Santos: screened out of Future Super

There are some companies that other super funds might invest in that are straight up ruled out for Future Super.  

Recently, one of those companies has been in the news (for all the wrong reasons, in our opinion). 

Santos is an oil and gas company that’s listed on the ASX.  

Recently, Santos was among those alleged to have covered up a long-term leak at its liquid natural gas (LNG) facility in Darwin, which has been leaking methane for almost 20 years. Methane, a fossil fuel, is up to 80 times more harmful to the climate than CO2 according to the UN.  

The Environment Centre NT uncovered documents that suggest Santos had known for many years that gas had been leaking out since the facility opened in 2006. It was caused by a faulty welding seal inside the storage tank, which drip-fed liquid methane into the surrounding soil and air. But Santos and its partners failed to either act on it or disclose it. This is a stark example of poor environmental governance. And what are they doing about it? So far, nothing. 

Inspectors found that an average of 95kg of methane had been released every hour for 14 years, equivalent to 8,000 cars on the road every year. Methane is dangerous stuff; responsible for 25% of global warming, and highly explosive, prompting concerns for the people of Darwin. As well as human health, it threatens water quality and sensitive coastal habitats like mangroves. 

Investment risk 

Companies like Santos are at risk of climate litigation, as research is now able to calculate direct climate harms onto individual emitters. Research published in Nature showed that 213 major heatwaves were made ‘more likely and more intense’ because of emissions from 180 carbon majors, including Santos and other Australian fossil fuel companies. Proportional data modelling showed that the equivalent of 49 heatwaves happened because of Santos.  

This doesn’t include the impacts of leaking liquid petroleum gas in Darwin, or the cost of cleaning it up. But allocating direct climate harm to companies like Santos provides the basis for well-informed judicial decision making and exposes them to legal risks that can devalue their stocks.  

Santos in the news 

Santos has been in the news before, notably as the defendant in a groundbreaking greenwashing lawsuit.  

It’s been targeted by human rights campaign, too. In 2023, First Nations people campaigned against two Santos projects that they said breached their human rights.  

Tiwi Islander, Larrakia and Gomeroi/Gamilaraay Traditional Owners sent letters to super funds that invest in Santos. They argued that the super funds, as shareholders, must do something to stop these projects going ahead. 

Gomeroi/Gamilaraay Traditional Owner Miah Wright explained why the community is fighting against the Narrabri gas project.   

“Water/Gali is the source of all life. It is Yinarr/Warringa (Gomeroi women) Lore to hold a spiritual connection with all water. The majority of cultural heritage sites are found within 200 metres of a waterway, maintaining and sustaining our way of life. If Santos gets its way with the Narrabri gas project, invested in by major Australian super funds, they will pollute our sacred water that sustains all life.”  

Meet Jackie

Q: Why doesn’t Future Super invest in Santos? 

Santos is one of the largest oil and gas companies in Australia. Future Super does not invest in fossil fuel companies, so any company that derives revenue from owning fossil fuel reserves or is engaged in the extraction of fossil fuels is excluded. 

As Santos is in the business of extracting oil and gas, as well as owning oil and gas reserves, they are not deemed investable for Future Super. 

Q: Why screen them out rather than trying to help them change? As investors could we stop the expansion of fossil fuel projects? 

To divest or engage with the fossil fuel industry is a longstanding debate in financial circles. In short, our Theory of Change rests on the belief that engaging with companies whose sole or primary business is selling hydrocarbons is ineffective. 

Those who believe engaging with fossil fuel companies is possible, often argue that these companies will use new technology to capture their carbon emissions. The fact is, these technologies are unproven.  

Santos was accused of misleading investors with its net zero roadmap when it pushed its climate targets back by 10 years. This change occurred after many years of investor engagement with Santos. 

Research suggests that if fossil fuel companies continue with their planned projects, they will burn “carbon bombs” which will push the world into disastrous global heating.  

A recent report put a dollar cost to damage already caused by climate change, at US28 trillion. As one of Australia’s top 5 super emitters, Santos is jointly responsible for A$1 trillion’s worth of climate harm.   

We believe engagement can lift the bar for companies which can co-exist with a sustainable society, but only when it has clear goals and thresholds and when divestment (pulling money out of the company) is followed through on if engagement is not successful.  

The reality is, no fossil fuel company has a science-based transition plan compatible with the Paris Agreement’s goal to limit global heating to 1.5°C since pre-industrial records. Additionally, claims around funds influencing companies on sustainability claims have come under scrutiny by the regulator, ASIC, which argues that any super funds making such claims need to be able to back that up with evidence of how they are wielding that influence and whether it has been effective. Following this announcement from the regulator, several funds deleted climate commitments from their websites.