“In our view, it would have been poor governance practice to vote for this particular resolution. [It] would have decreased our credibility with the company in any future engagements and dialogue had we voted for this resolution.” Among the funds that voted for the resolution, a general view is the CAF resolution could have been crafted and worded with more skill, but it was still important that shareholders delivered a strong message to Woodside. The CEO of Cbus, David Atkin, says the fund “thought it was important to send a message both to Woodside and other listed companies about our desire for transparency on carbon and climate change. However, the fact that the resolution ended up being put as a constitutional change made it highly unlikely that it would be passed, given that a constitutional change requires a 75 per cent majority – especially given that Shell has a major shareholding in Woodside of over 24 per cent.” HESTA also backed the resolution to tell Woodside that investors believed in carbon reduction. Rob Fowler, executive manager of investments and governance at the fund, says its vote was made in light of public comments by outgoing Woodside CEO Don Voelte, in which he advocated full protection for his sector. Such protection, says Fowler, “would be at a cost to all other companies and Australian consumers, on the introduction of a carbon tax in Australia”. So HESTA felt that supporting the resolution would “reaffirm to the company” investors’ commitment to initiatives that reduce carbon emissions, and the “need for companies to show that they are constructively managing the associated risks posed to longterm investment returns of our members”.

MTAA Super, one of the foundation members of ACSI, usually votes in accordance with the organisation so supported the Woodside resolution. But the fund also agreed that greater visibility of carbon risk would better inform its investment strategy. “As an investor it was deemed desirable to convey to Woodside a preference for greater disclosure of Woodside’s modeling and expectations relating to the future impact of a carbon price on its business,” says deputy CEO Leeanne Turner. To justify its vote in support of the resolution, LGS took the commercial sensitivity motive and turned it on its head. Bill Hartnett, sustainability manager at the fund, says that if the Woodside’s board “does not consider carbon pricing to be important enough to be part of its base case for making investment decisions, then these carbon pricing assumptions cannot be considered to be commercially sensitive”. “So they should disclose them. If they are commercially sensitive, then they should be in the base case.” This disclosure would not necessarily mislead the market – as the Woodside board argued – but would reveal the carbonprice assumptions it used when deciding to go ahead with projects such as Browse Basin, Pluto and the Sunrise oil fields, says Craig Turnbull, CIO at LGS. “As nobody, including Woodside or institutional investors, has 100 per cent certainty as to the timing and amount of the carbon price, then the investment community will not take Woodside’s carbon price assumptions as gospel, and certainly not commercial in confidence. Rather, investors will make their own assumptions,” Turnbull says.

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