HESTA removes AGL from watch list

HESTA has removed AGL from its watchlist in light of its progress towards alignment with the goals of the Paris Agreement and appointment of Damien Nicks as chief executive.

The $70 billion fund was vocal in its opposition to a planned demerger to create AGL Australia and Accel Energy last year as it felt it did not adequately support economy-wide decarbonisation to meet Paris-aligned targets nor manage the risk of stranded assets. 

The demerger proposal was later withdrawn in May 2022, and chief executive Graeme Hunt resigned. He was replaced by Damien Nicks in September, a move welcomed by HESTA. 

Nicks had previously stated that the energy transition would be the biggest challenge for the energy company going forward.

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In a statement, Kim Farrant, HESTA’s general manager for responsible investment, said: “We currently believe the approach AGL and its management team have outlined to shareholders more appropriately balances risk, returns and decarbonisation. Reflecting this progress, HESTA has removed AGL from its watchlist at this time.”

It said it would continue to engage with the energy firm as it believed there was additional scope for it to develop its decarbonisation ambitions, including by bringing forward coal-fired power generation closure dates. It could also grow its investment in renewable and energy storage.

“It’s important key emitters like AGL support a timely, equitable and orderly transition. The commitments made in AGL’s CTAP around supporting their workforce and impacted communities are encouraging but more detail is needed,” Farrant said.