If the world is to avoid catastrophic climate change, a complete transition away from fossil fuels is inevitable. So it stands to reason that shareholders and investors in fossil fuel companies should pressure boards and management to address this inevitability.

Directors have a clear fiduciary responsibility to effectively manage the risks their companies face, and surely paramount among them is the prospect of their projects and assets becoming stranded as governments and markets move away from fossil fuels. Company directors also have a clear duty of care to meet their responsibilities under our national commitment to emissions reduction.

It’s understandable against this backdrop that shareholder activism should intensify. In the annual general meeting of Woodside Energy at the end of April, the board was forced to reassure investors that it will consider future investments in the context of climate change. Yet it still made a last, desperate attempt to argue that gas remains essential to a stable transition to effective decarbonisation.

Woodside has been playing a cat-and-mouse game in its climate responses. There has been little change in its climate strategy since 2021 and it has resisted giving shareholders a say on its climate policies and, despite some minor concessions, Australia’s largest oil and gas operator is still pursuing expansion of its fossil fuel business. Its scope 1 and 2 emissions reduction targets are heavily reliant on offsets and it has resisted setting scope 3 targets. In the words of its chairman, Richard Goyder: “Woodside’s strategy (is) to continue building  a low-cost, lower-carbon, resilient, diversified and profitable portfolio that can provide energy to the world, and deliver long-term value for shareholders, across different energy transition scenarios.”

The board has finally agreed to put its climate strategy to a regular “advisory vote” next year, even though it was under pressure to do more to reduce its emissions. Some shareholders have also started to register their dissatisfaction with particular directors. Roughly a third opposed the re-election to the board of Ian Macfarlane, the Resources minister in the Howard government and one of the Coalition’s most conspicuous climate deniers, who had attempted to close down the renewables sector.

The proof of the pudding for Woodside will be to see just how reliant it remains on traditional gas, and which new projects it actually does develop. They are talking of a hydrogen project in Oklahoma in the United States, a large solar project in the Pilbara in Western Australia and a partnership to deliver the world’s largest hydrogen plant in New Zealand to produce ammonia.

At the same time, the company is expanding its existing oil project in the Gulf of Mexico and major gas fields such as Calypso around Trinidad and Tobago, Sunrise near Timor-Leste and Browse, north of Broome. Yet it is not clear why it would be sticking with natural gas and hydrogen projects – the future for which has been overestimated – rather than pursue low- or zero-carbon biogas projects, which can also deliver cheaper gas as well as reduce emissions.

Woodside also issued a plea to government in relation to potential regulation that could affect its activities, calling for “fiscal and monetary certainty”. This was surely a tongue-in-cheek message to a Labor government, given its privileged position under the Howard government as the main beneficiary of that government’s illegal bugging of the government of Timor-Leste to gain an advantage in the distribution of mining rights in the Timor Sea. Woodside has also benefited from being allowed to pay very little tax on almost obscene profits from exploiting domestic natural resources that should be for the benefit of all Australians. Woodside netted a record $9.65 billion in profit after tax in the past financial year, and enjoyed a 63 per cent increase in the average price of its oil as the war in Ukraine raged on.

Woodside has conspicuously pushed its social licence to the limit, in terms of both climate responses and corporate responsibility. As a company it is clearly yet to accept the global challenge to transition completely away from fossil fuels, and it seems determined to stick with profiting from the role of gas as a “transition fuel”, with interests in renewables projects as mere window-dressing. Watch this space as sustained investor pressure demands a more realistic and deliverable climate strategy.

Similar pressure is also building on Swiss mining company Glencore, which is the largest coal producer in Australia. A few years ago, investors such as Norway’s sovereign wealth fund, the world’s largest, announced a total move away from coal. Nearly a quarter of shareholders at the Glencore’s AGM last year rejected the company’s climate plan and pressure has been mounting in the lead-up to the next one at the end of May, with many seeking assurances that the board and management accept the reality that coal expansion is over, once and for all. As with Woodside, however, Glencore has been playing cat and mouse with shareholders over climate realities, and is yet to commit to a climate plan consistent with the objectives to reduce global warming that were agreed to by 196 parties at the United Nations Climate Change Conference in 2015, and which was put in force in 2016.

Glencore has been dancing around, attempting to shift its coal assets by developing a standalone coal company in a joint venture with the Canadian mining giant Teck Resources, which is yet to give board approval. Glencore has repeatedly said it accepts its responsibilities under the Paris climate accord, and says it will run down its thermal coalmines by the mid-2040s, which coincides with their expected depletion. However, the expected AGM resolutions call for more specifics in relation to the transition to Paris accord objectives and relative to the International Energy Agency’s timetable for the phase-out of unabated thermal coal.

Meanwhile, oil and gas giant Santos is facing a greenwashing case – it is accused by shareholder activist group Australasian Centre for Corporate Responsibility (ACCR) in the Federal Court of engaging in misleading or deceptive conduct by claiming it produces clean energy. It has been reported that the Australian Securities and Investments Commission is also investigating several companies, including superannuation and managed funds, for possible greenwashing – this is scrutiny of institutional investors. The ACCR case is the first in the world to challenge the veracity of a company’s net-zero emissions target. And it won’t be the last.

It is important to meet investor expectations for accurate information when considering entering a market. Optimistic projections are one thing, but companies must be held to account for misleading information. There are serious questions to be raised about Santos’s claims given its unconventional gas projects, including in the Beetaloo Basin.

Clearly we can’t be too far – and nor should we be – from a world in which directors are held personally responsible for the climate policies of their companies and institutions, and for the statements they make about those policies. This would certainly focus the minds of these corporate leaders on their responsibilities, and perhaps spur them to work with their private sector peers and governments to accelerate a realistic transition to a low-carbon Australia.

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