AGL Energy

AGL’s emissions intensity remained static between 2017 and 2022. Although this trend is projected to decline between 2022 and 2027, it will be insufficient to align with the company’s 1.5°C pathway. Coal will continue to make up the majority of the company’s energy source until the closure of its coal-fired power stations in 2033 and 2035. Moreover, though the company has set targets to increase its renewable energy capacity, its current investment in low-carbon technology, at only 2% of total capital expenditure (CapEx) in the reporting year, is insufficient. The company must accelerate its investment and planned closures to achieve emissions reductions in line with its 1.5°C pathway.

AGL has implemented board-level oversight of climate change and has board members with expertise in climate change risk and low-emission industry transition. The company includes transition metrics in its executives’ long-term incentive plan for 2025; however, it should at the same time make clear no incentives reward fossil fuel growth. In 2022, AGL published its transition plan and has committed to review its strategy every three years and submit this for approval at its annual general meeting. The company can improve its transition plan by extending its time frame beyond 2035, including its value chain, providing detailed financial projections and aligning with a 1.5°C scenario.

AGL notes the importance of reducing emissions from its supply chain but the company does not disclose a detailed supplier engagement strategy. The company’s supplier code of conduct does require suppliers to identify, monitor and minimise greenhouse gas (GHG) emissions and energy consumption from their own operations, but suppliers are not required to publicly report on their GHG emissions or any other low-carbon requirements. The company can improve by including GHG emissions reporting and reduction in the selection criteria for new suppliers and in contract renewal for existing suppliers. Further, the company can embed actions to engage suppliers on climate change in its strategy.

AGL is actively developing business models for a low-carbon future. The company plans to significantly grow its renewable capacity from 1.7 gigawatts (GW) to 8 GW by 2035 and has set out time-bound deployment schedules to develop this business model. It has also identified opportunities to enable customers to use smart meter data to reduce emissions as well as opportunities to expand work on microgrids and battery storage projects. This is of high importance as currently only 10% of AGL’s revenue comes from low-carbon products and services and this has not changed significantly in the last three years.

AGL has set targets that cover all of its electricity generation emissions. The company aims to reduce its scope 1 and 2 emissions by 100% by 2035, with interim reductions of 17% by 2023 and 52% by 2034 (compared to a 2019 baseline). The company’s scope 1 and 2 targets reflect its plans to close its remaining coal-fired power stations. The company has additionally set a target to reach zero scope 3 emissions by 2050.

AGL’s Climate Transition Action Plan sets out the company’s intention to close its coal-fired power stations, significantly reducing its scope 1 and 2 emissions. However, it does not set a fossil-fuel phase-out date. To increase its low-carbon power, AGL plans to build or access 8 GW of new renewable energy capacity by 2035, with an interim target of 3.1 GW by 2030. The company also intends to expand its energy as-a-service offering and aims to transition large customers, such as smelters, to low-carbon energy.

AGL’s current business model is highly reliant on coal and its finances mirror this dependence. In 2022, only 2.6% of the company’s CapEx was directed to low-carbon technology and only 10% of its revenue was derived from low-carbon products and services. Though the company states that it has invested in R&D into demand response technology, smart grid integration, energy storage and solar energy generation, it does not disclose the scale of this investment.

AGL’s emissions intensity, for both its own power generation and its purchased power, remained static between 2017 and 2022. Consequently, the company’s trend in emissions intensity is not aligned with its 1.5°C pathway. In May 2022, AGL withdrew its proposal to separate into AGL Australia and Accel Energy following pressure from shareholders and board members. This was followed by the release of the company’s transition strategy signalling a new commitment to addressing climate change.

AGL has a clear plan for addressing emissions from its power generation including a target to reduce scope 1 and 2 emissions by 100% by 2035 and increasing its renewable capacity. However, the company’s commitment to phase out coal by 2035 falls short of the IEA’s requirements for advanced economies to phase out coal by 2030. The company should continue to increase its ambition to ensure it can reduce its emissions intensity in line with its 1.5°C pathway.

No evidence was found that the company commits to social dialogue or of the categories of stakeholders the company engages with on a just transition. Furthermore, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, it discloses the actions it takes to create green and decent jobs in communities, one example is through the Liddell Power Station which will be converted into a low-carbon industrial energy hub that will create both energy and jobs for the future. The company however, does not disclose the measures it takes to ensure that these jobs embed equality of opportunity for women and vulnerable groups. Furthermore, no relevant disclosure was found of the company’s assessment of employment dislocation risks. There is evidence that the company has a public commitment to re- and up-skill workers displaced by the transition to a low-carbon economy. However, no evidence was found that the company re- and up-skills workers, nor re-skill workers in a way that ensures gender balance and inclusion of vulnerable groups.

The company has not identified the impacts of the low-carbon transition on social protection for workers and affected stakeholders. However, the company contributes to the social protection of workers and affected stakeholders, by donating to various social benefits, including but not limited to, the salvation army and other initiatives. The company, however, does not expect its business relationships to contribute to the social protection of their workers and affected stakeholders. There is evidence that the company supports lobbying activities with policies and regulations that support the just transition. However, no evidence was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights and the ILO fundamental rights at work, and it expects its business relationships to respect the ILO fundamental rights at work. However, no evidence was found of the company’s process to identify, assess and mitigate salient human rights risks in its own operations and supply chain. Moreover, no evidence was found of the company disclosing the stakeholders whose human rights have been affected by its activities. The company does, however, have a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. However, no evidence was found of a time-bound target for paying all workers a living wage. While the company discloses the proportion of its direct workforce covered by collective bargaining agreements, no relevant disclosure was found of the company’s required working hours. The company discloses some indicators of workforce diversity, including age and gender. However, no relevant disclosure was found of additional indicators of workforce diversity. Nevertheless, the company commits to gender equality and women’s empowerment.

The company commits to protecting personal data. Furthermore, there is  evidence showing a privacy statement regarding the collection, sharing and access to personal data. The company discloses its global tax strategy, and discloses the corporate income tax paid for each relevant jurisdiction. The company does have a policy prohibiting bribery and corruption, and it includes corresponding clauses in its contracts with business relationships. Furthermore, the company has a lobbying and political engagement policy, and it specifies that it does not make political contributions. Furthermore, there is  relevant disclosure on the company’s expenditure on lobbying activities.