ESG-focused shareholders to reject BHP and AGL Energy's decarbonisation goals

Recent trends indicate pressure is mounting on corporate Australia to target ESG goals, as shareholders take a tougher stance on their investments.

Influential proxy advisor, Glass Lewis, has just advised BHP (ASX:BHP) shareholders to vote against the company’s Climate Transition Action Plan that was released earlier this month.

In its latest annual climate report, BHP said it will ensure that its Scope 1 and 2 emissions (the things it can control) fall 30% below 2020 levels by 2030.

BHP also stated that under the Scope 3 emissions target, it will aim for net zero by 2050 not just for its own operations and shipping, but also for “direct suppliers”.

Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting company, but still have impact on the overall value chain.

Glass Lewis says that after assessing the climate report, it concluded that BHP’s goals were not aligned to the 2015 Paris Climate Accord – which aims to limit the global temperature increase this century to 2 degrees Celsius above pre-industrial levels.

Specifically, Glass Lewis argues that BHP’s Scope 3 targets need more discussions around the steps it intends to make.

The final shareholder vote will be cast at BHP’s annual general meeting to be held on November 11, but is non-binding on management.

AGL Energy shareholders defy Board

Meanwhile, angry investors of embattled electricity and gas supplier, AGL Energy (ASX:AGL), have defied calls by the Board to reject targets set by the Paris accord.

The Board had earlier told shareholders the company was not in a position to adopt the Paris-aligned targets.

The majority of AGL shareholders, or around 55.13%, have defied the calls and instead voted for a resolution called by Australasian Centre for Corporate Responsibility (ACCR) for the company to set targets in line with the Paris accord.

Alignment to the Paris targets means that AGL will have to accelerate its plan to seperate the coal business from its renewable energy business.

The company confirmed in June that it would be divorcing existing coal plants into Accel Energy.

Under the plan, Accel will be tasked with leading AGL’s coal assets through the energy transition phase into low-carbon power generation.

Accel will own AGL’s Loy Yang A, Macquarie Generation and Torrens Island coal power plants, with plans to prioritise “the responsible operation of these sites and facilitate their accelerated transition to low-carbon industrial energy hubs.”

AGL’s intended move away from coal coincides with a just-released plan by the ‘Quad alliance’ of countries — Australia, the US, India and Japan — to end coal power by 2040, a decade earlier than the original target.

An official statement released from the Quad meeting said member countries will also “pursue efforts to limit it to 1.5°C above pre-industrial levels”.