Green Capital Scores Against Coal in Australia

But in the meantime, buyers ought to put together for extra boardroom dramas centered on local weather coverage—and be prepared for far more muscular strain from inexperienced capital.

Australia’s

AGL Energy Ltd.

AGL -1.69%

on Monday stated that it would withdraw its proposal to separate into two and that greater than half its seven-person board—together with the chairman and chief govt officer—would step down. Top shareholder and tech billionaire

Mike Cannon-Brookes,

who co-founded Nasdaq-listed software program firm

Atlassian Corp.

, opposed the breakup plan.

The again story: Mr. Cannon-Brookes had partnered with Canada’s

Brookfield Asset Management

earlier this yr to strive to take over the company, however AGL rejected their bid. The consortium had deliberate to close down AGL’s coal vegetation early and exchange them with cleaner-energy sources and energy storage. AGL’s energy technology belongings presently run totally on fossil fuels corresponding to coal.

Following the preliminary brush off from AGL, Mr. Cannon-Brookes grew to become AGL’s largest shareholder this month with a greater than 11% stake. Some different AGL buyers, together with pension fund Hesta, additionally opposed the administration’s plan.

Mr. Cannon-Brookes will now search to place two representatives on AGL’s board. He says that somewhat than breaking apart, the corporate ought to pace up the shutdown of its coal vegetation and the event of renewable tasks—as the unique consortium had proposed.

The shake-up at AGL, which is the most important carbon emitter in Australia, reveals that shareholder activism—and even proxy fights—over local weather coverage will turn out to be extra widespread, even at much less recognized massive carbon emitters like AGL. And whereas Mr. Cannon-Brookes is undoubtedly concerned about climate change, he additionally needed to make a enterprise case to buyers.

Increasing use of renewables, particularly rooftop photo voltaic, in Australia has posed a problem to conventional energy corporations. Wholesale electrical energy costs had tumbled in latest years earlier than hovering gasoline prices despatched them increased over the previous yr. Shares of AGL have plunged 70% since their peak in 2017.

Mr. Cannon-Brookes argued the cut up might make AGL’s transition to renewables tougher because the stranded coal belongings might wrestle to finance new energy capability on their very own. He believes maintaining all the firm intact—with its massive buyer base and information—is one of the simplest ways to ship the power transition, and a long-term future for the corporate. Apparently, a big variety of AGL’s massive shareholders agree.

As local weather activism strikes from the road to the boardroom, buyers are placing cash the place their mouth is—even oil giants like

Exxon

and

Chevron

have needed to accommodate demands from activist investors for board seats or different coverage modifications.

The subsequent take a look at is to see if they’ll actually do properly by doing good.

Write to Jacky Wong at jacky.wong@wsj.com