Activists among shareholders campaign for a ballot against the board members of Woodside
In the realm of energy production, Woodside Energy, one of Australia's largest oil and gas companies, has been navigating a challenging landscape since 2024. The company's climate transition strategy, heavily weighted towards traditional LNG projects, has faced consistent opposition from shareholders. This opposition is reflected in the failure of Woodside's Climate Transition Action Plan to gain shareholder approval.
The plan, which aimed to shift from carbon offsets to large-scale abatement by 2031, has yet to win broad investor support. Instead, Woodside has accelerated its traditional energy investments, particularly in large LNG projects like the $12.5 billion Scarborough development. This focus has positioned Woodside as a leading LNG producer, aligned with expected global demand growth to 2040.
However, this strategy has implications for Woodside's performance and governance. Financially and operationally, the company has demonstrated resilience, with robust production and strategic asset management. This is evident in the company's Q1 2025 results, which show strong reliability and reserve additions, underpinning a stable performance outlook.
Governance challenges, however, loom large. The persistent shareholder rejection of the climate transition plan indicates tension between investor priorities and Woodside’s energy transition approach. Woodside's reliance on carbon offsets to meet regulatory targets raises governance scrutiny and may pose reputational and regulatory risks.
Navigating this delicate balance between maximising value from traditional hydrocarbon assets and decarbonising amid evolving policy and market conditions is a strategic balancing act for Woodside. The company must manage investor expectations and potential environmental concerns while maintaining energy security contributions during the multi-decade transition.
Despite these challenges, Woodside Energy has significantly underperformed relative to the local market and the global oil and gas sector, with 168% lower total shareholder returns than the ASX100 and 83% lower than the MSCI World Energy over 15 years. The Australasian Centre for Corporate Responsibility (ACCR) attributes this underperformance to Woodside's high-cost, high-risk, fossil fuel growth strategy.
The ACCR, led by Alex Hillman, has filed members' statements with Woodside Energy, dissenting against the election of all directors standing at the upcoming annual general meeting (AGM). Hillman implies that Woodside's underperformance may be linked to its energy transition strategy, as indicated by the shareholders' rejection of it in 2024. He believes that investors should question whether their directors are acting in the best interests of the company.
Since the record vote in 2024, Woodside Energy has made "no material change" to its climate strategy. This consistency has led to further dissent, with the ACCR stating that Woodside's entire board "shares collective responsibility for the company's failings", which include "chronically poor shareholder returns".
In 2024, more than half of Woodside Energy's shareholders voted to oppose the board's proposals regarding the company's climate transition plan, making it the first energy firm to have its climate strategy rejected by shareholders. The board's continued support of the strategy indicates that they are not addressing the significance of the company's underperformance or investor feedback on managing climate risk.
As Woodside Energy continues to navigate this challenging landscape, it will be interesting to see how the company adapts to the evolving demands of its shareholders and the broader energy sector.
- In the realm of environmental science, the Australasian Centre for Corporate Responsibility (ACCR) has criticized Woodside Energy's high-cost, high-risk fossil fuel growth strategy, linking it to the company's 168% lower total shareholder returns compared to the ASX100 over 15 years.
- The failure of Woodside Energy's Climate Transition Action Plan to gain shareholder approval in 2024, along with the consistent opposition from shareholders, has raised questions about whether the company's directors are acting in the best interests of the company, as implied by Alex Hillman, the leader of the ACCR.
- Despite the strategic decisions made by Woodside Energy, such as its focus on large LNG projects like the Scarborough development, the company's underperformance in terms of shareholder returns relative to the local market and the global oil and gas sector has led to increased scrutiny and governance challenges.
