Woodside 'not compliant' on climate reports Woodside Petroleum's reporting of its climate-related risks does not comply with

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Woodside 'not compliant' on climate reports

Woodside Petroleum's reporting of its climate-related risks does not comply with the international benchmark, leaving investors in the oil and gas producer exposed to potential asset write-downs and reputational risks, according to a legal assessment.

The analysis by the Environmental Defenders Office (EDO) is being released ahead of Woodside's updated climate report today.

The report was commissioned by the Conservation Council of Western Australia (CCWA), which in December mounted a legal challenge to environmental approvals of Woodside's $43 billion (liquid national gas) LNG expansion plans on the Burrup Peninsula.

EDO special counsel Brendan Dobbie said Woodside's climate-related disclosure did not comply with three of the 11 disclosures recommended by the Task Force for Climate-related Financial Disclosures (TCFD), the body set up in late 2015 by the Financial Stability Board.

He singled out a lack of specificity and completeness of disclosure of climate risks based on an analysis of Woodside's last report, its statements to the Australian Stock Exchange and investor briefings.

A Woodside spokeswoman rejected the findings, noting they were based on a report that was just about to be updated. "We reported in alignment with TCFD in our 2019 annual report and have committed to expanding our reporting in 2020 and beyond," she said.

The CCWA has sent the assessment to Woodside's institutional investors and is also offering to brief them individually on the findings.

"The opinion suggests Woodside is exposed to several climate-related risks that could result in an adjustment to the carrying amounts of Woodside's assets and liabilities, but have not been disclosed in accordance with industry practice," CCWA director Piers Verstegen wrote in a letter to investors.

The risks included the impact of potential carbon pricing or other carbon pollution regulation, future demand for Woodside's gas exports in a carbon-constrained world, and the impact of extreme weather events on the company's operations.

The CCWA also takes issue with Woodside's "highly optimistic" cost scenarios for the $16 billion Scarborough gas project, which is targeted for a final go-ahead in the December half.

It contrasts Woodside's conclusions about the economics of the project with the more cautious assessment by consultancy Wood Mackenzie and says investors "should be concerned by the contradiction between these findings".

The EDO said inadequate information about climate-related risks left companies and investors, including superannuation funds, "vulnerable to major losses".

"It skews the market unfairly in favour of companies that are ignoring risks, and unfairly away from companies that are acting responsibly," it said.

Mr Dobbie said the analysis found that Woodside was falling behind other companies such as BHP and Rio Tinto in its climate analyses. Coal producer Yancoal is also more complete and specific in the way it has been reporting its climate-related risks, he added.

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