In a statement released after the Woodside vote, he fumed: “It is not credible for a company to claim it has unique insight into future carbon markets and assume a zero carbon price for the indefinite future, when they know that prudent investors are expecting the risk of a higher carbon price to be managed. “Shareholders will be left carrying the can when carbon prices rise and the value of emission intensive companies fall. It is an inevitable scenario that some directors are conveniently ignoring.” Investors need to push for detailed disclosures from companies because the estimated price of carbon in the long-term varies wildly. The Mercer report states that by 2030, investors and companies should factor in a carbon price of between $110 and $220. In a report issued in late April, Jeff Bresnahan, managing director at SuperRatings, notes that while more funds are building an awareness of sustainability, there is scope for considerable improvement. “Only a few funds invest more than 5 per cent of their total net assets in responsible investments, which shows a reluctance to fully commit to sustainability even while many funds claim to be sustainable in other ways”. For this, Bresnahan allocates a lot of blame to the Federal Government’s indecisiveness. “The lack of direction from the Australian Government on areas of sustainability in recent years positively correlates with the lack of stronger actions taken by funds to implement sustainable policies,” he said in the report. “In fact, we observed funds stepping back from ‘strong’ attitudes towards supporting climate change action.

Likewise, slight backward steps were taken within measurement and reporting policies relating to funds’ environmental footprints between 2009 and 2010.” This reticence can be seen in some funds’ approach to the Woodside vote. Two industry fund giants, the $37 billion AustralianSuper and $27 billion UniSuper, voted against the resolution, both citing concerns that commercially sensitive information could be released if they pushed for carbon price assumptions from Woodside. AustralianSuper’s senior manager of investments, Peter Curtis, says the fund was advised by ACSI, funds managers, and another ESG research provider. “After reviewing the recommendations of all of the above,” he says, “the outcome was that we do not consider a change to the company’s constitution appropriate for the outcome the resolution is seeking, particularly if there is a risk that commercially sensitive information could be released. “As investors, we always seek greater disclosure, but separating out carbon disclosure in this way may not be the best way to achieve this goal. We feel there are other mechanisms better suited [such as] continued support of the carbon disclosure project [and] direct engagement with company.” Similarly, UniSuper CEO Terry McCredden says the fund was concerned that Woodside would be disadvantaged if the resolution passed and it was forced to declare commercially sensitive information. This would not be in members’ best financial interests, he says. “Also, existing accounting standards already require Woodside to report every six months on impairment testing of its assets and would require it to disclose the changed assumptions that led to any impairment,” he says. “The company also has an obligation under the ASX continuous disclosure regime to report on any information likely to have a ‘material effect’ on the price or value of its securities.

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