AGL’s outlook upgraded by ratings agency Moody’s

The power giant received an improved outlook from the ratings agency after bedding in its climate policy at its annual shareholder meeting.

AGL has received broad support for its climate transition plan amid pressure from leading shareholder Mike Cannon-Brookes.

AGL Energy’s outlook has been upgraded to stable from negative by Moody’s after it largely won support from shareholders for its climate plan at Tuesday’s annual general meeting.

The ratings agency said the stable outlook was justified based on AGL’s financial flexibility over the next few years to meet the energy transition and greater clarity on its longer term transition plan that would cut “acute” environmental, social and governance risks facing its credit profile.

AGL has laid out a plan to exit coal by mid-2035, and has set an interim target of owning 5 gigawatt of renewable and firming assets by the end of the decade.

Moody’s also pointed to the company’s track record and commitment to maintaining Baa2 credit ratings and clarity on the composition, diversity and independence of the board after four new directors were appointed to the power giant at its AGM.

“AGL’s transition plan to decarbonise its generation fleet by bringing forward the closure of Loy Yang A to 2035 and expanding its renewable and firming capacity is credit positive in light of the acute ESG risks facing the sector,” said Moody’s analyst Sarah Xie.

The non-binding vote on its climate transition action plan received 69 per cent support from votes cast for the AGM.

The company’s largest shareholder, Mike Cannon-Brookes, claimed a big win at the AGM with the board shake-up.

AGL had only recommended the election of Mark Twidell but Kerry Schott, Christine Holman and John Pollaers were all voted in on Tuesday. The Australian Shareholders Association backed Mr Twidell and Ms Schott but remained undecided until the AGM on whether Ms Holman and Mr Pollaers should also make the cut.

After viewing the candidates’ speeches, the shareholder group said it backed Ms Holman but voted against Mr Pollaers.

“We did not support Mr Pollaers election to the board given we thought the other directors elected brought listed company and diverse experience to the board,” ASA chief executive Rachel Waterhouse said.

“We recognise and respect that shareholders elected Mr Pollaers to the board and now it is time for the board to set the strategy in motion.”

AGL chair Patricia McKenzie “has stated several times that she will work with anyone who has been voted on. We can’t see any evidence of problems within the board from where we sit,” Ms Waterhouse added. The new directors are expected to focus on finding a new chief executive.