A win for climate: AGL ditches controversial demerger plan

It's landmark moment for people power, but what happens next?

Lucy Piper
November 16, 2021
Man sits at desk working_image courtesy of Javad Esmaeili via Unsplash

In a landmark moment for people power, energy giant AGL is ditching its controversial demerger, yielding to pressure from shareholders and investment groups. In other words: climate won. So is this a turning point? And what happens next? WorkforClimate director Lucy Piper shares her two cents.

AGL’s controversial demerger plans – to split the energy giant into two companies: a generator and retailer – would have allowed AGL to keep burning coal into the 2040s, and create one of the largest stand-alone coal power companies in the OECD.

It was always a cynical, not very smart plan. And as of this week, it no longer exists. On Monday, the AGL Board yielded to pressure from shareholders (including billionaire Mike Cannon-Brookes, who recently snapped up $660 million worth of company shares), and announced they’d be withdrawing the demerger.

This is obviously a huge shake-up for Australia’s energy industry – AGL is Australia’s largest electricity and gas provider, and accounts for about 8% of the country’s emissions – but it’s also a win for people power and activist investing.

Organisations like ACCR, Greenpeace and Healthy Futures have been fighting this campaign for months, warning shareholders about the dangers of the demerger. Billionaire Mike Cannon-Brookes stumped up $660 million of his own cash to block the split. 

"This entire AGL fiasco clearly demonstrates the power of influence and pressure when it comes from the inside of an organisation."

In the end, industry super fund HESTA, one of AGL’s most high-profile investors, publicly criticised the plan. By that point, the jig was basically up. “The events at AGL represent a watershed in active ownership in this country,” said HESTA CEO Debby Blakey. “Shareholders are pushing for greater action on climate change and a more rapid transition that aims to enhance the company’s ability to create long-term, sustainable value.”

Blakey has hit the nail on the head. Shareholders want action on climate. Voters clearly want action on climate. This is a wake-up call for the energy industry and corporate Australia, and a reminder that we can all push for change within our organisations.

WorkforClimate literally exists to catalyse and champion the power of internal changemakers. This entire AGL fiasco clearly demonstrates the power of influence and pressure when it comes from the inside of an organisation. It’s almost impossible for organisations to ignore the will of the people when the people with the will are their own staff and stakeholders.

All over Australia, companies are slowly starting to realise that clinging to fossil fuels isn’t just bad for the environment; it’s bad for business too. It doesn’t matter how much power you wield, whether you’re the chairman of an energy company or the Prime Minister of Australia; you’re going to be held to account.  

As for AGL, it’s unclear what the next steps will be. If Mike Cannon-Brookes and other like-minded investors can wrestle control, this could be the biggest decarbonisation opportunity Australia has ever seen.

For now, it’s a small win. Common sense and climate prevailed over misdirection, cynicism and naked greed. It’s always nice when that sort of thing happens.

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https://www.workforclimate.org/post/agl-ditches-controversial-demerger-plan
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