Mike Cannon-Brookes says AGL is ‘one of the most toxic companies’

Mike Cannon-Brookes has hit out at the energy company he has invested $700m in, describing it as ‘one of the most toxic companies on the planet’.

Mike Cannon-Brookes said the people he had nominated as directors had ‘copped a lot of sh*t’ to take the job. Picture: Supplied.

Tech billionaire Mike Cannon-Brookes has stepped up pressure on AGL Energy to move faster on cutting emissions, with its top shareholder describing it as “one of the most toxic companies on the planet”, while a board member cast doubt on Australia hitting 2030 green goals.

Mr Cannon-Brookes, whose private company, Grok Ventures, has a 10 per cent stake in the company, said AGL was Australia’s largest emitter of carbon.

“It has more emissions than the entire country of Portugal or the entire country of New Zealand, more than Sweden,” he told a climate forum hosted by the Australian Institute of Company Directors in Sydney on Friday.

His comments come as AGL director Kerry Schott, one of the tech mogul’s nominees to the AGL board last year, said Australia was unlikely to meet its goal of having 82 per cent renewable energy by 2030.

Dr Schott said this could put in danger Anthony Albanese’s goal of reducing carbon emissions by 46 per cent below 2005 levels by 2030.

“There is a recognition that getting to 82 per cent in renewables by 2030 is a big challenge and we are probably running late,” she said.

“That is not to say we can’t get there, but we do need to rapidly increase the transmission system so renewables can plug into it.”

Mr Cannon-Brookes, who split with wife Annie last month, has been pushing AGL to commit to a faster decarbonisation plan, including earlier shutdowns of its Bayswater and Loy Yang A power stations.

He said his four nominations for the board, at its annual meeting last November, had “copped a lot of shit” to take on the job, but said there was more “talent transition” needed at the company.

Meanwhile, Dr Schott said households and companies needed to look for ways to use less electricity and to vary their demands to use power when it was less ­expensive.

She said there had been a significant take-up of solar power in households, to the point where cities such as Adelaide, Brisbane and Perth had zero electricity ­demand from the grid during the day. But she said some states were still lagging in their connection of renewable energy to the grid.

Mr Cannon-Brookes told the AICD forum he had bought into AGL last year, investing $700m in the company, because he saw it as a “good place to start to prove that decarbonisation (of a company) can be done and be done profitably”.

He said AGL had scored “very poorly” on environmental, social, and corporate governance ratings, which was why it had few major institutional shareholders when he bought into it early last year. Companies that had poor ESG scores generally had higher financial risks, he argued.

AGL last year was “a slightly rudderless thing”. with a huge ­retail shareholder base that created an opportunity for him to buy in, he told the forum.

Mr Cannon-Brookes opposed AGL’s proposed demerger of its retail and coal-focused generation businesses as it was “not fully thought through” and he believed was not in the best interests of shareholders.

The board at the time was only presenting a single option for shareholders in the form of the proposed demerger, and was taking them for granted.

He said he was initially “laughed at” with his proposals for the company, but was later taken more seriously.

He said Australia was “starting to catch up” in committing to reduce carbon emissions but it was still not doing enough and was “paying for 10-20 years of being regressive on a global climate stage”.

AGL CEO Damien Nicks. Picture: Britta Campion

AGL this week announced a statutory loss of $1.26bn for the financial year as a result of writedowns due to the early closure of the Loy Yang A coal-fired power station in Victoria.

Chief executive Damien Nicks this week said the company was moving ahead as fast as it could with its move away from coal-fired power generation.

Rival energy company Origin Energy is scheduled to close the Eraring power station in NSW in mid-2025, which could leave the state with a shortfall in electricity generation capacity and put additional pressure on prices.

Mr Cannon-Brookes said AGL had had a large turnover in directors and senior executives since Grok bought in last year.

“We were pretty unashamed about forcing that transition,” he said.

He said AGL had some “amazing assets”, including millions of customers and some of the best grid connections in the world. He said believed AGL had some “fantastic opportunities to lean in and benefit” from the transition to a lower carbon world.

The transition at AGL was “still ongoing”, and it needed a large-scale corporation transformation to “embrace the new opportunities” of moving to a lower-carbon future, and he urged company directors to do more on climate change.

“We are saying there is a transition we need to make and we think this is important,” he said.

AGL Energy's Liddell Power Station. Picture: Supplied

Dr Schott, who spoke on a later panel at the conference, said it was critical that the electricity sector decarbonised as it was crucial for the decarbonisation of the broader economy.

But she said energy companies had to balance competing pressures in their plan to decarbonise, including the need to ensure continuity of power supply and concerns about consumers coping with price increases.

“If you are an energy company, it is relatively easy knowing what you have to do,” she said. “Doing it is much harder.

“You have got to try to do it as cheaply as possible.”

She said electricity companies could not suddenly push up prices: “It’s bad enough already for most people.”

They could not close down coal-fired power stations as fast as they would like to.

“You have to have the cap­acity there to replace it,” she said. “You have to work out how you are going to balance affordability, emission reductions and making sure you have reliability (of supply).”

But she said it was “absolutely critical for every company that the electricity sector decarbonises so that everybody else who uses electricity can decarbonise”.

“Almost all manufacturing is heavily reliant on energy of some kind. If we can get that greener it helps everybody else on their journey,” she said.