

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Speaker 1: voted on at the company's annual general meeting. Every publicly

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Speaker 1: traded company has one of these. It's a whole corporate

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Speaker 1: jamboree with lots of men in suits talking, which slide shows,

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Speaker 1: of course, in short, a very important event in capitalism,

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Speaker 1: and ACCR got five percent of other shareholders to agree

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Speaker 1: that AGL should douse how it's going to make money

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Speaker 1: in a warming world? Five percent was a good start,

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Speaker 1: but it wasn't going to change anything. The story picks

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Speaker 1: up in twenty twenty one.

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Speaker 2: So things really started to heat up when in March

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Speaker 2: twenty twenty one AGL after really fierce contests around their strategy,

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Speaker 2: including the exit of their former CEO after Australian politicians

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Speaker 2: attacked him in the media for wanting to bring forward

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Speaker 2: cold closure dates. They appointed a new CEO and they

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Speaker 2: decided that what they were going to do was de

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Speaker 2: merge the business. Demerge it into a kind of business

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Speaker 2: of the future and a thermal powered coal power generation business.

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Speaker 1: Basically just splitting the company into two parts.

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Speaker 2: That's right, and they were both planned to be listed entities.

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Speaker 2: So if you held shares in AGL, you were going

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Speaker 2: to end up with shares in the good company and

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Speaker 2: shares in the coal company.

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Speaker 1: Well, at this point, if you did have a good

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Speaker 1: company and a bad company, isn't it a good thing

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Speaker 1: for investors who are climate milanded to invest in the

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Speaker 1: good company and those who don't want coal assets can

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Speaker 1: then divest from the bad company.

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Speaker 2: Well that does nothing about the emissions. That's I guess

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Speaker 2: the core problem with that.

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Speaker 1: This is a genuine question. There is no clear cut answer.

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Speaker 1: It depends on your investing ideology. You could make the

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Speaker 1: climate case both ways. There was a chance that one

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Speaker 1: of the agal companies continue to run its coal plants

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Speaker 1: for decades that would generate more emissions. Also, just looking

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Speaker 1: at the financial numbers, Australia's stock market was having a

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Speaker 1: great run, but the value of AGL was falling.

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Speaker 2: And ACCR filed a shareholder resolution calling on the company

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Speaker 2: to set Parasitaligne targets for both the the future company,

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Speaker 2: the business of the future and for the coal company.

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Speaker 2: And of course that was going to be a pretty

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Speaker 2: difficult thing for the company to do.

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Speaker 3: That actually got a majority.

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Speaker 2: Then in early twenty twenty two, something really interesting happens,

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Speaker 2: which is that a takeover bid is made for the

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Speaker 2: company by Brookfield along with Grock Ventures. Grock Ventures being

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Speaker 2: the private investment vehicle of Australian tech billionaire Mike cannon Brooks.

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Speaker 1: Mike Cannon Brooks started the company at Lassian, which makes

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Speaker 1: project management software like Trello. Brookfield is a Canadian asset

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Speaker 1: management firm and it manages around eight hundred and fifty

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Speaker 1: billion dollars. So when Brin talks about shareholder engagement. This

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Speaker 1: is the scale of investors she's talking about. The pitch

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Speaker 1: that cannon Brooks and Brookfield bring to agl's shareholders is basically,

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Speaker 1: let us run the company with a plan to decarbonize

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Speaker 1: its assets and invest in renewables lots of capsm Drama

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Speaker 1: follows that bid is offered, it's rejected, not once.

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Speaker 3: But twice.

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Speaker 1: Brookfield walks away. Mike cannon Brooks.

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Speaker 3: Does not.

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Speaker 2: Grock Ventures, undeterred by Brookfield walking away, decide to buy

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Speaker 2: a stake in the company that gives them over eleven

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Speaker 2: percent of voting rights, and that's in advance of the

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Speaker 2: de merger. Going to a vote to demerge a company,

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Speaker 2: the board requires the support of seventy five percent, so

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Speaker 2: a special majority of votes cast at the company meeting

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Speaker 2: to be cast in favor of the proposal.

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Speaker 1: So seventy five percent of the board needs to vote

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Speaker 1: in favor.

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Speaker 2: No a vote of shareholders, but it's seventy five percent

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Speaker 2: of the votes are cast on the day, so things

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Speaker 2: were looking.

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Speaker 3: Pretty shaky for the board.

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Speaker 2: We did have some Australian asset owners coming out and saying, look,

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Speaker 2: we reject this to merger we're going to vote against it,

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Speaker 2: because you can't run from climate risk if you're the

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Speaker 2: kind of investor that we are. That ultimately we're a

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Speaker 2: long term investor, and this is going to catch up

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Speaker 2: with us, and we think it's in the company's interest,

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Speaker 2: but in our interests as a diversified owner of stocks.

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Speaker 2: So the merger is withdrawn because the company can see

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Speaker 2: that it's on shaky ground, it's unlikely to win. You

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Speaker 2: have immediate resignation of one board director and then announced

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Speaker 2: kind of rolling resignations of others, including the chair and

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Speaker 2: the CEO, and a kind of interim committee is appointed

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Speaker 2: and they go on a search for other directors, and

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Speaker 2: with their eleven and a half percent stake in the company,

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Speaker 2: Grock Ventures nominate for directors and the company says to

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Speaker 2: one of them, Okay, we like the look of you.

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Speaker 2: We'll support your nomination. But to all of the other

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Speaker 2: three they say no, and so then we end up

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Speaker 2: in a contested AGM. And this is where ACCR, of

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Speaker 2: course played a role. We spoke to all of the

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Speaker 2: independent directors, we spoke to all the company directors, and

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Speaker 2: we formed the view that all of these independent directors

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Speaker 2: were worthy of election and all of them were elected.

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Speaker 3: So this is a huge deal.

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Speaker 2: It's the first time in the Stratian corporate history that

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Speaker 2: the board of an organization, again Australia's largest polluter, has

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Speaker 2: been totally transformed by active as shareholding with a climate focus.

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Speaker 1: That's a real change. But what does that do to emissions?

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Speaker 2: So during all of this, this board did, under this pressure,

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Speaker 2: bring forward the date of closure of one of its

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Speaker 2: major coal generation assets by decade and so the forecast

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Speaker 2: emissions that will be avoided by that decision alone is

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Speaker 2: about two hundred million tons of CO two equivalent.

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Speaker 1: Now, that happened in September twenty twenty two. Of course,

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Speaker 1: one other major thing happened between the AGM in May

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Speaker 1: twenty twenty two and this decision in September. There was

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Speaker 1: a change in the government. There was an Australian election

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Speaker 1: that voted in a Labor government with a huge brandate

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Speaker 1: to independence, who were very keen on climate action. So

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Speaker 1: how can you differentiate between what was a political change

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Speaker 1: where Labor government was clearly interested in more renewables than

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Speaker 1: AGL saw that versus what happened at the board level.

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Speaker 2: So I think the environment in which AGL could make

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Speaker 2: these decisions. Was markedly changed. But I really don't think

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Speaker 2: that the leadership of the company wanted to do it,

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Speaker 2: and so it did require that relentless pressure. And the

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Speaker 2: evidence that they didn't want to do it is that

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Speaker 2: they were still pursuing the de merger. Right, So the

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Speaker 2: shareholder pressure and the ongoing shareholder pressure, I mean, it's

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Speaker 2: still necessary. AGL doesn't have a one point five degree

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Speaker 2: aligned pathway yet, so there's absolutely still work to do.

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Speaker 2: But that shareholder pressure was absolutely crucial in saying company

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Speaker 2: strategy changed.

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Speaker 1: By the way in twenty twenty two, after AGL announced

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Speaker 1: that it would close its most polluting coal facility in

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Speaker 1: twenty thirty five, its share price rose for the first

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Speaker 1: time in a long time. Another company that accr to

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Speaker 1: con is the Swiss giant Glencore. It's an enormous mining

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Speaker 1: company and ninety percent of its scope one, two and

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Speaker 1: three emissions are related to coal. Coal also makes up

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Speaker 1: a huge amount of its income. More than half of

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Speaker 1: its profits nearly eighteen billion dollars last year came from coal.

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Speaker 1: After a banner year of profits due to high fossil

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Speaker 1: fuel prices caused by the war in Ukraine. In twenty

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Speaker 1: twenty one, Glencore issued a pledge. It said that it

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Speaker 1: will lower its emissions by fifty percent relative to its

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Speaker 1: twenty nineteen baseline by twenty thirty five. Yes, that's a

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Speaker 1: lot of years. But basically ACCR, which is an owner

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Speaker 1: of Glencore shares, did not like those numbers. So ACCR

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Speaker 1: filed a shareholder resolution. It said, it is unclear how

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Speaker 1: our companies planned thermal coal production aligns with the global

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Speaker 1: demand for thermal coal under a one point five degree

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Speaker 1: Celsius scenario. And you brought a shareholder resolution in December

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Speaker 1: twenty twenty two asking the company to do.

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Speaker 2: What to disclose how its thermal coal forward production pathway

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Speaker 2: aligns with the Paris Agreement. So glen Core is a

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Speaker 2: company that kind of wriggled out of investor scrutiny for

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Speaker 2: a long time. It was saying really nice things about

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Speaker 2: its decarbonization adjectives. When you actually look at if you

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Speaker 2: model the thermal coal production pathway, it was still expansion

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Speaker 2: going on. There was We're absolutely not aligned. There's still

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Speaker 2: absolutely not aligned. So we brought the shareholder resolution in

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Speaker 2: December twenty twenty two, but that was already after a

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Speaker 2: very long period of engagement.

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Speaker 1: Accr's resolution asked for glen Core to prepare a climate

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Speaker 1: action plan, which essentially boiled down to okay, so you

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Speaker 1: want to continue producing coal, How exactly will this work

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Speaker 1: with your claim to lower emissions? And aren't you putting

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Speaker 1: the world of track on its climate goals? Alongside ACCR

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Speaker 1: were asset managers who controlled two point two trillion dollars.

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Speaker 1: On the day of the vote, nearly thirty percent of

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Speaker 1: investors agreed with ACCR. Yes, Glencore, you should explain how

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Speaker 1: exactly you will do this. This is an achievement ACCR

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Speaker 1: is proud of, but the result is not binding on Glencore.

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Speaker 1: It's just a request. And at the AGM you got

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Speaker 1: thirty percent of the investors voting against glen Core's climate plans,

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Speaker 1: twenty nine percent voting to make Glencore disclose more information

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Speaker 1: on its climate plans. Again, non binding shareholder resolution. What

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Speaker 1: changed does that bring?

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Speaker 3: Well?

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Speaker 2: That is ongoing work, I guess. In the lead up

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Speaker 2: to filing actually was where there was some change that

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Speaker 2: was made. So before we went ahead with the filing,

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Speaker 2: Glencore made the decision to drop the valeria Greenfield's project,

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Speaker 2: which is absolutely huge in terms of emissions almost a

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Speaker 2: billion tons.

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Speaker 1: One billion tons. Valeria was a coal mind that Glencore

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Speaker 1: had planned to build in Australia. When the company announced

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Speaker 1: that it won't build that mine, it cited its own

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Speaker 1: net zero commitments.

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Speaker 2: So it's impossible to attribute this to any one particular

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Speaker 2: strategy or any one particular force. But as to whether

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Speaker 2: I think pressure from its shareholders, the threat of escalation,

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Speaker 2: real escalation by its shareholders contributed to that decision, or

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Speaker 2: the environment which was made, absolutely.

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Speaker 1: I had to know what these confrontations sound like. So

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Speaker 1: after the break, I asked Brinn to challenge the Zero

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Speaker 1: Podcast Corporation and try to get us to change our

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Speaker 1: polluting waste.

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Speaker 4: The Zero Podcast Corporation doesn't just interview the people behind

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Speaker 4: climate solutions. We are a climate solution. We're always innovating

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Speaker 4: and inspiring, bringing ideas and jobs into your neighborhood, your home,

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Speaker 4: into your dresser drawers and your earbuds and your earmos thoughts,

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Speaker 4: and we want to keep going to be the podcast

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Speaker 4: corporation for the next century. So at Zero, we've committed

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Speaker 4: to not just reaching net zero emissions, but net net

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Speaker 4: zero zero emissions, so net zero it's not zero zero.

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Speaker 1: If the zero podcast Corporation we're publicly traded and not

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Speaker 1: making good on that netnet zero zero goal, Britain and

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Speaker 1: her group might want to get involved. I asked her

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Speaker 1: to tell me how exactly that engagement might go. Let's

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Speaker 1: just go through the basics of what it is that

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Speaker 1: a shareholder can actually do to change a company. So

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Speaker 1: say you're a shareholder, I am the company. You're annoyed

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Speaker 1: by something I am doing. What do you do?

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Speaker 4: First?

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Speaker 2: I request a meeting with you to discuss the thing

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Speaker 2: that I'm annoyed about, and at that meeting, I tell

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Speaker 2: you what I'm annoyed about, and if it's not already

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Speaker 2: known to you because of who I am, that I

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Speaker 2: might escalate using my formal rights. Then I tell you

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Speaker 2: that if you don't change this, I'm considering using my

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Speaker 2: rights as a shareholder to force this issue into the public.

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Speaker 1: Well, thank you for coming. It was a pleasant meeting.

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Speaker 1: But you're an it's it bitsy owner of shares. You

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Speaker 1: might try what you want. I'm going to continue what

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Speaker 1: I do.

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Speaker 2: You may do that, and then I would come good

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Speaker 2: on my threat. It depends what I've threatened. There are

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Speaker 2: a few things that a shareholder can threatened to do.

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Speaker 2: You generally start with, well, I'm going to threaten to

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Speaker 2: vote my shares against you on some item on the

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Speaker 2: ballot at your AGM. And maybe I'm going to threaten

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Speaker 2: to put an item on the ballot for a vote

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Speaker 2: at your AGM about the thing that I'm concerned about.

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Speaker 2: And if I do that, maybe I am going to

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Speaker 2: call on other investors to make that request alongside me.

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Speaker 2: So I might have a three trillion dollar coalition that

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Speaker 2: files a shareholder resolution that says, here's the thing that

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Speaker 2: we are concerned about. We would like to take a

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Speaker 2: vote of all shareholders to see who else is concerned

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Speaker 2: about this thing.

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Speaker 1: Oh now, these annual General meetings are kind of the

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Speaker 1: place where I will tell the world what great things

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Speaker 1: I'm doing and why all the dividends we are paying

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Speaker 1: out are making you the shareholders richer. And you know,

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Speaker 1: these people who are a minority are going to make

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Speaker 1: some noise about changing things here, but look, we make

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Speaker 1: profits and we deliver dividends. Don't listen to them. Don't

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Speaker 1: vote for that stuff because it's going to cut your

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Speaker 1: dividends off. I think that will be a pretty compelling

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Speaker 1: case for people who are investing in my company to

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Speaker 1: want to make returns.

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Speaker 2: It might be, But say you get a twenty or

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Speaker 2: thirty percent vote of your shareholders against you, so for

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Speaker 2: my resolution, that might be embarrassing for you. You might

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Speaker 2: be a company director that's looking to protect their reputation,

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Speaker 2: that's looking to have a reputation of being responsive to

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Speaker 2: shareholder concerns. If you get a twenty five percent vote

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Speaker 2: in some jurisdictions, like in the UK, then you're actually

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Speaker 2: required under the Corporate Governance Code to consult with your

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Speaker 2: shareholders about that vote. So you might have to go

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Speaker 2: and have some groveling conversations. But as to whether you'll

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Speaker 2: be forced to address my concern, the answer is no.

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Speaker 1: Well that's good, right, I can continue to do what

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Speaker 1: I want. So what power do you have after that?

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Speaker 2: So even if in most yuris times you get fifty

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Speaker 2: percent of the vote, so a majority on a shareholder resolution,

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Speaker 2: it's generally not binding. So in some places you can

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Speaker 2: bind a company by a special majority, so two thirds

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Speaker 2: or a seventy five percent majority of shareholders, and you

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Speaker 2: require that level of majority to for example, a mend

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Speaker 2: a company constitution which will bind the directors. But if

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Speaker 2: you get a non binding vote, then you can ignore

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Speaker 2: it if you like. I would say, look, we are

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Speaker 2: getting to a stage where there are some companies that

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Speaker 2: will ignore non binding majority votes, but there will be

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Speaker 2: consequences for that. So that's what we had at AGL,

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Speaker 2: and you know, a half the board got renewed. So

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Speaker 2: so that brings me to two. I guess another set

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Speaker 2: of rights, and that is the right of voting, predeclaring,

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Speaker 2: campaigning on binding votes which fall into two categories, votes

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Speaker 2: put by management, and then votes on director elections where

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Speaker 2: directors are nominated by shareholders.

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Speaker 1: Oh so my bosses, right, I'm the chief exec But

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Speaker 1: yes I do have bosses, and they're the board of directors.

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Speaker 1: So you're going to do what with my board?

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Speaker 2: I might if I am concerned enough about the direction

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Speaker 2: of your strategy, then I note that while you have

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Speaker 2: a role in developing and executing strategy, your board has

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Speaker 2: a role in overseeing it, and ultimately the buck stops

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Speaker 2: with them. So if I think that they're doing a

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Speaker 2: poor job of overseeing your strategy and that that is

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Speaker 2: undermining my interest as a shareholder, so I'm worried about

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Speaker 2: climate change. I see it as material risk to my

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Speaker 2: portfolio over a certain time horizon. If I'm concerned enough,

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Speaker 2: I might seek to eye. I either remove directors from

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Speaker 2: your board by campaigning for boats against them, or I

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Speaker 2: might nominate alternative directors to your board who have capability

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Speaker 2: and motivation to see the company strategy change.

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Speaker 1: Well, good luck to you. You've got a few of

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Speaker 1: my board members change, but majority of them are still

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Speaker 1: my friends and they will let me do what I

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Speaker 1: want to do.

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Speaker 2: What next, Look, it depends how much money I've got.

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Speaker 2: But say I've got a big pool of capital and

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Speaker 2: you're a medium sized company, So I might buy a

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Speaker 2: major stake in the company. I might make it takeover bid.

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Speaker 2: And then I guess you have the opportunity to decide

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Speaker 2: whether I'm offering a fair price. And if you decide

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Speaker 2: that I'm offering a fair price, you might ask your

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Speaker 2: shareholders whether they agree.

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Speaker 1: The thing that Brent did not do to the Zero

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Speaker 1: Podcast Corporation is sue us. This is something SECR is

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Speaker 1: doing right now to an oil and gas company called Santos.

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Speaker 1: Talk me through why a lawsuit is the rate move

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Speaker 1: at this.

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Speaker 2: Point under Australian law. We've got corporations law and consumer law,

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Speaker 2: and there's provisions in both of those acts that prohibit

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Speaker 2: misleading or deceptive conduct. Our assessment of the plans that

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Speaker 2: Santos released in twenty twenty in relation to its net

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Speaker 2: zero strategy, its transition strategy, is that there were a

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Speaker 2: bunch of grounds that were misleading or deceptive. We were

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Speaker 2: not able to get those matters addressed in private conversations.

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Speaker 2: Shareholder resolutions are poorly suited to these kind of legal

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Speaker 2: questions of interpretations of words, so we decided that what

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Speaker 2: we allege are the misrepresentations were serious enough to ask

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Speaker 2: a court if they agree with us. We think that shareholders,

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Speaker 2: of course, have an interest in reliable, credible, accurate information.

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Speaker 2: They're making major decisions, they are allocating their beneficiaries capital

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Speaker 2: on the basis of information that's disclosed to the market,

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Speaker 2: so we have a real interest in ensuring the integrity

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Speaker 2: of that information. We allege that Santos's information did not

440
00:27:25,480 --> 00:27:27,639
Speaker 2: meet that standard in a couple of areas, and so

441
00:27:27,720 --> 00:27:30,040
Speaker 2: we're still pursuing the legal strategy there.

442
00:27:30,400 --> 00:27:34,280
Speaker 1: Santos said it is defending accr's allegations and that it

443
00:27:34,359 --> 00:27:38,760
Speaker 1: is committed to transparent, accurate and compliant reporting. Now, oil

444
00:27:38,760 --> 00:27:42,280
Speaker 1: and gas companies have had not very much credibility on

445
00:27:42,320 --> 00:27:46,280
Speaker 1: climate issues, to put it mildly, and so people look

446
00:27:46,280 --> 00:27:49,480
Speaker 1: at their climate plans and they go, well, of course

447
00:27:49,520 --> 00:27:53,119
Speaker 1: they're lying. Well, of course they're not green enough. What

448
00:27:53,240 --> 00:27:55,720
Speaker 1: would you expect. What's your response to that?

449
00:27:56,600 --> 00:28:03,280
Speaker 2: Well, it's a curious response for institutions that have a

450
00:28:03,320 --> 00:28:06,359
Speaker 2: fiduciary duty to care about this, that actually have to

451
00:28:06,400 --> 00:28:10,440
Speaker 2: make decisions about how they're allocating capital, and they need

452
00:28:10,480 --> 00:28:13,400
Speaker 2: to be confident that the information that they're getting is accurate.

453
00:28:13,440 --> 00:28:16,159
Speaker 2: So I think we do absolutely see a cynicism about

454
00:28:16,200 --> 00:28:20,200
Speaker 2: the information that investors are getting from oil and gas companies.

455
00:28:20,800 --> 00:28:23,840
Speaker 2: But that's really worrying to us. That's another one of

456
00:28:23,840 --> 00:28:26,200
Speaker 2: the reasons that we have asked the court to intervene

457
00:28:26,240 --> 00:28:29,760
Speaker 2: in this matter to make an assessment of whether the

458
00:28:29,800 --> 00:28:33,520
Speaker 2: statements meet the legal standard. It's actually it's a world

459
00:28:33,600 --> 00:28:36,720
Speaker 2: first case in that it is going to the veracity

460
00:28:36,760 --> 00:28:38,240
Speaker 2: of a company's net zero plan.

461
00:28:38,680 --> 00:28:40,600
Speaker 3: But it's actually really orthodox law, like.

462
00:28:40,600 --> 00:28:45,160
Speaker 2: Misleading and deceptive conduct, like basic trade practices, basic corporation's law.

463
00:28:45,920 --> 00:28:48,160
Speaker 3: And it's a rich and well established area of law.

464
00:28:48,280 --> 00:28:51,920
Speaker 2: So we're still in litigation and we're hoping to have

465
00:28:51,960 --> 00:28:54,840
Speaker 2: an outcome within the next twelve months, but we need

466
00:28:54,840 --> 00:28:55,520
Speaker 2: to wait and see.

467
00:28:56,000 --> 00:28:59,040
Speaker 1: I've always been struck by the fact that if a

468
00:28:59,080 --> 00:29:02,320
Speaker 1: company were to make up its financial accounts, it could

469
00:29:02,320 --> 00:29:06,280
Speaker 1: get into serious trouble. It can have its leaders put

470
00:29:06,360 --> 00:29:10,760
Speaker 1: in jail, put huge fines on the company disparred from

471
00:29:10,760 --> 00:29:13,880
Speaker 1: some activities of governments have control over those, but when

472
00:29:13,920 --> 00:29:16,800
Speaker 1: it comes to carbon accounting, which is also a form

473
00:29:16,840 --> 00:29:22,720
Speaker 1: of accounting that matters, there are almost no punishments available.

474
00:29:23,200 --> 00:29:25,320
Speaker 2: It's kind of perverse, right that this is something that

475
00:29:25,440 --> 00:29:28,560
Speaker 2: is so material. Look, I think that we have seen

476
00:29:28,880 --> 00:29:32,720
Speaker 2: and when we've been pushing for kind of climate materiality

477
00:29:32,720 --> 00:29:36,920
Speaker 2: assessments to be included in financial accounts, companies haven't been

478
00:29:37,280 --> 00:29:41,600
Speaker 2: responsive to that to date. But really this is absolutely

479
00:29:42,040 --> 00:29:46,120
Speaker 2: material financial risk. The law always lags. The law will

480
00:29:46,160 --> 00:29:50,440
Speaker 2: catch up, this is inevitable, but it hasn't caught up yet.

481
00:29:51,000 --> 00:29:55,000
Speaker 2: So we are seeing in Australia, in addition to our case,

482
00:29:55,040 --> 00:29:59,320
Speaker 2: we're seeing hugely increased attention from regulators and we really

483
00:29:59,720 --> 00:30:02,840
Speaker 2: well come that, but there's still.

484
00:30:02,640 --> 00:30:04,800
Speaker 3: A lot of greenwashing out there. It's fair to say.

485
00:30:05,480 --> 00:30:08,800
Speaker 1: Now, are you worried that when you pursue these cases

486
00:30:08,920 --> 00:30:12,880
Speaker 1: sometimes companies might choose to leave Australia al together. This

487
00:30:12,920 --> 00:30:17,680
Speaker 1: is something that's happened in Europe, for example, where Shell

488
00:30:18,120 --> 00:30:22,680
Speaker 1: has been under constant criticism for not having a climate

489
00:30:22,720 --> 00:30:25,640
Speaker 1: plan or not following it through, and there were legal

490
00:30:25,680 --> 00:30:29,800
Speaker 1: cases filed. Eventually Shell just decided to leave the Netherlands

491
00:30:30,000 --> 00:30:34,680
Speaker 1: and choose London as it's well, it's complicated because it's

492
00:30:34,720 --> 00:30:36,320
Speaker 1: two headquarters, and then it became one.

493
00:30:36,520 --> 00:30:38,719
Speaker 2: Well I hear that being asked currently if they all

494
00:30:38,800 --> 00:30:41,120
Speaker 2: leave London and go list in New York right, And

495
00:30:41,120 --> 00:30:45,560
Speaker 2: I think that conversation is being had about Glencore as well.

496
00:30:45,640 --> 00:30:48,680
Speaker 2: You know, can you forum shop? Can you run from

497
00:30:48,920 --> 00:30:55,440
Speaker 2: climate related legal scrutiny. Look, it's not something that we

498
00:30:55,520 --> 00:31:02,600
Speaker 2: expect the companies in our Australian folio to be actively considering.

499
00:31:02,680 --> 00:31:06,280
Speaker 2: We would be very surprised if they were. But I'm

500
00:31:06,280 --> 00:31:08,600
Speaker 2: not going to say it's not an issue like because

501
00:31:08,640 --> 00:31:09,800
Speaker 2: it patently is.

502
00:31:10,360 --> 00:31:13,120
Speaker 1: We ask Glenn Core about this and the company declined

503
00:31:13,160 --> 00:31:16,840
Speaker 1: to comment. We do live in a two track world

504
00:31:16,920 --> 00:31:20,600
Speaker 1: where on the one side we are seeing progress the

505
00:31:20,680 --> 00:31:23,160
Speaker 1: kind of work that you are doing in eCCr now

506
00:31:23,720 --> 00:31:26,440
Speaker 1: would be much much harder ten years ago and did

507
00:31:26,440 --> 00:31:30,280
Speaker 1: not exist twenty years ago. But of course, at the

508
00:31:30,280 --> 00:31:34,120
Speaker 1: same time, climate impacts keep getting worse, emissions haven't declined.

509
00:31:34,880 --> 00:31:36,320
Speaker 1: What keeps you going.

510
00:31:36,680 --> 00:31:39,480
Speaker 2: The changes that we want to see in the world

511
00:31:40,400 --> 00:31:43,880
Speaker 2: are not just possible, but they're inevitable. So, for example,

512
00:31:43,920 --> 00:31:46,920
Speaker 2: in the oil and gas sector, we want to prevent

513
00:31:47,200 --> 00:31:52,560
Speaker 2: new capital expenditure or new final investment decisions on new

514
00:31:52,600 --> 00:31:56,240
Speaker 2: and expanded and extended projects. That is what we need

515
00:31:56,280 --> 00:31:59,000
Speaker 2: to see in the world. That will happen. It's our

516
00:31:59,120 --> 00:32:03,800
Speaker 2: challenge to to accelerate that, and we certainly are seeing

517
00:32:03,840 --> 00:32:06,960
Speaker 2: a great deal more interest. I think as our activities

518
00:32:07,000 --> 00:32:10,440
Speaker 2: become better known, as the emission's impacts are better able

519
00:32:10,480 --> 00:32:15,080
Speaker 2: to be quantified, as we get clearer and crunchier on

520
00:32:15,120 --> 00:32:18,240
Speaker 2: our objectives, which really are those real world emissions outcomes,

521
00:32:18,280 --> 00:32:22,240
Speaker 2: which are so hard to achieve, it so essential to

522
00:32:23,200 --> 00:32:26,600
Speaker 2: just the survival of all life on Earth, And you know,

523
00:32:26,680 --> 00:32:29,560
Speaker 2: I get pretty mad about this stuff as well. And rage,

524
00:32:29,720 --> 00:32:33,280
Speaker 2: as I sometimes say, is a renewable resource, and I

525
00:32:33,280 --> 00:32:36,160
Speaker 2: mean it's motivating work because we just have to accelerate it,

526
00:32:36,200 --> 00:32:41,240
Speaker 2: and shareholders have so much power that has been badly

527
00:32:41,360 --> 00:32:44,160
Speaker 2: under exploited. Today there's just power sitting on the table,

528
00:32:44,240 --> 00:32:47,680
Speaker 2: so it's really motivating for us to try to assist

529
00:32:47,760 --> 00:32:49,920
Speaker 2: shareholders to use it effectively.

530
00:32:50,520 --> 00:32:53,640
Speaker 1: Well, this sounds like a David versus Goliath fight and

531
00:32:53,720 --> 00:33:06,080
Speaker 1: I'm here for it. Thank you, Thanks very much. I

532
00:33:06,080 --> 00:33:08,320
Speaker 1: have a book coming out in October, if you haven't

533
00:33:08,360 --> 00:33:12,040
Speaker 1: heard already, it's called Climate Capitalism, and the title alone

534
00:33:12,080 --> 00:33:15,000
Speaker 1: should tell you that I think that capitalism can be

535
00:33:15,120 --> 00:33:19,000
Speaker 1: changed to work to fight climate change rather than exacerbate it.

536
00:33:19,320 --> 00:33:22,640
Speaker 1: In fact, I have tons of examples of exactly how

537
00:33:22,720 --> 00:33:24,520
Speaker 1: to do it. And the reason that I make the

538
00:33:24,560 --> 00:33:27,160
Speaker 1: case is that there is power in the hands of

539
00:33:27,200 --> 00:33:31,440
Speaker 1: capital owners, the shareholders that Brin and many others are

540
00:33:31,520 --> 00:33:34,920
Speaker 1: activating to change the companies that are causing these emissions.

541
00:33:35,320 --> 00:33:39,360
Speaker 1: Those shareholders, capital owners, or members. They are all individuals

542
00:33:39,600 --> 00:33:42,480
Speaker 1: and their minds can be changed. Or if they don't

543
00:33:42,520 --> 00:33:46,160
Speaker 1: change their minds, there are shareholder activists like ACCR who

544
00:33:46,240 --> 00:33:50,080
Speaker 1: will get them kicked off their boards. Thanks so much

545
00:33:50,120 --> 00:33:52,640
Speaker 1: for listening to Zero. If you liked this episode, please

546
00:33:52,680 --> 00:33:55,360
Speaker 1: take a moment to rate and review it. Subscribe on

547
00:33:55,360 --> 00:33:58,520
Speaker 1: Apple Podcasts or Spotify send it to a friend or

548
00:33:58,520 --> 00:34:02,120
Speaker 1: someone who hates capitalists. Get in touch at Zero Pod

549
00:34:02,200 --> 00:34:05,600
Speaker 1: at Bloomberg dot Net. Zero's producer is Oscar Boyd and

550
00:34:05,720 --> 00:34:09,320
Speaker 1: senior producer is Christine driscoll Ar. Theme music is composed

551
00:34:09,320 --> 00:34:12,720
Speaker 1: by wonder Lee. Special thanks this week to David Stringer

552
00:34:12,800 --> 00:34:16,000
Speaker 1: and kirabindrip I am Akshatrati. Back next week.