Shareholder Resolution

ACCR Shareholder Resolution to AGL Energy Ltd on closure dates of Bayswater and Loy Yang A coal-fired power stations

The Australasian Centre for Corporate Responsibility (ACCR) has filed Shareholder Resolutions to AGL Energy Ltd (ASX:AGL) requesting the company bring forward the closure dates of its Bayswater and Loy Yang A coal-fired power stations. AGL announced that the resolutions would be voted on at their upcoming AGM on 7 October 2020, in Sydney, Australia.

The resolution was supported by 19.96% of shareholders (see results in ASX notice).

This page contains the resolutions and their supporting statements, and will be updated with links to news and additional briefings about this engagement.

See ACCR Statement on result: Blackrock support demonstrates Australian investors lag foreign peers →

See the latest Investor Briefing for these resolutions →


  1. Resolution 1 and supporting statement
  2. Resolution 2 and supporting statement
  3. Contact information
  4. Media coverage

Resolution 1 and supporting statement

Special resolution to amend our company’s constitution

To amend the constitution to insert a new clause 32.4:

Member resolutions at general meeting:

The Members in general meeting may by ordinary resolution express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution must relate to an issue of material relevance to the company or the company’s business and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company.

Supporting Statement to Resolution 1

Shareholder resolutions are a healthy part of corporate democracy in many jurisdictions. As a shareholder, the Australasian Centre for Corporate Responsibility (ACCR) favours policies and practices that protect and enhance the value of our investments.

The Constitution of our company is not conducive to the right of shareholders to place ordinary resolutions on the agenda of the annual general meeting (AGM). In our view, this is contrary to the long-term interests of our company, our company’s Board, and all shareholders in our company.

Australian legislation and its interpretation in case law means that Australian shareholders are unable to directly propose ordinary resolutions for consideration at Australian companies’ AGMs. In Australia, the Corporations Act 2001 provides that 100 shareholders or those with at least 5% of the votes that may be cast at an AGM with the right to propose a resolution[1]. However, section 198A specifically provides that management powers in a company reside with the Board[2].

Case law in Australia has determined that these provisions, together with the common law, mean that shareholders cannot by resolution either direct that the company take a course of action, or express an opinion as to how a power vested by the company’s constitution in the directors should be exercised.

Australian shareholders wishing to have a resolution considered at an AGM have dealt with this limitation by proposing two part resolutions, with the first being a ‘special resolution,’ such as this one, that amends the company’s constitution to allow ordinary resolutions to be placed on the agenda at a company’s AGM. Such a resolution requires 75% support to be effective, and as no resolution of this kind has ever been supported by management or any institutional investors, none have succeeded.

It is open to our company’s Board to simply permit the filing of ordinary resolutions, without the need for a special resolution. We would welcome this. Permitting the raising of advisory resolutions by ordinary resolution at a company’s AGM is global best practice, and this right is enjoyed by shareholders in any listed company in the UK, US, Canada or New Zealand.

We note that the drafting of this resolution limits the scope of permissible advisory resolutions to those related to “an issue of material relevance to the company or the company's business as identified by the company” and that recruiting 100 individual shareholders in a company to support a resolution is by no means an easy or straightforward task. Both of these factors act as powerful safeguards against ‘opening the floodgates’ to a large number of frivolous resolutions.

ACCR urges shareholders to vote for this proposal.

Resolution 2

Ordinary resolution on coal closure dates

Shareholders affirm our company’s commitment to decarbonisation and welcome the FY20 scenario analysis.

Shareholders request that our company align the closure dates of the Bayswater and Loy Yang A coal-fired power stations with a strategy to limit the increase in global temperatures to 1.5°C above pre-industrial levels.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.

Supporting statement to Resolution 2

In 2015, AGL announced that it would close its three coal-fired power stations at the end of their operating lives: Liddell by 2022-23[3], Bayswater by 2035 and Loy Yang A by 2048[4].

Scenario Analysis

AGL’s FY2020 scenario analysis[5] shows that in order to limit global warming to 1.5°C above pre-industrial levels, AGL would have to close its three coal-fired power stations by approximately 2036. AGL’s FY2016 scenario analysis modelled a similar decline in coal-fired generation[6].

Electricity generation is the largest source of emissions in Australia, contributing approximately a third of the total[7]. AGL’s generation assets contributed 8.1% of Australia’s total emissions in FY2019 (43.1Mt of 532Mt); Liddell contributed 1.6%, Bayswater 2.7% and Loy Yang A 3.5%[8]. Coal-fired power contributes approximately 70% of grid-level generation (excluding rooftop solar) in the National Electricity Market (NEM)[9].

The head of the International Energy Agency (IEA) said of Australia’s coal-fired power stations, “if they don’t retire early or if we don’t use technology which decarbonises existing plants is the issue…if they continue to operate as they run then it is impossible. We can forget reaching these hard climate targets”[10].

Carbon Intensity

In the year to 30 June 2019, the carbon intensity of AGL’s operated generation assets was 0.95 tCO2-e/MWh, compared to the average intensity in the NEM of 0.77 tCO2-e/MWh[11].

Of AGL’s power stations, Loy Yang A has the highest carbon intensity at 1.16 tCO2-e/MWh, followed by Liddell at 0.92 tCO2-e/MWh, and Bayswater at 0.88 tCO2-e/MWh[12]. Even after Liddell closes in 2022-23, the carbon intensity of AGL’s generation assets will likely remain well above the average intensity in the NEM.

Capital Expenditure

Since AGL’s acquisition of Bayswater and Liddell, ‘sustaining’ capital expenditure has grown from $154 million to an estimated $592 million in FY2020, while spending on ‘growth and transformation’ has never been as high as it was in FY2013. ‘Sustaining’ capital expenditure has grown from 25% of total capital expenditure in FY2013 to 72% (estimated) in FY2020. Conversely, ‘growth and transformation’ capital expenditure has declined from 75% in FY2013 to 28% (estimated) in FY2020.

AGL Energy's Capital Expenditure, 2013-20
Capital expenditure AU$m20132014201520162017201820192020 (est)
Growth and transformation454262426139217295388234
Source: AGL Energy Annual and Half-Year Reports, 2013-20

This allocation of capital expenditure suggests AGL is maintaining its coal-fired power stations at the expense of accelerating its transition.

Reliability and Safety

The age of AGL’s three coal-fired power stations at retirement will be at or greater than 50 years:

Start dateScheduled closure dateAge at retirement (years)
Loy Yang A1984-88204860-64

Since 2012, 10 coal-fired power stations have been retired from the NEM at an average age of 40 years[13].

As coal-fired power stations age, reliability declines and the cost of maintenance increases. According to the Australian Energy Market Operator (AEMO), “the growing amount of renewable generation increases the variability in the system”, increasing reliance on the remaining thermal generation fleet, “that have an increased risk of forced outages”. Furthermore, “the reliability of the aging thermal generation fleet has deteriorated and the warming climate has increased the risk of extreme temperatures and high peak demands”[14].

Between December 2017 and December 2019, coal and gas-fired power stations in the NEM experienced 227 unscheduled outages, or breakdowns[15]. AGL accounted for 54 of those 227 breakdowns: 30 at Loy Yang A, 16 at Liddell and 8 at Bayswater[16]. Loy Yang A was the second-worst performing power station in the NEM by number of breakdowns, and Loy Yang A Unit 2 was the fourth-worst performing unit[17].

Prior to its closure in March 2017, Victoria’s work safety body required upgrades and repairs to multiple boilers at the 52-year-old Hazelwood coal-fired power station to meet health and safety standards[18]. Hazelwood’s owner, Engie, ultimately could not justify the estimated $400 million investment[19].

Air Pollution

Air pollution from coal-fired power stations has adverse public health impacts, contributing to heart disease, strokes, asthma attacks, low birth weight of babies, lung cancer and type 2 diabetes[20]. Research, partly funded by AGL, found that air pollution from NSW’s five coal-fired power stations is estimated to lead to 98 early deaths every year[21]. Air pollution from Loy Yang A is likely to have similar adverse public health impacts.

Every year that AGL’s coal-fired power stations remain open poses a risk across multiple issues: climate, grid reliability, worker safety and community health.

Accelerating the energy transition by bringing forward the closure dates of the Bayswater and Loy Yang A coal-fired power stations would protect the long-term interests of AGL shareholders.

ACCR urges shareholders to vote for this proposal.

Contact information

For information about this resolution contact ACCR Director of Climate and Environment, Dan Gocher.

To stay up to date with updates and information about ACCR's work, subscribe for email updates.

Media coverage

  1. Sections 249D and 249N of the Corporations Act 2001 (Cth) ↩︎

  2. S198A provides that “[t]he business of a company is to be managed by or under the direction of the directors”, and that “[t]he directors may exercise all the powers of the company except any powers that this Act or the company’s constitution (if any) requires the company to exercise in general meeting.” ↩︎

  3. AGL originally announced that Liddell would close entirely in 2022. ↩︎

  4. AGL Energy, Greenhouse Gas Policy, April 2015 ↩︎

  5. AGL Energy, Climate Statement and Commitments, June 2020 ↩︎

  6. AGL Energy, Carbon Constrained Future, September 2016 ↩︎

  7. Commonwealth of Australia, Quarterly Update of Australia’s National Greenhouse Gas Inventory: June 2019 ↩︎

  8. AGL Energy, FY19 Sustainability Data Centre, Operational Greenhouse Gas Footprint (Material Sites and Fuels) ↩︎

  9. The Australia Institute, National Energy Emissions Audit, June 2020 ↩︎

  10. The Australian, ‘Call to retire coal-fired power stations early’, 21 July 2020 ↩︎

  11. AGL Energy, FY19 Sustainability Data Centre, Carbon Intensity of Operated Generation Assets ↩︎

  12. Commonwealth of Australia, Clean Energy Regulator, Electricity Sector Emissions and Generation Data 2018–19 ↩︎

  13. Jotzo et al, ‘Coal transition in Australia: an overview of issues’, September 2018 ↩︎

  14. ibid. ↩︎

  15. The Australia Institute, Fossil fails in the Smart State, February 2020 ↩︎

  16. ibid. ↩︎

  17. ibid. ↩︎

  18. Jotzo et al, ‘Coal transition in Australia: an overview of issues’, September 2018 ↩︎

  19. ibid. ↩︎

  20. Ewald, B., The health burden of fine particle pollution from electricity generation in NSW, November 2018 ↩︎

  21. Environmental Risk Sciences Pty Ltd, Peer Review: Dr Ewald Report, 6 March 2019 ↩︎

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