Photo: Work on Cairn’s Athena rig, Senegal
Two listed energy companies, SOCO International and Cairn Energy, face complaints to the financial reporting watchdog that they have failed to adequately report their climate change risks.
Environmental campaign group ClientEarth has lodged two letters of complaint with the Financial Reporting Council, saying the companies make “scant” reference to climate-related risks in their annual reports.
Both Cairn and SOCO have denied the claims.
ClientEarth lawyer Alice Garton said: “For companies operating in this sector — with business models and strategies which rely on the continued use of hydrocarbons — it is inconceivable that climate risk is not a material and significant factor for these companies.
“Failing to adequately disclose climate risk is failing to mention one of the most important risks facing the company and means the annual report is only telling the positive side of the story.
“This information is vital for investors. Without it they simply cannot make a fully informed investment decision.”
In a statement, SOCO said it had not included climate among its principal risks because it was already reporting on risks that were “associated” with climate change:
“After careful consideration by the board, with the guidance and advice of the company’s auditors, and in keeping with its sector peers, the judgment of the directors of SOCO was not to include climate change as a separate risk among the principal risks to the company’s strategy and associated principal risks that underpin the group’s three-year forecast and scenario testing in 2015.”
It added: “The principal risks listed in the strategic report include underlying business risks, uncertainties and trends potentially associated with climate change, as identified by ClientEarth, including environmental impacts, commodity prices and operating costs.
“The directors will continue to identify the key areas of risk and uncertainties to SOCO’s business, including a continued assessment of the potential impact of climate change.”
SOCO denied that it was failing to meet its reporting obligations but added the business took “… such allegations of noncompliance with laws seriously and are therefore reviewing in detail the materials provided by ClientEarth”.
Cairn too has denied the claims. A statement from company said: “Cairn Energy PLC is a constituent of the FTSE4Good whereby the company is selected and screened in accordance with transparent and defined environmental, social and governance criteria.
“The index is designed to identify companies with recognised corporate responsibility practices.
“Corporate responsibility is key to our business and we take our commitments to responsible and transparent reporting very seriously and have been recognised for the quality of our work in this area.
“We continually identify corporate responsibility priorities and our 2015 annual report featured climate change in the comprehensive materiality matrix.”
