AGL investor Aware Super weighs climate risk amid demerger vote
Climate and financial risks are being weighed up by a top 10 shareholder in AGL ahead of a demerger vote.
A top 10 shareholder in AGL Energy says it is still weighing support for a controversial demerger of the company, with both climate change and financial risks named as issues that could swing its vote.
The $150bn Aware Super fund, AGL’s eighth-largest investor with a 1.43 per cent stake, said it was holding talks with AGL and Mike Cannon-Brookes’ Grok Ventures ahead of a June 15 shareholder vote.
“We’re acutely aware that climate change is a material financial risk to our members’ retirement savings. It’s also an issue of particular concern to our members given a high proportion work in healthcare and other frontline roles – the first responders who frequently have to deal with the impact of climate change on the ground,” an Aware Super spokesman said. “At the same time, we’re also conscious of the short-term financial risk associated with the debate over AGL’s demerger strategy.”
Ongoing talks “will enable us to evaluate the strategy”.
AGL was hit with a huge backlash on climate change at its 2021 annual general meeting after more than half of investors demanded steeper carbon cuts, in a result hailed by Mr Cannon-Brookes as a defining moment for Australia’s climate ambitions. AGL was also slammed on Thursday by green activists and energy experts after claiming that having enough renewables to replace its coal generation by 2030 was an “engineering impossibility”.
Australia’s largest electricity generator told The Australian that fast-tracking the removal of coal-fired power by up to 15 years did not add up, a thinly veiled attack on Mike Cannon-Brookes who has agitated for the fuel to be dumped as part of his opposition to the demerger.
Greenpeace said it was a clear demonstration of the failure of the company’s leadership and inability to keep pace with energy market changes.
“AGL has the memory of a goldfish and the agility of an elephant at a time which calls for the opposite,” Greenpeace campaigner Glenn Walker said. “Time and time again, they have been caught with their pants down by the rapidly accelerating energy transition.”
Building renewables twice as fast as in the last few years mirrored the Australian Energy Market Operator’s step-change scenario, the University of Melbourne’s Dylan McConnell said, while the Australian Centre for Corporate Responsibility said AGL hadn’t spent a cent on new renewables since 2016.
AGL’s general manager for policy and markets regulation, Elizabeth Molyneux, said decisive action must be taken on the transition to green forms of energy.
“We cannot take 20th century thinking into the future,” Ms Molyneux told an Australian Energy Week forum.
While Grok may have access to a 11.3 per cent stake in AGL, two influential proxy advisers have raised concern over the billionaire’s voting rights. The tech mogul built his 11.3 per cent holding in AGL through a series of swaps and derivatives via JPMorgan, but partially borrowed stock can be recalled with three days’ notice. The two sides have traded barbs all week, with AGL arguing Mr Cannon-Brookes had no plan for the company and the tech executive accusing AGL of having no Plan B if he derails the company restructure.
Analysts say Mr Cannon-Brookes’ Grok Ventures could pounce on either the entire company – should he foil the split – or its coal arm Accel Energy if the division goes through.
Mr Cannon-Brookes, one of the country’s richest businessmen, intervened a week ago to stop an attempt by AGL to hive off its coal-fired stations.
AGL rose 1.7 per cent to $8.33 on Thursday.
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