Our view

To deliver on decarbonisation, Woodside's transition strategy must move away from the sidelines, where targets are aspirational and highly contingent. For its transition strategy to be credible, investors should engage on these material gaps: 

1) Reliance on offsets: We estimate offsets will account for ~70% of total emissions reductions between Woodside’s FY16-20 baseline and FY30.

2) Rising scope 3 emissions: Woodside’s transition strategy does not address its growing customer scope 3 emissions, with production growing 16% to FY27. 

3) Unclear value for decarbonisation: Investment must grow 26% on average to meet its $5bn aim, and the proposed 5Mtpa of emissions avoided or abated translates into an expensive and small opportunity. 

4) Emissions targets are not comprehensive, addressing just 8% of emissions. 

Key takeaways