Billionaire investor Mike Cannon-Brookes has described Australian power giant AGL as one of the “most toxic companies on the planet”, responsible for releasing more climate-polluting greenhouse gas emissions into the atmosphere than some individual nations.
Cannon-Brookes, the co-founder of tech firm Atlassian and one of the country’s richest people, last year built an 11 per cent stake in AGL, which he used to launch a successful push to overhaul its board of directors and force new pledges for faster and deeper cuts to its enormous carbon footprint.
Before Cannon-Brookes’ intervention, AGL had planned to continue burning coal at some of Australia’s largest power stations until well in the 2040s, but has since ceded to shareholder pressure to fast-track its exit from coal to 2035 and spend more on renewable energy.
Speaking at a business event in Sydney on Friday, Cannon-Brookes said AGL had been an obvious target because it was the nation’s single biggest carbon dioxide emitter, and presented a compelling opportunity to force meaningful change in Australia’s high-polluting, coal-dominated electricity sector.
“AGL is one of the most toxic companies on the planet,” he told the forum hosted by the Australian Institute of Company Directors.
“It has more emissions than the entire country of Portugal, or the entire country of New Zealand – think of every single thing in New Zealand, every car, every business, every factory, every sheep … and it’s eminently fixable.”
Because AGL also ranked poorly on environmental, social and governance metrics, known as “ESG”, it was deemed to have higher exposure to financial risk, and therefore did not have many large institutional shareholders, Cannon-Brookes said, meaning his 11 per cent stake was the largest “by a factor of five or six”.
At AGL’s shareholder meeting in November, the incumbent board was dealt a historic defeat when shareholders voted to elect all four candidates nominated by Cannon-Brookes to bolster the power giant’s response to climate change and clean energy opportunities.
Cannon-Brookes’ nominees – former Energy Security Board chair Kerry Schott, Swinburne University chancellor John Pollaers, CSR director Christine Holman and former Tesla director Mark Twidell – won election as independent directors despite the board endorsing only Twidell.
Under AGL’s updated climate plans, which shareholders endorsed at the annual meeting, its Bayswater coal-fired power plant in NSW is now due to shut no later than 2033, while the retirement of Loy Yang A in Victoria’s Latrobe Valley has been brought forward by up to 10 years from 2045 to 2035.
The company will also spend between $8 billion and $10 billion building 12 gigawatts of new renewable energy projects and “firming” assets – such as big batteries and pumped hydro – to support them when the wind isn’t blowing and the sun isn’t shining.
Following last year’s upheaval, AGL’s new chief executive, Damien Nicks, on Thursday said active investors had begun rejoining the share register over the past six months, which he believed reflected growing confidence in the company’s financial outlook and its refreshed climate strategy.
“Financial year 2023 was a year of significant transformation in which we reset market and stakeholder confidence and progressed our strategy to connect our customers to a sustainable future and transition our energy portfolio,” he said.
Despite the stronger commitments, AGL continues to face pressure from Cannon-Brookes for even earlier coal closures.
His private investment vehicle, Grok Ventures, wrote to AGL in June to express its support for the company’s shift in strategic direction, but signalled it would continue pushing for coal closure dates to align AGL with the goals of the Paris Agreement to avert catastrophic levels of climate change by limiting global temperature rises to 1.5 degrees above pre-industrial levels.
Cannon-Brookes on Friday said embracing the transition to cleaner energy presented a more profitable opportunity for shareholders.
“AGL has some amazing assets – it has millions of customers, some of the best grid connections in the world, it has some fantastic opportunities to lean in and invest and benefit in the transition,” he said. “That’s the story we put across, that it’s better for shareholders … but it required a talent transition, which is still ongoing.”
If AGL were to align with a maximum of 1.5 degrees, it would need to exit coal by as early as 2028-29, according to the company’s calculations. The board has said if the wider energy transition accelerated and there was an opportunity for AGL to exit coal more quickly, “we will certainly consider that”.
Schott, one of AGL’s new directors, said on Friday that the development of the company’s updated climate plan – which had to balance emissions reductions, energy affordability and reliability – was an essential start to making progress on climate action.
“If you are an energy company, it’s relatively easy knowing what you have to do, the doing of it is much harder … because you’ve got to try and do it as cheaply as possible” she said.
“You can’t suddenly cause prices to go up – they are bad enough already for most people – and you know you can’t close down a coal-fired generator tomorrow morning, much as you would like to do that for emissions reduction, because you have to have the capacity there to replace it.”
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Source: Thanks smh.com