AGL: The power of shareholder activism

The collapse of AGL’s demerger plans shows shareholder activism is gaining momentum, with shareholders beginning to realise the power they have to effect change.

Just over a week ago, Mike Cannon-Brookes said the election was won and lost on climate.

“Australians want action and are asking for a stronger stance, as did AGL shareholders who voted for a Paris Agreement aligned future last year,” he said.

Nine days later and it would appear the fight around AGL’s board table has also been won and lost on climate.

The energy giant’s demerger plan, which was set to be voted on on 15 June, has been abandoned, and board members Peter Botten (chair), Graeme Hunt (CEO), Diane Smith-Gander and Jacqueline Hey have all resigned.

Cannon-Brookes’ goal to push the Australian energy market towards green energy seems to be a step closer.

A spokesperson for Grok Ventures, Cannon-Brookes’ private investment vehicle, welcomed what they said was a “sensible decision by AGL to abandon its value destructive demerger plan and renew its board.

“AGL’s retail and institutional shareholders have sent an emphatic message to the board and management of AGL that the company needs to be kept together to take advantage of the economic opportunity presented by decarbonisation,” they said.

Climate lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) Harriet Kater, went a step further calling the mass-exodus at AGL “a bloodbath”.

“Well before the demerger was announced in March 2021, institutional investors expressed their frustrations with the lack of leadership at AGL,” she said.

“With the abandonment of the demerger, the departure of four directors is a welcome step towards a brighter future for AGL shareholders.

“The longest-serving members of the board, particularly Hunt and Botten, have overseen the destruction of an enormous amount of shareholder value, and millions of dollars wasted on a now failed demerger.”

The beginning of the end for greenwashing 

Glenn Walker, senior campaigner of Greenpeace Australia Pacific, said it was a “fantastic time for shareholder activism”.

“Everyday shareholders [are beginning] to harness their actual power when voting,” Walker said.

“This AGL story is the beginning of the end for greenwashing. AGL is the first company to publicly realise in this way that they don’t have the sway they thought they had [and] I believe we can unlock that and force more boards to be more responsible actors.”

He said it would have been possible for the demerger to be voted out, even without the hefty 11.3 per cent shareholder advantage Grok Ventures holds.

This is due, he says, to the fact that 50 per cent of shareholders at AGL are mum and dad investors, and many of them want green energy.

“Our calculation was that if we got 3,000 to 4,000 voters to vote against the demerger then that would have stopped the demerger irrespective of Cannon-Brookes’ vote,” Walker said.

“It is a real lesson that corporate Australia needs to learn. Retail shareholder activism and true democracy [is] becoming a part of corporate Australia in a way it hasn’t before.”

Walker was brought on by Greenpeace Australia Pacific in June last year to head-up a campaign to alert AGL shareholders and the Australian public at-large to the fact that the energy provider was Australia’s largest polluter.

The subsequent campaign saw AGL take Greenpeace to court for copyright and trademark infringements – a case it ultimately lost.

Walker also highlighted that Rio Tino – AGLs largest client – is looking to decarbonise its aluminium smelter in the Hunter Valley completely by 2029. This is the year AGL’s contract also expires.

“With that knowledge you can see that AGL was going to lose their business by 2030 if they didn’t make a clear move towards more green energy,” he said. 

“The fact the old board knew this, knew the desires of its shareholder base and still did nothing just shows you how out of touch they actually were.”