GL Energy Ltd, Australia’s biggest carbon emitter, will partly link executive long term bonuses to emissions cuts, as part of a climate action plan it announced on Tuesday.
The move makes AGL the first of Australia’s major polluters, including miners and gas producers, to include cutting emissions in long term incentives, alongside traditional shareholder return measures.
“It’s built around a view the world will need to decarbonise and therefore a business that doesn’t start getting on with the business of transition risks being stranded somewhere along the way,” AGL Chief Executive Brett Redman said.
The plan comes in response to growing pressure from investors and customers, Redman said.
Norway’s $1 trillion wealth fund recently flagged it would sell stakes in AGL and other companies that mine or use coal.
AGL last year emitted 42.7 million tonnes of carbon dioxide-equivalent, more than double Australia’s next biggest carbon emitter, according to government data.
However Australia’s top power producer has no plans to speed up the closure of its coal-fired power plants. The first closure, Liddell, is set for 2022, while its dirtiest plant, the Loy Yang A power station, is scheduled to shut only in 2048.
Instead, its emissions cut incentive will be tied to expanding in renewable energy and increasing the proportion of its sales that are carbon neutral or carbon free, Redman said.
AGL on Tuesday launched a programme offering households and businesses “carbon neutral” power for a small fee. In return it will invest in emissions offset projects such as reforestation and replacing charcoal burners in Kenya, Redman said.
Climate activists were unimpressed.
“AGL will continue to feel investor pressure until it brings forward the closure of its coal-fired power stations,” said Dan Gocher, a director at the Australasian Centre for Corporate Responsibility, a not-for-profit research group.