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HESTA says it 'stands ready' to help AGL understand investor expectations

By Adrian Suljanovic
3 minute read

HESTA has welcomed AGL’s plans to scrap its demerger plans and their announced significant board renewal.

After publicly airing its disproval of AGL Energy’s demerger plans, HESTA welcomed the giant’s backflip on Monday, noting it “stands ready” to work with AGL’s current and new board to provide a clear understanding of the expectations of global investors.

“AGL’s future success is best served by a transparent Paris-aligned decarbonisation that seeks to enhance and protect shareholder value, while providing comprehensive support for impacted communities,” said CEO of HESTA, Debby Blakey.

“Shareholders are increasingly expecting companies to do more to drive a timely, equitable and orderly transition to a low-carbon future. It’s vital that company boards consider if they have the right mix of skills and strategic thinking to ensure they remain adaptable as the need for climate action increases in the coming years,” Ms Blakey said.

On Monday morning, Australia’s biggest domestic contributor to climate change yielded to pressure and announced its determination to withdraw the proposal to separate AGL Energy into AGL Australia and Accel Energy via a demerger.

As a result, chairman Peter Botten and chief executive Graeme Hunt are both due to step down as soon as the company finds replacements, alongside two other board members.

In the statement filed with the ASX, AGL admitted that support for the demerger would have been shy of the 75 per cent approval threshold at the vote set for 15 June, given the stated opposition from a number of investors including Grok Ventures.

AGL’s demerger backflip has been referred to as “bungled and misguided”.

The company had strongly maintained its support for the demerger despite fierce opposition.

Just last week, HESTA confirmed that it would vote against the demerger having deemed that an “orderly transition” to net-zero emissions is in the “best financial interests of our members”.

In a statement seen by InvestorDaily, HESTA said that, having reviewed AGL’s plan, it remained unconvinced that the overall demerger would sufficiently accelerate decarbonisation to meet Paris-aligned targets.

“When voting this AGM season, we’re considering if companies are suitably managing risk and enabling the creation of long-term value. And that they’re doing this in a way that promotes a stronger economy and the management of systemic risks that benefits our members and all Australians,” HESTA CEO, Debby Blakey, said last Wednesday.

Despite HESTA’s very public rejection of the demerger, AGL quickly followed up with its own statement strongly reaffirming its intentions, in which it seemingly took a very public swipe at those opposing the demerger. 

However, it is now clear that shareholders have rallied together in defiance of the demerger.

AGL Energy is not expected to report back to shareholders and investors until September when it plans to provide a progress of the review of its strategic direction alongside its financial results.