Mike Cannon-Brookes hails historic AGL climate vote
AGL Energy was hit with a huge climate protest vote in a result hailed by tech billionaire Mike Cannon-Brookes as a defining moment for Australia’s climate ambitions.
The under-pressure electricity giant AGL Energy was hit with a huge backlash on climate change after more than half of investors demanded steeper carbon cuts in a result hailed by tech billionaire Mike Cannon-Brookes as a defining moment for Australia’s climate ambitions.
Over 55 per cent of investors voted in favour for AGL, Australia’s biggest polluter, to set short, medium and long-term decarbonisation goals despite it telling shareholders to vote against the resolution.
It calls for AGL to set targets that meet the Paris agreement, a pact that aims to keep temperatures below two degrees above pre-industrial levels and would mean phasing out coal plants by 2030.
Tech billionaire Mike Cannon-Brookes hailed the vote as a huge event for Australia’s climate ambitions,
“This is an incredibly momentous event in the history of climate in Australia. Wow. Wow. You put a dent in the future timeline of the world today,” Mr Cannon-Brookes said on Twitter.
This is an incredibly momentous event in the history of climate in Australia. Wow. Wow.
— Mike Cannon-Brookes 👨ðŸ¼â€ðŸ’»ðŸ§¢ðŸ‡¦ðŸ‡º (@mcannonbrookes) September 22, 2021
ðŸ‘🻠@brynnobrien and @AustCCR team on their @AGLAustralia resolution.
You put a dent in the future timeline of the world today. https://t.co/0HH6WeslLp
The vote is a significant moment for corporate Australia, consultancy Energy Synapse said, putting the nation’s businesses on heightened alert of the accelerating move to clean energy.
“This is the biggest climate vote ever recorded in corporate Australia, without board support. In practice, this would mean closing coal fired power stations by 2030,” Energy Synapse founder Marija Petkovic said.
AGL’s board is not required to act on the advisory vote as it hinged on a separate change to the company’s constitution which did not get enough support.
Still, AGL agreed to at least consider putting the targets in place ahead of a planned split of the company into a green retailer and coal-focused electricity generator in 2022.
“The Board recognises that accelerated action is required to address climate change and is committed to presenting climate change roadmaps for both Accel Energy and AGL Australia in the scheme booklet as part of the demerger process, but did not believe this resolution is in the best interests of AGL’s shareholders,” an AGL spokeswoman said on Wednesday night.
Australian corporates are increasingly under pressure on climate change as institutional investors such as Climate Action 100+, backed by domestic superannuation funds, use their power to hold companies to account.
The Australasian Centre for Corporate Responsibility, which filed the shareholder resolution, said a majority of investors have now demanded AGL complies with the Paris accord, which includes phasing out coal by 2030.
“An overwhelming majority of shareholders in AGL has sent a resounding message to the board of AGL: align your business with the Paris Agreement,” ACCR’s Dan Gocher said. “The erosion in shareholder value appears to have finally united shareholders behind this push.”
AGL said while it takes climate change “very seriously”, it cannot act alone.
“The success and speed of the transition will require an effective level of co-ordination between government, regulators and industry and the board does not believe it is in the best interests of AGL to make this commitment unilaterally,” AGL chairman Peter Botten said.
“The task is to create a glide path rather than a crash landing. It will require the right policy and investment settings and a focus on customers from all market participants. It will also require a market design that supports an orderly transition.”
AGL’s board and CEO Graeme Hunt also apologised to investors for its plummeting share price with its stock plunging 55 per cent so far this year as low wholesale electricity prices slashed its profitability and raised concern over the earnings outlook for the next few years.
“In the past three years alone, prices have halved. AGL has for some time been foreshadowing market headwinds in wholesale prices. However, it is fair to say that the extent of the fall has surprised many credible market analysts and observers,” Mr Botten said.
“Let me be very clear, your board understands that shareholders are very unhappy with where the AGL share price is today and we acknowledge that the financial performance of the company over the past 12 months is not acceptable to shareholders or directors.”
AGL reiterated underlying profit for 2022 is forecast to a $220m-$340m range, representing a potential 59 per cent fall from this year’s $537m result and below consensus of $357m.
The company comfortably avoided a second strike on pay after the board decided to cut short-term incentives for executives despite some of the hurdles being met.
About 95 per cent of votes were in favour of the remuneration report, a big reversal after it copped a giant first strike at last year’s AGM with 46.5 per cent of shares cast against the pay structure. Major proxy advisers said changes made meant they had recommended in favour of AGL’s remuneration report this year even as they flagged several areas of concern.
Its torrid earnings performance and plunging share price played a part in the decision to withhold bonuses.
“The board took a holistic view of the scorecard for executives and the company’s performance and exercised its discretion to adjust short term incentive outcomes to zero for all executives despite some objectives being partially met,” AGL said.
It’s vowed to give shareholders a vote on climate reporting for the split companies – AGL Australia and Accel Energy – at their first AGMs should the demerger proceed. It will also detail goals after the forthcoming COP26 climate meeting in November.
“This work will include analysis and impact on our business of commitments related to the Paris Accord and deliberations that will come from the UN climate change conference COP 26 in November and will inform decisions on how both companies can appropriately lean into the transition, as never before,” Mr Botten said.
AGL rose 2.9 per cent to $5.68.