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Australian Energy Execs Banking Millions On Unburnable Fossil Fuel Exploration

A new report has revealed the numerous multi-million dollar bonuses awarded to Australian and international fossil fuel company executives who are able to explore and expand fossil fuel reserves — reserves which are unburnable under any legitimate two-degrees climate scenario.

Australia-based environmental finance campaigners Market Forces, an affiliate of Friends of the Earth Australia, has published a new report this week entitled Digging Deeper which reveals several energy companies listed in the ASX3000 reward their executives with multi-million dollar bonuses on the successful exploration and expansion of fossil fuel reserves. However, while this might seem to reward good business, it also harms the planet, considering that as it stands, our fossil fuel reserves are already well in excess of the limit required to keep our global warming levels to less than two degrees Celsius below 1990 levels.

Specifically, the report found that seven companies — AWE, FAR Ltd, Karoon Gas Australia, Oil Search, Santos, Senex Energy, and Sino Gas & Energy — explicitly refer to reserve replacement or exploration targets in their executives’ bonus structures, resulting in those same executives standing to make a combined AU$2.02 million in additional bonuses each year by meeting these reserve replacement or exploration targets. The report also found similar incentives in the executive bonus packages of foreign companies operating in Australia: For example, Bob Dudley, CEO of BP PLC — a company which is currently considering deep sea drilling in the Great Australian Bight — could earn an exploration bonus of up to US$1.32 million.

“With the Paris agreement being ratified by the world’s biggest economies and aiming to keep the world under two degrees warming, we know that a large proportion of current fossil fuel reserves cannot be consumed,” said Daniel Gocher, Market Forces analyst and report author. “Executive bonuses predicated on unearthing more fossil fuels when the world needs less shows the extent to which these companies’ business model is broken. They are not just in a state of denial, but actively accelerating towards a brick wall.”

The report also identified Australian superannuation funds which, at the moment, collectively hold approximately 20% of the market capitalization of all ASX-listed companies, as failing to put pressure on these energy companies to reform their methods of business. We have seen over the past couple of years numerous funds around the world divest entirely or partially from fossil fuel companies, resulting in a sea change in many regions’ energy companies to do business cleaner. However, with business as normal Down Under, energy businesses have not felt the need to change their business practices.

Further, a number of Australia’s superannuation funds have remained invested in fossil fuel companies in an effort to engage with these companies to clean up their act — a legitimate method which has seen valid returns across the world. However, this engagement does not exist in Australia, leaving energy companies able to do whatever they want. Specifically, according to the report, voting records showed that only three out of twelve superannuation funds (twelve out of Australia’s 50 largest being the only ones to reveal their voting records) voted against any Australian-listed energy company’s executive remuneration packages last year.

“Australians are being hoodwinked by their superfunds which have utterly failed to live up to their public pledges on climate,” concluded Daniel Gocher. “There can be no more glaring example of the failure of superannuation funds to effectively engage with companies on climate change than their continued blind support for executive remuneration packages which expressly incentivise the expansion of fossil fuel reserves.”

The report reiterates this, concluding that “Australia’s super funds must have effective engagement policies and practices, and demonstrate how these are being implemented to ensure companies they invest in are compatible with a low carbon future. An obvious step to demonstrate alignment with the goals agreed to in Paris is for funds to reject fossil fuel exploration incentives.”

More information regarding the fossil fuel situation in Australia can be viewed at the report’s website, found here

 
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I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.

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