Reference no: EM133050701

Question - AGL faces climate pressure: investors The $US54 trillion ($73 trillion) Climate Action 100+ group said AGL Energy faces pressure to boost its disclosure on climate as investors increase demands on companies achieving net zero emission goals.

Proxy adviser Institutional Shareholder Services (ISS) told shareholders on Wednesday it backed an activist resolution for AGL to set short, medium and long-term targets aligned with the Paris climate accord ahead of a planned split of the company into a green retailer and coal-focused electricity generator.

Climate Action 100+ said AGL, Australia's largest polluter, faces an increasing expectation for more transparency on how it will meet climate targets "Investors engaging with carbon intensive companies facing significant climate related financial risks like AGL Energy have been calling for greater transparency around how those firms intend to transition to net-zero emissions which for utilities is sooner than for most other sectors," Climate Action 100+ Australia director Laura Hillis told The Australian.

"They will also be calling for accountability mechanisms such as governance structures and remuneration strategies that ensure that boards and executives are held to account in delivering transition plans." The Australasian Centre for Corporate Responsibility had accused AGL of not being prepared to set Paris-aligned targets although the electricity operator has vowed to give shareholders a vote on climate reporting for the split companies - AGL Australia and Accel Energy - at their first AGMs should the demerger proceed.

ISS said support for the resolution should not be unreasonable given AGL's plan for the vote once the companies are separated.

Blackrock, the world's largest asset manager, backed a shareholder resolution at last year's AGM calling for the early retirement of AGL's Loy Yang coal power plant so the company can meet Paris climate change goals.

The climate resolution will go to a vote at AGL's AGM on September 22. AGL copped a giant first strike against its remuneration report at last year's AGM with 46.5 per cent of shares voted against the pay structure, and 30.4 per cent of shares voted against a performance rights issue to former boss Brett Redman. Both ISS and CGI Glass Lewis said changes made by AGL meant they had recommended in favour of the company's remuneration report this year even as they flagged several areas of concern.

I. What theories from ACC30008 can be applied to the discussion reported in the article? (Maximum words 500).

II. How can you link 'ethical investment' with the discussion in the above article? (Maximum words 250).

III. Do you believe that stakeholder pressure, particularly from current shareholders, to adopt environmentally friendly policies and practices for companies such as AGL leads to "greenwashing"? Explain. (Maximum words 250).