AGL avoids second strike as Mike Cannon-Brookes demands more climate action

An unambitious attitude to carbon transition is rewarding AGL executives with bonuses for ‘standing still’, the billionaire’s vehicle said.

AGL Energy chair Patricia McKenzie. Picture: Supplied

AGL’s board of directors will remain in place after shareholders, including billionaire Mike Cannon-Brookes, voted to spare the company a second strike — though the company’s largest shareholder said the near 200-year old company is moving too slowly to decarbonise.

The vote on the company’s remuneration report extends a period of stability for AGL, which was embroiled in a bitter takeover battle in 2022 with Mr Cannon-Brookes and Brookfield.

More than 25 per cent of AGL’s shareholders rejected the company’s remuneration report in 2022, but its chairwoman Patricia McKenzie on Tuesday said the company had avoided a second strike following the votes of large equity owners.

The avoidance of the second strike was aided by the decision of Mr Cannon-Brookes’ private investment company, Grok, to abstain from the remuneration vote. However, Grok chief executive Jeremy Kwong-Law said the board had set weak climate targets in order to receive bonuses.

“We believe that the targets set under the ‘carbon transition metrics’ in AGL’s 2023 remuneration report incentivise the company to stand still while the rest of the Australian energy market does the work: executives will be rewarded, while AGL, its customers and shareholders, are left behind by inaction,” Mr Kwong-Law said in the letter.

“This unambitious attitude reminds us of the ‘old AGL’ thinking — which was orientated towards watching the transition from the sidelines, instead of leading from the front.”

Mr Cannon-Brookes in August described AGL as one of “most toxic companies on the planet”.

Grok said AGL secure bonuses for reducing emissions by approximately 1 per cent a year for the next four years, and driving new renewable generation at around 10 per cent — consistent with the Australian Energy Market Operator’s step-change scenario.

Ms McKenzie said the company is making good progress towards its target of developing 12GW of renewable energy generation and storage by 2035. AGL in 2022 said it would hasten its exit from coal, bowing to pressure from shareholders like Mr Cannon-Brookes.

AGL had said it would close its coal-fired Loy Yang A power station in Victoria in 2035, having previously said it would retire the generator in 2045. AGL said it will shutter its Bayswater coal power station between 2030 and 2033.

Earlier this year, AGL said it had entered into a deal with the Victorian state government to share the threat of Loy Yang becoming uneconomic before 2035, a move that will likely see the coal power station — one of the state’s largest emitters — remain open until the next decade.

Victoria has legislated Australia’s most aggressive energy transition policy that has seen the state commit to cutting emissions by between 75 and 80 per cent by 2035, while bringing forward its net-zero target by five years to 2045.

To achieve this, Victoria will prohibit coal power generation in the state by 2035.

While defending the company’s progress, Ms McKenzie said Australia is experiencing difficulties in developing new renewable energy assets.

“We are seeing some challenges, including delays in approvals, cost pressures and some local opposition to new generation and transmission projects,” Ms McKenzie said.

AGL is the latest to warn about the potential roadblocks to Australia’s energy transition.

Australia has set an ambitious target of having renewable energy generate more than 80 per cent of the country’s power by 2030, a target that is proving very challenging.

The avoidance of the second strike was aided by the decision of Mike Cannon-Brookes’ private investment company Grok. Picture: NCA NewsWire / Max Mason-Hubers