HESTA has removed AGL from its watchlist in light of its progress towards alignment with the goals of the Paris Agreement and appointment of Damien Nicks as chief executive.
The $70 billion fund was vocal in its opposition to a planned demerger to create AGL Australia and Accel Energy last year as it felt it did not adequately support economy-wide decarbonisation to meet Paris-aligned targets nor manage the risk of stranded assets.
The demerger proposal was later withdrawn in May 2022, and chief executive Graeme Hunt resigned. He was replaced by Damien Nicks in September, a move welcomed by HESTA.
Nicks had previously stated that the energy transition would be the biggest challenge for the energy company going forward.
In a statement, Kim Farrant, HESTA’s general manager for responsible investment, said: “We currently believe the approach AGL and its management team have outlined to shareholders more appropriately balances risk, returns and decarbonisation. Reflecting this progress, HESTA has removed AGL from its watchlist at this time.”
It said it would continue to engage with the energy firm as it believed there was additional scope for it to develop its decarbonisation ambitions, including by bringing forward coal-fired power generation closure dates. It could also grow its investment in renewable and energy storage.
“It’s important key emitters like AGL support a timely, equitable and orderly transition. The commitments made in AGL’s CTAP around supporting their workforce and impacted communities are encouraging but more detail is needed,” Farrant said.
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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