Speaker 1: Welcome to zero. I'm Akshatrati this week rights representations and repercussions.
Speaker 1: When it comes to fossil fuel companies and climate change,
Speaker 1: it often becomes a conversation about us versus them, the
Speaker 1: people versus the corporation, planet versus profits. Look, it's not
Speaker 1: surprising given the fossil fuel industry's track record on climate action,
Speaker 1: but it doesn't have to be that way if the
Speaker 1: owners of those companies, the holders of capital, use the
Speaker 1: immense power they have over corporations.
Speaker 2: Shareholders have so much power that has been badly under exploited.
Speaker 2: Today there's just power sitting on the table.
Speaker 1: This is Bryn O'Brien, executive director of the Australasian Center
Speaker 1: for Corporate Responsibility. Companies are core units of capitalism, and
Speaker 1: Brinn makes the case that it's possible to harness the
Speaker 1: forces of capitalism to be a solution for tackling climate
Speaker 1: change rather than continuing to worsen it. And Britt has
Speaker 1: shown it can be done. Recently, ACCR convinced the Japanese
Speaker 1: company Nippon Steel to start investing in new low carbon manufacturing,
Speaker 1: and it even got the Australian company BHP to set
Speaker 1: a date to retire a coal mine, stopping roughly six
Speaker 1: hundred million tons of carbon dioxide from entering the atmosphere.
Speaker 1: Accr's strategy is to engage with companies. It starts simply
Speaker 1: with sitting down with the company and talking it through.
Speaker 1: Now that might sound simplistic. It's one reason why shareholder
Speaker 1: engagement sometimes is criticized for being too conciliatory, even ineffective,
Speaker 1: But Brinn says that if companies don't change just with dialogue,
Speaker 1: then ACCR has other tactics.
Speaker 2: Engagement that achieves results always has the credit threat of escalation.
Speaker 1: The ultimate escalation is for an investor to divest, that is,
Speaker 1: to sell off their shares in the company. There's a
Speaker 1: movement that's been growing to try and get big owners
Speaker 1: of capital to divest from fossil fuel companies because those
Speaker 1: companies aren't changing fast enough. This is what groups like
Speaker 1: Stop the Money Pipeline and Fossil Free want big shareholders
Speaker 1: to do. And yet despite the movement, fossil fuel companies
Speaker 1: continue to make record profits and make some shareholders very happy.
Speaker 1: When I was in Australia this summer, I wanted to
Speaker 1: talk to Brinn about her philosophy of engagement versus divestment,
Speaker 1: Why shareholder activism is key to cutting real world emissions
Speaker 1: and what happens when you have to make good on
Speaker 1: a threat. So we're going to talk a lot about
Speaker 1: shareholder activism, and that is active engagement with polluting companies
Speaker 1: through owning their shares rather than divestment. The question of
Speaker 1: engagement versus di investment is the kind of decision that
Speaker 1: every investor who understands climate change and wants to mitigate
Speaker 1: climate change while making an economic return has to grapple with.
Speaker 1: So what's your case for engagement and against the investment?
Speaker 2: Our objective is to seek changes to company strategy for
Speaker 2: the companies and our portfolio to reduce real world emissions
Speaker 2: in line with science for the benefit of shareholders. That
Speaker 2: change that we want to see to company strategy is
Speaker 2: possible to request and to push for using the rights.
Speaker 3: That shareholders have.
Speaker 2: So those rights include filing shareholder resolutions. It includes having
Speaker 2: a say in who is on the board of a
Speaker 2: company by voting on director elections or nominating directors. Those
Speaker 2: are the.
Speaker 3: Leavers that are available if you're.
Speaker 2: A shareholder in a company to seek changes to the
Speaker 2: company's behavior, So that might be to seek a company
Speaker 2: not pursuing a fossil fuels expansion project, or it might
Speaker 2: be to seek a company using their political influence to
Speaker 2: transition our economies.
Speaker 3: Those rights are.
Speaker 2: Only available to those around the table. They're only available
Speaker 2: to shareholders, So if you divest, then you abandon those rights.
Speaker 2: So you would want to be very very sure that
Speaker 2: if your objective is to seek real world emissions reductions,
Speaker 2: that if you choose to divest, you have gone through
Speaker 2: a thorough process of exercising and exploiting all of the
Speaker 2: rights that you have. In my experience, there's effective engagement,
Speaker 2: engagement that achieves results, and then there's ineffective engagement. And
Speaker 2: the difference between those two things is effective engagement. Engagement
Speaker 2: that achieves results always has the credible threat of escalation
Speaker 2: through the use of formal shareholder rights. So going and
Speaker 2: having a conversation with a company and trying to persuade
Speaker 2: them through your advocacy alone without that threat of either
Speaker 2: voting at a company annual general meeting or filing a
Speaker 2: shareholder resolution or nominating directors that without that threat, results
Speaker 2: are not achieved.
Speaker 1: But there is an ultimate threat, which is after trying
Speaker 1: all those things. If the company does not do what
Speaker 1: you think they should be doing, the threat of escalation
Speaker 1: could be as high as actually divesting because it's just
Speaker 1: not working. And there is a case for divestment too,
Speaker 1: which is if a large investor diverse and makes the
Speaker 1: case for other shareholders to divest, then the stock price
Speaker 1: of the company can fall, and can fall drastically. When
Speaker 1: the stock price falls, the company may not have as
Speaker 1: much ability to is money in the market as it
Speaker 1: did previously. And so why is that not seen as
Speaker 1: an option in the threat of escalating change that you
Speaker 1: want from companies.
Speaker 2: So I think it's always an option, But I'm not
Speaker 2: sure that we have evidence to date of a divestment
Speaker 2: campaign getting so much momentum that it actually results in
Speaker 2: a material change to stock price. We do have evidence
Speaker 2: that poor company decision making around transition risk has had
Speaker 2: effect on stock prices, but we just haven't seen the
Speaker 2: evidence from divestment. And I think the additional hurdle, or
Speaker 2: the additional thing that we're looking for is those real
Speaker 2: world emissions reductions. And we do have some examples of
Speaker 2: where well executed shareholder strategy has resulted in quantifiable, real
Speaker 2: world emissions reductions.
Speaker 1: One of the big things Brinn and her organization were
Speaker 1: involved in was replacing some of the members on the
Speaker 1: board of Australia's largest utility AGL. It used to stand
Speaker 1: for Australian Gas Light Company when it was founded in
Speaker 1: eighteen thirty seven. Today it is Australia's largest greenhouse gasimeter.
Speaker 1: ACCR got involved in trying to reform AGL in twenty fifteen.
Speaker 1: It filed a shareholder resolution the kind of thing we've
Speaker 1: been talking about, that asked the company to disclose its
Speaker 1: climate plans. How is AGL going to run a thriving
Speaker 1: business relying on so much coal and gas power generation
Speaker 1: when the world is moving on to cleaner sources and
Speaker 1: fossil fuels are becoming more expensive. That shareholder resolution was
Speaker 1: voted on at the company's annual general meeting. Every publicly
Speaker 1: traded company has one of these. It's a whole corporate
Speaker 1: jamboree with lots of men in suits talking, which slide shows,
Speaker 1: of course, in short, a very important event in capitalism,
Speaker 1: and ACCR got five percent of other shareholders to agree
Speaker 1: that AGL should douse how it's going to make money
Speaker 1: in a warming world? Five percent was a good start,
Speaker 1: but it wasn't going to change anything. The story picks
Speaker 1: up in twenty twenty one.
Speaker 2: So things really started to heat up when in March
Speaker 2: twenty twenty one AGL after really fierce contests around their strategy,
Speaker 2: including the exit of their former CEO after Australian politicians
Speaker 2: attacked him in the media for wanting to bring forward
Speaker 2: cold closure dates. They appointed a new CEO and they
Speaker 2: decided that what they were going to do was de
Speaker 2: merge the business. Demerge it into a kind of business
Speaker 2: of the future and a thermal powered coal power generation business.
Speaker 1: Basically just splitting the company into two parts.
Speaker 2: That's right, and they were both planned to be listed entities.
Speaker 2: So if you held shares in AGL, you were going
Speaker 2: to end up with shares in the good company and
Speaker 2: shares in the coal company.
Speaker 1: Well, at this point, if you did have a good
Speaker 1: company and a bad company, isn't it a good thing
Speaker 1: for investors who are climate milanded to invest in the
Speaker 1: good company and those who don't want coal assets can
Speaker 1: then divest from the bad company.
Speaker 2: Well that does nothing about the emissions. That's I guess
Speaker 2: the core problem with that.
Speaker 1: This is a genuine question. There is no clear cut answer.
Speaker 1: It depends on your investing ideology. You could make the
Speaker 1: climate case both ways. There was a chance that one
Speaker 1: of the agal companies continue to run its coal plants
Speaker 1: for decades that would generate more emissions. Also, just looking
Speaker 1: at the financial numbers, Australia's stock market was having a
Speaker 1: great run, but the value of AGL was falling.
Speaker 2: And ACCR filed a shareholder resolution calling on the company
Speaker 2: to set Parasitaligne targets for both the the future company,
Speaker 2: the business of the future and for the coal company.
Speaker 2: And of course that was going to be a pretty
Speaker 2: difficult thing for the company to do.
Speaker 3: That actually got a majority.
Speaker 2: Then in early twenty twenty two, something really interesting happens,
Speaker 2: which is that a takeover bid is made for the
Speaker 2: company by Brookfield along with Grock Ventures. Grock Ventures being
Speaker 2: the private investment vehicle of Australian tech billionaire Mike cannon Brooks.
Speaker 1: Mike Cannon Brooks started the company at Lassian, which makes
Speaker 1: project management software like Trello. Brookfield is a Canadian asset
Speaker 1: management firm and it manages around eight hundred and fifty
Speaker 1: billion dollars. So when Brin talks about shareholder engagement. This
Speaker 1: is the scale of investors she's talking about. The pitch
Speaker 1: that cannon Brooks and Brookfield bring to agl's shareholders is basically,
Speaker 1: let us run the company with a plan to decarbonize
Speaker 1: its assets and invest in renewables lots of capsm Drama
Speaker 1: follows that bid is offered, it's rejected, not once.
Speaker 3: But twice.
Speaker 1: Brookfield walks away. Mike cannon Brooks.
Speaker 3: Does not.
Speaker 2: Grock Ventures, undeterred by Brookfield walking away, decide to buy
Speaker 2: a stake in the company that gives them over eleven
Speaker 2: percent of voting rights, and that's in advance of the
Speaker 2: de merger. Going to a vote to demerge a company,
Speaker 2: the board requires the support of seventy five percent, so
Speaker 2: a special majority of votes cast at the company meeting
Speaker 2: to be cast in favor of the proposal.
Speaker 1: So seventy five percent of the board needs to vote
Speaker 1: in favor.
Speaker 2: No a vote of shareholders, but it's seventy five percent
Speaker 2: of the votes are cast on the day, so things
Speaker 2: were looking.
Speaker 3: Pretty shaky for the board.
Speaker 2: We did have some Australian asset owners coming out and saying, look,
Speaker 2: we reject this to merger we're going to vote against it,
Speaker 2: because you can't run from climate risk if you're the
Speaker 2: kind of investor that we are. That ultimately we're a
Speaker 2: long term investor, and this is going to catch up
Speaker 2: with us, and we think it's in the company's interest,
Speaker 2: but in our interests as a diversified owner of stocks.
Speaker 2: So the merger is withdrawn because the company can see
Speaker 2: that it's on shaky ground, it's unlikely to win. You
Speaker 2: have immediate resignation of one board director and then announced
Speaker 2: kind of rolling resignations of others, including the chair and
Speaker 2: the CEO, and a kind of interim committee is appointed
Speaker 2: and they go on a search for other directors, and
Speaker 2: with their eleven and a half percent stake in the company,
Speaker 2: Grock Ventures nominate for directors and the company says to
Speaker 2: one of them, Okay, we like the look of you.
Speaker 2: We'll support your nomination. But to all of the other
Speaker 2: three they say no, and so then we end up
Speaker 2: in a contested AGM. And this is where ACCR, of
Speaker 2: course played a role. We spoke to all of the
Speaker 2: independent directors, we spoke to all the company directors, and
Speaker 2: we formed the view that all of these independent directors
Speaker 2: were worthy of election and all of them were elected.
Speaker 3: So this is a huge deal.
Speaker 2: It's the first time in the Stratian corporate history that
Speaker 2: the board of an organization, again Australia's largest polluter, has
Speaker 2: been totally transformed by active as shareholding with a climate focus.
Speaker 1: That's a real change. But what does that do to emissions?
Speaker 2: So during all of this, this board did, under this pressure,
Speaker 2: bring forward the date of closure of one of its
Speaker 2: major coal generation assets by decade and so the forecast
Speaker 2: emissions that will be avoided by that decision alone is
Speaker 2: about two hundred million tons of CO two equivalent.
Speaker 1: Now, that happened in September twenty twenty two. Of course,
Speaker 1: one other major thing happened between the AGM in May
Speaker 1: twenty twenty two and this decision in September. There was
Speaker 1: a change in the government. There was an Australian election
Speaker 1: that voted in a Labor government with a huge brandate
Speaker 1: to independence, who were very keen on climate action. So
Speaker 1: how can you differentiate between what was a political change
Speaker 1: where Labor government was clearly interested in more renewables than
Speaker 1: AGL saw that versus what happened at the board level.
Speaker 2: So I think the environment in which AGL could make
Speaker 2: these decisions. Was markedly changed. But I really don't think
Speaker 2: that the leadership of the company wanted to do it,
Speaker 2: and so it did require that relentless pressure. And the
Speaker 2: evidence that they didn't want to do it is that
Speaker 2: they were still pursuing the de merger. Right, So the
Speaker 2: shareholder pressure and the ongoing shareholder pressure, I mean, it's
Speaker 2: still necessary. AGL doesn't have a one point five degree
Speaker 2: aligned pathway yet, so there's absolutely still work to do.
Speaker 2: But that shareholder pressure was absolutely crucial in saying company
Speaker 2: strategy changed.
Speaker 1: By the way in twenty twenty two, after AGL announced
Speaker 1: that it would close its most polluting coal facility in
Speaker 1: twenty thirty five, its share price rose for the first
Speaker 1: time in a long time. Another company that accr to
Speaker 1: con is the Swiss giant Glencore. It's an enormous mining
Speaker 1: company and ninety percent of its scope one, two and
Speaker 1: three emissions are related to coal. Coal also makes up
Speaker 1: a huge amount of its income. More than half of
Speaker 1: its profits nearly eighteen billion dollars last year came from coal.
Speaker 1: After a banner year of profits due to high fossil
Speaker 1: fuel prices caused by the war in Ukraine. In twenty
Speaker 1: twenty one, Glencore issued a pledge. It said that it
Speaker 1: will lower its emissions by fifty percent relative to its
Speaker 1: twenty nineteen baseline by twenty thirty five. Yes, that's a
Speaker 1: lot of years. But basically ACCR, which is an owner
Speaker 1: of Glencore shares, did not like those numbers. So ACCR
Speaker 1: filed a shareholder resolution. It said, it is unclear how
Speaker 1: our companies planned thermal coal production aligns with the global
Speaker 1: demand for thermal coal under a one point five degree
Speaker 1: Celsius scenario. And you brought a shareholder resolution in December
Speaker 1: twenty twenty two asking the company to do.
Speaker 2: What to disclose how its thermal coal forward production pathway
Speaker 2: aligns with the Paris Agreement. So glen Core is a
Speaker 2: company that kind of wriggled out of investor scrutiny for
Speaker 2: a long time. It was saying really nice things about
Speaker 2: its decarbonization adjectives. When you actually look at if you
Speaker 2: model the thermal coal production pathway, it was still expansion
Speaker 2: going on. There was We're absolutely not aligned. There's still
Speaker 2: absolutely not aligned. So we brought the shareholder resolution in
Speaker 2: December twenty twenty two, but that was already after a
Speaker 2: very long period of engagement.
Speaker 1: Accr's resolution asked for glen Core to prepare a climate
Speaker 1: action plan, which essentially boiled down to okay, so you
Speaker 1: want to continue producing coal, How exactly will this work
Speaker 1: with your claim to lower emissions? And aren't you putting
Speaker 1: the world of track on its climate goals? Alongside ACCR
Speaker 1: were asset managers who controlled two point two trillion dollars.
Speaker 1: On the day of the vote, nearly thirty percent of
Speaker 1: investors agreed with ACCR. Yes, Glencore, you should explain how
Speaker 1: exactly you will do this. This is an achievement ACCR
Speaker 1: is proud of, but the result is not binding on Glencore.
Speaker 1: It's just a request. And at the AGM you got
Speaker 1: thirty percent of the investors voting against glen Core's climate plans,
Speaker 1: twenty nine percent voting to make Glencore disclose more information
Speaker 1: on its climate plans. Again, non binding shareholder resolution. What
Speaker 1: changed does that bring?
Speaker 3: Well?
Speaker 2: That is ongoing work, I guess. In the lead up
Speaker 2: to filing actually was where there was some change that
Speaker 2: was made. So before we went ahead with the filing,
Speaker 2: Glencore made the decision to drop the valeria Greenfield's project,
Speaker 2: which is absolutely huge in terms of emissions almost a
Speaker 2: billion tons.
Speaker 1: One billion tons. Valeria was a coal mind that Glencore
Speaker 1: had planned to build in Australia. When the company announced
Speaker 1: that it won't build that mine, it cited its own
Speaker 1: net zero commitments.
Speaker 2: So it's impossible to attribute this to any one particular
Speaker 2: strategy or any one particular force. But as to whether
Speaker 2: I think pressure from its shareholders, the threat of escalation,
Speaker 2: real escalation by its shareholders contributed to that decision, or
Speaker 2: the environment which was made, absolutely.
Speaker 1: I had to know what these confrontations sound like. So
Speaker 1: after the break, I asked Brinn to challenge the Zero
Speaker 1: Podcast Corporation and try to get us to change our
Speaker 1: polluting waste.
Speaker 4: The Zero Podcast Corporation doesn't just interview the people behind
Speaker 4: climate solutions. We are a climate solution. We're always innovating
Speaker 4: and inspiring, bringing ideas and jobs into your neighborhood, your home,
Speaker 4: into your dresser drawers and your earbuds and your earmos thoughts,
Speaker 4: and we want to keep going to be the podcast
Speaker 4: corporation for the next century. So at Zero, we've committed
Speaker 4: to not just reaching net zero emissions, but net net
Speaker 4: zero zero emissions, so net zero it's not zero zero.
Speaker 1: If the zero podcast Corporation we're publicly traded and not
Speaker 1: making good on that netnet zero zero goal, Britain and
Speaker 1: her group might want to get involved. I asked her
Speaker 1: to tell me how exactly that engagement might go. Let's
Speaker 1: just go through the basics of what it is that
Speaker 1: a shareholder can actually do to change a company. So
Speaker 1: say you're a shareholder, I am the company. You're annoyed
Speaker 1: by something I am doing. What do you do?
Speaker 4: First?
Speaker 2: I request a meeting with you to discuss the thing
Speaker 2: that I'm annoyed about, and at that meeting, I tell
Speaker 2: you what I'm annoyed about, and if it's not already
Speaker 2: known to you because of who I am, that I
Speaker 2: might escalate using my formal rights. Then I tell you
Speaker 2: that if you don't change this, I'm considering using my
Speaker 2: rights as a shareholder to force this issue into the public.
Speaker 1: Well, thank you for coming. It was a pleasant meeting.
Speaker 1: But you're an it's it bitsy owner of shares. You
Speaker 1: might try what you want. I'm going to continue what
Speaker 1: I do.
Speaker 2: You may do that, and then I would come good
Speaker 2: on my threat. It depends what I've threatened. There are
Speaker 2: a few things that a shareholder can threatened to do.
Speaker 2: You generally start with, well, I'm going to threaten to
Speaker 2: vote my shares against you on some item on the
Speaker 2: ballot at your AGM. And maybe I'm going to threaten
Speaker 2: to put an item on the ballot for a vote
Speaker 2: at your AGM about the thing that I'm concerned about.
Speaker 2: And if I do that, maybe I am going to
Speaker 2: call on other investors to make that request alongside me.
Speaker 2: So I might have a three trillion dollar coalition that
Speaker 2: files a shareholder resolution that says, here's the thing that
Speaker 2: we are concerned about. We would like to take a
Speaker 2: vote of all shareholders to see who else is concerned
Speaker 2: about this thing.
Speaker 1: Oh now, these annual General meetings are kind of the
Speaker 1: place where I will tell the world what great things
Speaker 1: I'm doing and why all the dividends we are paying
Speaker 1: out are making you the shareholders richer. And you know,
Speaker 1: these people who are a minority are going to make
Speaker 1: some noise about changing things here, but look, we make
Speaker 1: profits and we deliver dividends. Don't listen to them. Don't
Speaker 1: vote for that stuff because it's going to cut your
Speaker 1: dividends off. I think that will be a pretty compelling
Speaker 1: case for people who are investing in my company to
Speaker 1: want to make returns.
Speaker 2: It might be, But say you get a twenty or
Speaker 2: thirty percent vote of your shareholders against you, so for
Speaker 2: my resolution, that might be embarrassing for you. You might
Speaker 2: be a company director that's looking to protect their reputation,
Speaker 2: that's looking to have a reputation of being responsive to
Speaker 2: shareholder concerns. If you get a twenty five percent vote
Speaker 2: in some jurisdictions, like in the UK, then you're actually
Speaker 2: required under the Corporate Governance Code to consult with your
Speaker 2: shareholders about that vote. So you might have to go
Speaker 2: and have some groveling conversations. But as to whether you'll
Speaker 2: be forced to address my concern, the answer is no.
Speaker 1: Well that's good, right, I can continue to do what
Speaker 1: I want. So what power do you have after that?
Speaker 2: So even if in most yuris times you get fifty
Speaker 2: percent of the vote, so a majority on a shareholder resolution,
Speaker 2: it's generally not binding. So in some places you can
Speaker 2: bind a company by a special majority, so two thirds
Speaker 2: or a seventy five percent majority of shareholders, and you
Speaker 2: require that level of majority to for example, a mend
Speaker 2: a company constitution which will bind the directors. But if
Speaker 2: you get a non binding vote, then you can ignore
Speaker 2: it if you like. I would say, look, we are
Speaker 2: getting to a stage where there are some companies that
Speaker 2: will ignore non binding majority votes, but there will be
Speaker 2: consequences for that. So that's what we had at AGL,
Speaker 2: and you know, a half the board got renewed. So
Speaker 2: so that brings me to two. I guess another set
Speaker 2: of rights, and that is the right of voting, predeclaring,
Speaker 2: campaigning on binding votes which fall into two categories, votes
Speaker 2: put by management, and then votes on director elections where
Speaker 2: directors are nominated by shareholders.
Speaker 1: Oh so my bosses, right, I'm the chief exec But
Speaker 1: yes I do have bosses, and they're the board of directors.
Speaker 1: So you're going to do what with my board?
Speaker 2: I might if I am concerned enough about the direction
Speaker 2: of your strategy, then I note that while you have
Speaker 2: a role in developing and executing strategy, your board has
Speaker 2: a role in overseeing it, and ultimately the buck stops
Speaker 2: with them. So if I think that they're doing a
Speaker 2: poor job of overseeing your strategy and that that is
Speaker 2: undermining my interest as a shareholder, so I'm worried about
Speaker 2: climate change. I see it as material risk to my
Speaker 2: portfolio over a certain time horizon. If I'm concerned enough,
Speaker 2: I might seek to eye. I either remove directors from
Speaker 2: your board by campaigning for boats against them, or I
Speaker 2: might nominate alternative directors to your board who have capability
Speaker 2: and motivation to see the company strategy change.
Speaker 1: Well, good luck to you. You've got a few of
Speaker 1: my board members change, but majority of them are still
Speaker 1: my friends and they will let me do what I
Speaker 1: want to do.
Speaker 2: What next, Look, it depends how much money I've got.
Speaker 2: But say I've got a big pool of capital and
Speaker 2: you're a medium sized company, So I might buy a
Speaker 2: major stake in the company. I might make it takeover bid.
Speaker 2: And then I guess you have the opportunity to decide
Speaker 2: whether I'm offering a fair price. And if you decide
Speaker 2: that I'm offering a fair price, you might ask your
Speaker 2: shareholders whether they agree.
Speaker 1: The thing that Brent did not do to the Zero
Speaker 1: Podcast Corporation is sue us. This is something SECR is
Speaker 1: doing right now to an oil and gas company called Santos.
Speaker 1: Talk me through why a lawsuit is the rate move
Speaker 1: at this.
Speaker 2: Point under Australian law. We've got corporations law and consumer law,
Speaker 2: and there's provisions in both of those acts that prohibit
Speaker 2: misleading or deceptive conduct. Our assessment of the plans that
Speaker 2: Santos released in twenty twenty in relation to its net
Speaker 2: zero strategy, its transition strategy, is that there were a
Speaker 2: bunch of grounds that were misleading or deceptive. We were
Speaker 2: not able to get those matters addressed in private conversations.
Speaker 2: Shareholder resolutions are poorly suited to these kind of legal
Speaker 2: questions of interpretations of words, so we decided that what
Speaker 2: we allege are the misrepresentations were serious enough to ask
Speaker 2: a court if they agree with us. We think that shareholders,
Speaker 2: of course, have an interest in reliable, credible, accurate information.
Speaker 2: They're making major decisions, they are allocating their beneficiaries capital
Speaker 2: on the basis of information that's disclosed to the market,
Speaker 2: so we have a real interest in ensuring the integrity
Speaker 2: of that information. We allege that Santos's information did not
Speaker 2: meet that standard in a couple of areas, and so
Speaker 2: we're still pursuing the legal strategy there.
Speaker 1: Santos said it is defending accr's allegations and that it
Speaker 1: is committed to transparent, accurate and compliant reporting. Now, oil
Speaker 1: and gas companies have had not very much credibility on
Speaker 1: climate issues, to put it mildly, and so people look
Speaker 1: at their climate plans and they go, well, of course
Speaker 1: they're lying. Well, of course they're not green enough. What
Speaker 1: would you expect. What's your response to that?
Speaker 2: Well, it's a curious response for institutions that have a
Speaker 2: fiduciary duty to care about this, that actually have to
Speaker 2: make decisions about how they're allocating capital, and they need
Speaker 2: to be confident that the information that they're getting is accurate.
Speaker 2: So I think we do absolutely see a cynicism about
Speaker 2: the information that investors are getting from oil and gas companies.
Speaker 2: But that's really worrying to us. That's another one of
Speaker 2: the reasons that we have asked the court to intervene
Speaker 2: in this matter to make an assessment of whether the
Speaker 2: statements meet the legal standard. It's actually it's a world
Speaker 2: first case in that it is going to the veracity
Speaker 2: of a company's net zero plan.
Speaker 3: But it's actually really orthodox law, like.
Speaker 2: Misleading and deceptive conduct, like basic trade practices, basic corporation's law.
Speaker 3: And it's a rich and well established area of law.
Speaker 2: So we're still in litigation and we're hoping to have
Speaker 2: an outcome within the next twelve months, but we need
Speaker 2: to wait and see.
Speaker 1: I've always been struck by the fact that if a
Speaker 1: company were to make up its financial accounts, it could
Speaker 1: get into serious trouble. It can have its leaders put
Speaker 1: in jail, put huge fines on the company disparred from
Speaker 1: some activities of governments have control over those, but when
Speaker 1: it comes to carbon accounting, which is also a form
Speaker 1: of accounting that matters, there are almost no punishments available.
Speaker 2: It's kind of perverse, right that this is something that
Speaker 2: is so material. Look, I think that we have seen
Speaker 2: and when we've been pushing for kind of climate materiality
Speaker 2: assessments to be included in financial accounts, companies haven't been
Speaker 2: responsive to that to date. But really this is absolutely
Speaker 2: material financial risk. The law always lags. The law will
Speaker 2: catch up, this is inevitable, but it hasn't caught up yet.
Speaker 2: So we are seeing in Australia, in addition to our case,
Speaker 2: we're seeing hugely increased attention from regulators and we really
Speaker 2: well come that, but there's still.
Speaker 3: A lot of greenwashing out there. It's fair to say.
Speaker 1: Now, are you worried that when you pursue these cases
Speaker 1: sometimes companies might choose to leave Australia al together. This
Speaker 1: is something that's happened in Europe, for example, where Shell
Speaker 1: has been under constant criticism for not having a climate
Speaker 1: plan or not following it through, and there were legal
Speaker 1: cases filed. Eventually Shell just decided to leave the Netherlands
Speaker 1: and choose London as it's well, it's complicated because it's
Speaker 1: two headquarters, and then it became one.
Speaker 2: Well I hear that being asked currently if they all
Speaker 2: leave London and go list in New York right, And
Speaker 2: I think that conversation is being had about Glencore as well.
Speaker 2: You know, can you forum shop? Can you run from
Speaker 2: climate related legal scrutiny. Look, it's not something that we
Speaker 2: expect the companies in our Australian folio to be actively considering.
Speaker 2: We would be very surprised if they were. But I'm
Speaker 2: not going to say it's not an issue like because
Speaker 2: it patently is.
Speaker 1: We ask Glenn Core about this and the company declined
Speaker 1: to comment. We do live in a two track world
Speaker 1: where on the one side we are seeing progress the
Speaker 1: kind of work that you are doing in eCCr now
Speaker 1: would be much much harder ten years ago and did
Speaker 1: not exist twenty years ago. But of course, at the
Speaker 1: same time, climate impacts keep getting worse, emissions haven't declined.
Speaker 1: What keeps you going.
Speaker 2: The changes that we want to see in the world
Speaker 2: are not just possible, but they're inevitable. So, for example,
Speaker 2: in the oil and gas sector, we want to prevent
Speaker 2: new capital expenditure or new final investment decisions on new
Speaker 2: and expanded and extended projects. That is what we need
Speaker 2: to see in the world. That will happen. It's our
Speaker 2: challenge to to accelerate that, and we certainly are seeing
Speaker 2: a great deal more interest. I think as our activities
Speaker 2: become better known, as the emission's impacts are better able
Speaker 2: to be quantified, as we get clearer and crunchier on
Speaker 2: our objectives, which really are those real world emissions outcomes,
Speaker 2: which are so hard to achieve, it so essential to
Speaker 2: just the survival of all life on Earth, And you know,
Speaker 2: I get pretty mad about this stuff as well. And rage,
Speaker 2: as I sometimes say, is a renewable resource, and I
Speaker 2: mean it's motivating work because we just have to accelerate it,
Speaker 2: and shareholders have so much power that has been badly
Speaker 2: under exploited. Today there's just power sitting on the table,
Speaker 2: so it's really motivating for us to try to assist
Speaker 2: shareholders to use it effectively.
Speaker 1: Well, this sounds like a David versus Goliath fight and
Speaker 1: I'm here for it. Thank you, Thanks very much. I
Speaker 1: have a book coming out in October, if you haven't
Speaker 1: heard already, it's called Climate Capitalism, and the title alone
Speaker 1: should tell you that I think that capitalism can be
Speaker 1: changed to work to fight climate change rather than exacerbate it.
Speaker 1: In fact, I have tons of examples of exactly how
Speaker 1: to do it. And the reason that I make the
Speaker 1: case is that there is power in the hands of
Speaker 1: capital owners, the shareholders that Brin and many others are
Speaker 1: activating to change the companies that are causing these emissions.
Speaker 1: Those shareholders, capital owners, or members. They are all individuals
Speaker 1: and their minds can be changed. Or if they don't
Speaker 1: change their minds, there are shareholder activists like ACCR who
Speaker 1: will get them kicked off their boards. Thanks so much
Speaker 1: for listening to Zero. If you liked this episode, please
Speaker 1: take a moment to rate and review it. Subscribe on
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Speaker 1: at Bloomberg dot Net. Zero's producer is Oscar Boyd and
Speaker 1: senior producer is Christine driscoll Ar. Theme music is composed
Speaker 1: by wonder Lee. Special thanks this week to David Stringer
Speaker 1: and kirabindrip I am Akshatrati. Back next week.