Stewardship in Action: Engagement Snapshots on Environmental Transparency and Employee Safety

‍Key Takeaways:

• Engagement with an oil and gas group on its need for expanded disclosures on its climate transition plans and emissions reduction targets influenced the company to release a climate-related investor engagement report.
• Engaging with a food chain on its employee health, safety and well-being-related risks influenced the company to commission an independent third-party audit on the impact of the company’s policies and practices on the safety and well-being of workers.

This article is part of a Stewardship in Action series that relays brief, on-the-ground snapshots of how Glass Lewis’ Stewardship team¹ engages publicly-listed companies on a range of material environmental, social, and governance (ESG) issues. The first installment can be read here. The engagements are dedicated to helping institutional shareholders identify and address ESG issues that can potentially affect the long-term value of their portfolio companies. Engagement on these issues is essential in fostering constructive dialogue and positive change.² All company names have been anonymized.

Snapshot One: Improving Environmental Transparency With an Australian Oil and Gas Group

Best Practices on Environmental Transparency

Companies can promote environmental transparency by disclosing relevant information in relation to environmental performance, strategies, governance and risks. Such disclosures may include, but are not limited to, greenhouse gas emissions, water usage, climate scenario analysis and waste management practices. In addition, companies are increasingly expected to align their disclosures to and/or report on relevant frameworks such as the Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD) and the Carbon Disclosure Project (CDP). Companies are encouraged to ensure environmental transparency by adopting best practices in their sectors, disclosing comprehensive environmental data, setting ambitious sustainability goals, and engaging with stakeholders.

The Company: Oil and Gas Group Limited, based in Australia, engages in the exploration, evaluation, development, production, and marketing of hydrocarbons in Asia Pacific, Africa, the Americas, and Europe.

The Issues: Oil and Gas Group Limited faced shareholder opposition over several years, primarily due to the absence of a robust climate plan, insufficient climate-related disclosures and lack of a Scope 3 emissions reduction target. Shareholders repeatedly voiced their concerns at multiple AGMs.

At one AGM, while a climate-related shareholder proposal received majority shareholder support, the company failed to explicitly acknowledge the vote or disclose how it planned to address or engage with shareholders on the matter.

At a subsequent AGM, the company presented an advisory vote on its climate report, which garnered just over 50% support. Despite the outcome, no significant changes were introduced to the climate plan, or material improvements made regarding disclosure.

At the next AGM, a director's reappointment faced notable shareholder dissent, reflecting some shareholder concerns related to the company’s response to the previous year’s say on climate vote. The company did not acknowledge this shareholder dissent, and it was also not clear whether the company planned to take any action to alleviate shareholder concerns. Shortly before this AGM, the company committed to conducting a new say on climate vote. It also supplemented the existing Scope 3 investment target with a complementary emissions abatement target, focused on potential emissions avoided through new energy and lower-carbon service projects.

At its following AGM, the company sought shareholder approval for its climate transition plan. Prior to the AGM, some shareholders publicly voiced they would be voting against the proposal, signaling the company had not sufficiently addressed concerns. The company faced unprecedented backlash, with a majority of investors rejecting the climate report.

The Engagement Objectives:

1. The company needed to disclose how it would account for shareholder feedback in its climate transition plan.
2. The company needed to disclose more about future demand for its products through the climate transition and its competitiveness.
3. The company needed to establish a Scope 3 emissions reduction target.

Progress on Change

Ongoing Discussions

Following our initial outreach in Q1 2024, with subsequent follow-ups in Q3 2024 and Q1 2025, we held an engagement meeting with Oil and Gas Group in April 2025. The meeting was attended by the company’s vice president of climate, sustainability and energy policy, as well as acting vice president of investor relations.

Our team acknowledged that prior to the engagement meeting, the company had published a climate-related investor report in Q1 2025. It also provided additional information on the steps it had taken in response to shareholder feedback in its sustainability report and 2024 climate update. An addendum to the investor engagement report was further released to map investor feedback to these new disclosures. The report detailed the company's meetings with investors on climate-related matters throughout 2024. It also highlighted the main themes of shareholder concerns, namely (1) liquefied natural gas (LNG) demand, (2) Scope 1 and 2 emissions and (3) Scope 3 emissions. The company addressed each of these areas with examples of actions taken in response to shareholder feedback.

The company representatives noted that climate change is a standing agenda item for the sustainability committee and is regularly discussed by the board, which also reviews shareholder engagements on an ongoing basis. The company explained that the purpose of the investor engagement report was to address differing shareholder views by summarizing key themes and the company’s responses.

When asked about any examples of past shareholder feedback that led to tangible changes, the company representatives highlighted certain acquisitions supporting lower-carbon product development using carbon capture and storage technology, as well as expanded disclosures.

On future demand for products, the company representatives noted that LNG demand is expected to grow, especially in Asia, despite the uncertainty about when demand will peak. In other markets, such as Australia, they emphasized the role that natural gas will play in climate transition.  It was also mentioned that the company conducts scenario analysis to stress-test the free cash flow (FCF) of its producing and sanctioned assets, applying pricing assumptions from three International Energy Association (IEA) scenarios (i.e., STEPS, APS, NZE)³ and reporting positive FCF in all cases.

Regarding Scope 3 targets, the company representatives explained that their approach has evolved over time. The company initially set an investment target, followed by an abatement target. However, they added that Scope 3 target-setting depends on market developments, as emissions from the use of sold products (Category 11) constitute the largest contributor. To reduce these emissions, the company identified two main options: product substitution or carbon capture and storage. However, the company does not expect a significant decrease in LNG sales in the foreseeable future. Thus, it chose Scope 3 targets focused on tracking the growth of lower-carbon products rather than relying on a reduction in LNG sales.

Shareholder and Stewardship Outcomes

At the company’s 2025 AGM, a shareholder advocacy organization opposed the election of all three nominated directors, citing the board’s failure to respond to the shareholder dissent against its prior say on climate votes. The AGM was interrupted by climate protests, and the sustainability committee chair was re-elected with notable dissent.

Unlike previous years, the company has provided more information regarding future product demand and its response to shareholder feedback, primarily through the release of the climate-related investor engagement report. While this indicates some level of understanding, the company has yet to implement substantive changes to its climate strategy and targets. The responses remain largely narrative in nature, and the 2025 AGM results indicate continued shareholder concerns. Additionally, the company has yet to provide detailed demand projections for its products. At this time, the company does not appear to have plans to establish a scope 3 emissions reduction target. We will continue to monitor the company’s progress and investor sentiment in these matters.

Snapshot Two: Addressing Employee Safety With an American Food Chain

Best Practices on Employee Health, Safety and Well-Being (HSW)

Investors can consider several steps to engage on HSW-related risks. Disclosure remains a key focus area. Investors can engage with portfolio companies on the disclosure of credible HSW policies and practices. Further, they can encourage disclosure of key indicators such as injury rates, lost-time incidents, near misses and mental health metrics.

In addition, investors may benefit from transparency around the companies’ HSW-related governance and oversight mechanisms, such as evidence of board-level oversight of health and safety risks. Reporting frameworks such as the GRI Standards (e.g., GRI 403: Occupational Health and Safety) and the SASB standards can serve as benchmarks for these disclosures. The EU Corporate Sustainability Reporting Directive (CSRD) further requires companies to report on material HSW risks and governance using a double materiality lens.

Investors may also consider engaging with portfolio companies on the adequacy of their investment in HSW initiatives. This reinforces the idea that promoting health, safety and well-being within the workforce is also a strategic investment, not a mere compliance obligation.

Additionally, third-party audits can be leveraged to provide an additional assurance on the adequacy of HSW management systems within a company. This may support robust oversight, management and implementation of HSW practices, which in turn could benefit shareholders and stakeholders.

Lastly, shareholder proposals remain a key venue for investors to promote the effective management of HSW across their portfolio companies. Below, we explore this issue further through a case study of our engagement with an American food chain.

The Company: American Food Chain, Inc., together with its subsidiaries, owns and operates American Food Chain restaurants.

The Issues: The engagement was initiated in Q2 2024, when the company had been the subject of media reports highlighting staff exposure to customer violence. Several safety-related incidents also raised concerns, including fires, resulting in a worker suffering from burns over 50% of his body after an explosion in the residential building where the company restaurant was located. Additionally, the U.S Equal Employment Opportunities Commission (EEOC) filed a suit against the company alleging management harassment.

Given the nature and the scope of its operations, it was crucial that the company ensured that it was taking steps to provide a safe environment for its employees and customers to avoid alienating stakeholders. A shareholder proposal calling for an independent third-party audit of the impact of its policies and practices on the safety and well-being of workers received considerable support at the 2024 AGM.

The Engagement Objectives: The company needed to commission an independent third-party audit on the impact of the company’s policies and practices on the safety and well-being of workers.

Progress on Change

Ongoing Discussions

Following our outreach efforts in Q2 and Q3 2024, and again in Q1 2025, the company agreed to engage with our team in a digital meeting in April 2025 to discuss the company’s approach to the issue.

During the meeting, the company highlighted that it hired external consultants in 2024 to conduct a limited evaluation of its workplace violence prevention and response program. The company included details of this evaluation in its 2025 proxy statement, published after our engagement meeting. The evaluation involved visiting a cross-section of its restaurants across the U.S., a review of policies, training materials, response plans, and other program documents, as well as interviews with employees at restaurants and support centers, including members of the Global Security & Resilience (GSR) team.

The external consultants found that the company has an effective security infrastructure and strong policies and programs for preventing, reporting and responding to workplace violence. It also identified areas for improvement, including increased training and awareness for restaurant crews, additional resources for the GSR team to support growth and stronger risk-based analysis in restaurant design and development.

Shareholder and Stewardship Outcomes

At our meeting, the company representative also explained the company’s proactive approach to address workplace violence and employee safety. This includes the establishment of structured internal tracking mechanisms, grievance mechanisms, evaluation processes, targeted training initiatives and enhanced physical security measures.

In terms of employee well-being, the company representative outlined a range of existing programs and benefits that support its workforce, including mental health services, tuition assistance, and ESL support. Additionally, the company’s 2024 Form 10-K noted the expansion of its mental health benefits by offering free access to a mental health app to all U.S. employees starting in 2025.

We will continue to monitor the company’s progress and any further developments related to the objective, particularly regarding the implementation of the audit recommendations.

To learn more about Glass Lewis' active stewardship engagement, see our Q2 report here.

Notes and References

1. This article is co-authored with Cindy Blaney, Lead Analyst, Stewardship and Francis Opada, Senior Analyst, Stewardship.
2. The Glass Lewis Stewardship team, representing institutional investor clients, engages with public companies to discuss the identified ESG issues and track progress towards addressing them. The meetings between the stewardship team and companies are separate and distinct from meetings with Glass Lewis’ Proxy Research team, which is responsible for producing Glass Lewis’ Proxy Paper research reports. The company-specific issues discussed in Active Stewardship Engagement meetings with companies are based on the needs and priorities of clients and may not necessarily overlap with Glass Lewis’ Proxy Research policies and guidelines.
3. International Energy Agency. World Energy Outlook 2025. (IEA, 2025). https://iea.blob.core.windows.net/assets/d2923e0f-89de-468b-9e05-8f682839240b/WorldEnergyOutlook2025.pdf.