Climate action groups are warning some of the nation's biggest emitters face growing increasingly isolated from shareholders and industry groups if they do not act to reduce their carbon output.
It comes after Woodside yesterday released its 2022 Climate Report, revealing a $9.7 billion profit over the last year, while reducing emissions by just 1 per cent more than the year before — going from a 10 to 11 per cent reduction from its baseline.
Across the same period though, overall emissions increased because of the oil and gas giant's acquisition of BHP's oil and gas projects.
The company defended its progress, saying it was still on track to meet its target of a 15 per cent reduction by 2025 and eventually net zero by 2050.
But green groups say the company is not taking its responsibilities seriously and is showing a "lack of genuine commitment to emissions reduction".
The previous edition of Woodside's Climate Report was only narrowly accepted by shareholders last year, with 49 per cent of voting it down.
Critics pointed to what they saw as a lack of detail over the company's use of carbon offsets and missing targets, with chairman Richard Goyder rejecting the idea it was a sign of displeasure over the company's takeover of BHP's oil and gas business or projects in the pipeline.
Those projects include the controversial $16 billion Scarborough gas development, expected to emit millions of tonnes of carbon over its lifetime after shipments begin in 2026.
'Woodside committed to playing its part'
In this year's report, Mr Goyder referenced the lukewarm reception last year's plan received.
"Woodside is committed to playing its part. We are reducing our net equity Scope 1 and 2 greenhouse gas emissions towards our targets and progressing investment in new energy products and lower carbon services alongside existing and potential new oil and gas opportunities," he wrote.
"Shareholders have told us that they would like to understand more about how we plan to reduce emissions from our operations, and about how we manage our use of carbon credit appropriately.
"We also heard that they would like to understand how we consider our future investment options in oil, gas and new energy in the context of climate change.
"These matters, and other climate-related factors, have been discussed by the board and its committees throughout the year. We have addressed them in this report, explaining what we can and cannot do and why.
"Much of this report is similar to our Climate Report 2021 because our understanding and strategy remains consistent."
That lack of a significant shift after the shareholder vote surprised the Australasian Centre for Corporate Responsibility (ACCR), a shareholder advocacy group calling on companies to do more on climate.
"On the back of that really firm feedback from investors I and ACCR expected to see fairly dramatic changes to this climate report and what we saw was just more of the same, so still a massive reliance on offsets to deliver its scope one target and a complete absence of a scope three target," lead analyst Alex Hillman said.
Scope one emissions refer to those produced by Woodside and its facilities, while scope three emissions are those resulting from the use of its products.
"For Woodside's portfolio, about 90 per cent of their emissions are scope three, so to set targets that exclude scope three is to ignore 90 per cent of the problem," Mr Hillman said.
In its report, Woodside said while it was working to reduce scope three emissions by offering new fuels, like hydrogen and ammonia, "inconsistent reporting regimes" made it difficult to accurately track those emissions.
But it also defended its ongoing plans to grow its LNG business.
"As we have seen in the wake of the invasion of Ukraine, significant volumes of gas and other fossil fuels cannot simply be removed from our energy systems without consequence, let alone be switched off altogether overnight," Woodside CEO Meg O'Neill wrote.
"We need all options on the table if we are to successfully change the way we produce and consume energy and limit global temperature rise.
"Investment in new LNG supply can help meet demand at affordable prices. And LNG can help Asia to decarbonise, for example by replacing coal, supporting renewables and in hard-to-abate uses."
Woodside accused of 'cavalier approach' to climate risk
Woodside's plans were criticised by Greenpeace, who described the report as a "comprehensive fail".
"Woodside is betting the farm on a fantasy future increase in gas use that is utterly at odds with modelling from credible energy analysts such as the International Energy Agency," head of advocacy and strategy Glenn Walker said.
"Woodside investors should be incredibly nervous about the company's cavalier approach to climate risk. They're clearly not taking this seriously and have no alternative vision for a climate-constrained future."
The Conservation Council of WA was similarly critical.
"Woodside is using this opportunity to justify the continued production and use of oil and gas at a time where there is international consensus on the need to rapidly decarbonise," the council's programs director Maggie Wood said.
Woodside is also among the companies which could have its membership rights of a major industry group restricted, over the speed of its climate action.
'Awkward conversations' ahead
On Friday the Carbon Market Institute (CMI), which counts companies like Woodside, BHP, BP and South 32 among its members, moved to strip large emitters with an increasing carbon footprint of many of their membership rights.
CEO John Connor said it was part of a growing trend that would see organisations grow isolated unless they acted on emissions.
"And that's for big emitters, that's for governments, community groups, industry groups and so obviously this is leading us to some awkward conversations," he said.
"The pressure is only going to continue to increase and the questions around carbon responsibility and the fact that having any carbon in your books is a risk.
"So let's manage that but also grab the opportunities that are there in a cleaner economy, and there are many."
In a statement, a Woodside spokesperson said it "continues to invest in the Australian carbon market and will engage with CMI accordingly".
Mr Hillman agreed that those kinds of pressures, on top of regulations like the safeguard mechanism, would continue to push companies towards action.
"Woodside's climate strategy is … so poor that even the investors, that are those that literally own the company and will benefit from any profit that Woodside makes from doing climate harm, aren't happy with Woodside's climate strategy," he said.
"We're expecting that the lack of responsiveness that Woodside has demonstrated in its latest climate plan will antagonise investors further, but without the opportunity to vote against the climate plan itself we expect to see investors escalate to other types of votes at the Annual General Meeting."
He said that could include the election of directors and votes on executives' bonuses.
Carbon responsibility the 'new certainty'
Mr Connor said the need for emissions reduction, whether enforced by laws or stakeholders, was here to stay.
"In addition to death and taxes there's a new certainty, it's carbon responsibility," he said.
"It's not going away, it's only going to increase, and so we want to help our members with that and engage with them but be clear about it that we want best practice."
