“The super industry is undergoing significant structural change at present, but trustees must make sure they prioritise this issue and take action on climate change to protect members’ retirement savings.” If a carbon tax is introduced, funds that have foreseen this risk and taken action stand to benefit. But it might take some years for resource scarcity to amplify the costs of carbon and make loweremission technologies more appealing. Still, funds should seriously consider inevitable resources shortfalls, and which investments will be most rewarded by the marketplace in this situation. Karina Litvack, head of governance and sustainable investment at F&C Asset Management, communicated the manager’s reasons for supporting the resolution at the vote: “As the Australian Government debates whether or not to proceed with policies that will place constraints on carbon emissions, F&C considers it essential for large CO2 emitters like Woodside to ensure their business model is resilient in the face of potential escalation in the carbon price.” For F&C, a clear climate change strategy from Woodside was not enough. “Although Woodside has disclosed a clear climate change strategy and significant data on its overall emissions, the absence of any carbon price assumption means investors have no clarity over how these data are relevant to core business decision-making.” Like other Woodside rivals – such as ExxonMobil, Royal Dutch- Shell, BP, Total and Statoil – Oil Search has committed to disclosing its carbon price assumptions. Its decision was in response to a resolution lodged by the CAF at the company’s AGM on May 10, which was subsequently withdrawn after Oil Search conceded. The CAF has also succeeded in compelling Aquila Resources and Paladin Energy to disclose their carbon emissions, undertake strategies to reduce emissions and also estimate how a price for carbon would impact their long-term capital investment decisions.

On page 27 of its 2010 Sustainable Development Report, Woodside addresses the content of the resolution: “like other companies, we do not publicly release information on economic assumptions” about carbon pricing, it states. This is convenient. In a letter to Australian Ethical Investment, which Investment Magazine has obtained, Woodside reveals that in its base-case assumptions for evaluating major projects, it never factors in a carbon price. And if there is one, the company will receive compensation from the Federal Government – in perpetuity – for the impacts. The letter reads: “Woodside does include carbon pricing assumptions as part of its economic assessment of new and outgoing capital expenditure. However, these assumptions are applied as sensitivities to its assessments, and are not part of their basis. “Applying carbon price assumptions to base-case economics in the absence of legislated constraints on carbon emissions would be misleading to the market and the investment community. In addition, it is not customary for Woodside to release information on the precise nature of economic assumptions used in its assessments of capital expenditure”. It continues, stating that Woodside’s most significant investment decision in recent years was to undertake the Pluto liquefied natural gas project. This was approved in mid-2007, when both the former Rudd Government and the Opposition clearly said that trade-exposed industries would not be disadvantaged by the introduction of an emissions trading scheme. “Consequently costs associated with an ETS were not included in the base-case project economic assumptions,” Woodside states. Poulter is aghast at this.

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