HESTA has announced it will vote against AGL’s demerger proposal saying it will not adequately support economy-wide decarbonisation and will therefore not be in the best interests of members.
The superannuation fund, which owned 0.36% of AGL, said it remained unconvinced the demerger would sufficiently accelerate decarbonisation to meet Paris-aligned targets, nor manage the risk of stranded assets.
The demerger would create two companies: Accel Energy would be Australia’s largest electricity generator and AGL Australia would be a multi-service energy retailer with 4.5 million customers.
HESTA chief executive, Debby Blakey, said: “AGL is one of Australia’s biggest emitters, with their emissions effectively flowing right through our portfolio. If AGL commits to Paris-aligned emission reduction targets this will have a hugely positive impact on Australia’s pathway to net zero, lowering the overall systemic risk exposure of our members’ investments.
“We cannot simply divest away from the risk of Australia being slow to transition to a low-carbon future. Responsible investors have a responsibility to their members to go to where the biggest emissions are and as owners try and first change the behaviour of these companies.”
The fund said a stand-alone company owning AGL’s coal-fired power plants risked making it more difficult for Australia to transition to a low-carbon future.
“We believe this company would struggle to make the transition out of coal successfully were power prices to fall or the transition further accelerated to limit the worst impacts of climate change,” it said.
“The proposed company would remain a potential takeover target, with the risk of private owners seeking to extend the life of emission-intensive assets.”
According to HESTA, AGL had also failed to adequately outline how it would support impacted communities.
“An equitable transition is a vital underpinning of the company’s long-term social licence to operate and would directly impact our members who deliver vital services in these communities.”
AGL shareholders would vote on the demerger on 15 June, and with Atlassian co-founder and AGL demerger opponent Mike Cannon-Brookes owning 11.3% of the energy provider, the demerger plan would need 75% approval.