Fifteen Australian-listed companies have spent a combined $12.69 billion on fossil fuel exploration since July 2012. Ten foreign companies spent a further $14.62 billion on exploration in Australia between 2013-2015.
|BHP Billiton Ltd||$917||$2,104||$3,021|
|Woodside Petroleum Ltd||$739||$2,746||$3,485|
|Oil Search Ltd||–||$2,178||$2,178|
|Karoon Gas Australia Ltd||$365||$510||$875|
|Beach Energy Ltd||$512||$72||$584|
|Rio Tinto Ltd||$281||–||$281|
|Senex Energy Ltd||$236||–||$235|
|Origin Energy Ltd||$296||–||$296|
|Seven Group Holdings Ltd||$47||$72||$119|
|New Hope Group||$106||–||$106|
|Sino Gas & Energy Holdings Ltd||–||$95||$95|
|Whitehaven Coal Ltd||$35||–||$35|
Tell your super fund to stop rewarding climate destruction today!
In many cases, exploration is encouraged through executive remuneration packages. There are at least seven ASX-listed companies with known links between executive remuneration and fossil fuel reserves: AWE, FAR Ltd, Karoon Gas, Oil Search, Santos, Senex Energy and Sino Gas & Energy. Other energy companies, including Beach Energy, Woodside Petroleum and Whitehaven Coal, have remuneration structures that may encourage exploration.
At least six international companies with significant Australian operations also have explicit fossil fuel exploration or reserves-based bonus structures: ExxonMobil, Chevron, BP, Murphy Oil, Hess and ConocoPhillips.
Senior executives at the seven Australian companies stand to make a combined $2.02 million in additional bonuses each year if their reserve targets are met.
Despite their potential influence as significant shareholders, Australia’s super funds are failing to effectively challenge fossil fuel companies’ broken business models. Funds claim engagement is the best way to change the behaviour of companies they invest in, but little evidence is made available to demonstrate the effectiveness of this approach.
Funds have the right to vote on items such as executive remuneration and lobby for perverse incentives like fossil fuel fuel exploration bonuses to be removed from remuneration packages. But the evidence available indicates funds are, either actively or passively, using their members’ money to endorse these dirty bonuses.
Only eighteen of Australia’s 50 largest super funds disclose their complete proxy voting record, making it difficult to determine which funds are genuine ‘active owners.’ Our analysis of twelve Australian super funds’ voting records shows only three voted against any energy company’s remuneration package in the 2015/16 financial year.
These votes were all cast at Santos’ 2016 AGM, which saw significant investor revolt against excessive remuneration during a period of poor performance. So while there are some rare examples of funds voting against remuneration packages in the energy sector, there has not been widespread voting against exploration incentives.
Despite the significant presence of many international companies in the Australian economy, our super funds generally don’t engage with them. Engagement with companies actively exploring and producing fossil fuels in Australia should be an immediate priority for super funds.
Australia’s super funds must have effective engagement policies and practices, and demonstrate how these are being implemented to ensure companies they invest in are compatible with a low carbon future. An obvious step to demonstrate alignment with the goals agreed to in Paris is for funds to reject fossil fuel exploration incentives.
Funds are able to vote because of the retirement savings they manage for their members. They should engage with companies in a way that reflects their members’ views and concerns about climate change.
|Super Fund||AWE Ltd||FAR Ltd||Karoon Gas Australia Ltd||Oil Search Ltd||Santos Ltd||Senex Energy Ltd||Sino Gas & Energy Holdings Ltd||Woodside Petroleum Ltd|
|Total Rem. Vote||98.97%||84.34%||99.08%||98.04%||88.93%||96.70%||98.75%||72.41%|