Activist shareholders in the energy sector continue to apply pressure on companies like AGL to rapidly transition and de-carbonise in line with the Paris Agreement. AGL has been actively planning for a low carbon economy, however the speed of this transition in light of the Paris Agreement remains a matter of debate amongst its shareholders.

For companies like AGL, the transition to a low carbon economy creates a dilemma. Rapid decarbonisation could result in past fossil fuel investments being written off, with associated loss of income. However, failure to transition to renewables could itself lead to stranded assets and brings the potential for shareholder litigation, particularly if the wider market continues to trend towards renewables.

Data from Australian scientific research and energy regulators indicate the cost of new build renewable projects is now cheaper per MwH than new build coal plants. As such, the economic costs of transitioning are shifting. Likewise, the regulatory risks of obtaining project approval for fossil fuels projects are increasing, as highlighted by the recent refusal of planning approval for a coal mine by the Land and Environment Court of NSW in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7.