Shareholder activist group Australasian Centre for Corporate Responsibility (ACCR) has filed a shareholder resolution with AGL Energy requesting targets that are aligned with the Paris Agreement for both of the proposed demerged companies.
The resolution will request AGL set short, medium and long-term targets that are aligned with the Paris Agreement, which will cover Scope 1, 2 and 3 emissions for AGL and the proposed demerged company.
AGL has announced plans to split into two companies - AGL Australia, which will hold the company's power, gas and telecommunications retailing divisions as well as some cleaner generation assets, and Accel Energy, which will own its emissions-intense coal and gas-fired power stations.
The resolution also request information on how the proposed demerged companies' capex will align with those targets and how remuneration policies for executives will align with achieving those targets.
"AGL has cost shareholders dearly by failing to effectively manage the energy transition to date, seeing its share price plummet by more than 70% since its peak in 2017," said ACCR director of climate and finance Dan Gocher, Director of Climate and Environment. "This erosion of shareholder value was done with eyes wide open as AGL resolutely defended its decision to acquire three coal-fired power stations at a time when the market was starting to move in the opposite direction.
"Recent meetings with members of the Board suggest AGL is not prepared to set Paris-aligned targets, despite that now being a clear expectation of emissions intensive companies."
Gocher noted that in the second half of 2020, the carbon intensity of AGL's operated generation assets was 0.95 tCO2-e/MWh, compared to an average of 0.70 tCO2-e/MWh in the NEM. Since 2015, the average intensity in the NEM has declined by 23%, while the carbon intensity of AGL's operated assets has declined by 2%.
"AGL claims that it is hamstrung by the Federal Government, which is a disastrous situation for shareholders," Gocher said. "Yet three of the directors that have overseen this debacle have been rewarded with chair and CEO positions at Accel Energy and AGL Australia, which raises a multitude of concerns around their ability to manage the transition ahead."
AGL announced that Peter Botten, currently chair of AGL Energy, will continue as chair when the company becomes Accel Energy. Botten was appointed chair in April 2021, having joined the board as a non-executive director in October 2016. Previously, Botten was managing director and CEO of Oil Search Limited for more than 25 years.
Graeme Hunt, currently interim managing director and CEO of AGL Energy, has been named as future managing director and CEO of Accel Energy. Hunt's role is expected to be for a fixed term of three years commencing on the effective date of the demerger. Mr Hunt was chairman of AGL Energy from September 2017 to April 2021 and joined the board as a non-executive director in September 2012.
Patricia McKenzie will be chair of AGL Australia. McKenzie has been a non-executive director of AGL Energy since May 2019. She has 40 years' experience in the Australian energy sector with particular focus on matters of market design, industry governance and regulatory reform.
Christine Corbett has been identified as managing director and CEO of AGL Energy. Corbett has been chief customer officer of AGL Energy since July 2019.
"To provide investors with the confidence they sorely need, it is imperative that AGL provide a Paris-aligned climate transition plan for both of the proposed entities, with short, medium and long term targets, capital expenditure alignment and a remuneration framework that incentivises rapid decarbonisation," Gocher said. "The International Energy Agency's recently published 'Net Zero by 2050' report recommended that all unabated coal plants must be phased out in advanced economies by 2030. Incredibly, Baywater is scheduled to close in 2035, and Loy Yang A in 2048."