Today is just like any other Monday on the ASX, or is it? For the first time in nine years, the market is waking up to a Labor Government and that could put pressure on AGL Energy Limited (ASX: AGL) shares.
Saturday's election was "won and lost on climate", Mike Cannon-Brookes, AGL's major shareholder and activist against its planned demerger, was quoted by The Australian as saying.
At the time of writing, the AGL share price is $8.60, 0.41% lower than its previous close.
In comparison, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.41%.
So, what could the change in government mean for AGL shares? Let's take a look.
Could a change in government pressure AGL shares?
Atlassian Corporation founder and boss, Cannon-Brookes has celebrated the results of 2022's Federal election. The vote saw unprecedented support for Climate 200-backed 'teal' independents and the Greens.
He said such results show Australians and owners of AGL shares want greater action on climate change.
People standing for stronger action on climate is the consistent message tonight – across inner city, suburban & rural seats.
— Mike Cannon-Brookes
Big swings to the Indies, to the Greens, to Labor over LNP (in two party seats).
An incredible, amazing mandate.Australia!
#AusVotes22
(@mcannonbrookes) May 21, 2022
It was only eight months ago that 55% of the company's shareholders voted for the company to implement Paris Agreement-aligned emissions targets. And the weekend's Labor win could increase pressure.
Australia's goal to reach net-zero by 2050 won't change alongside the government. However, Labor's short-term emissions reduction plan differs from that of the outgoing Coalition.
Labor is working to see Australia's emissions fall 43% by 2030. Meanwhile, an outcry of support for the Greens and climate-focused independents could highlight a demand for stronger targets. That could be bad news for Australia's biggest emitter.
"The AGL board should pay attention to its shareholders and the mood of the country," Cannon-Brookes was quoted by The Australian as saying.
"A demerger plan that is not aligned to Paris targets is not going to fly … Australia has its sights set on a brighter future and the opportunities that decarbonisation will bring."
The demerger plan
The company's planned demerger will see it split into energy retailer AGL Australia and energy generator Accel Energy. AGL Australia will aim to reduce its emissions by 50% by 2030 and reach net zero by 2040. Meanwhile, Accel Energy is aiming to ditch coal-fired power generation by no later than 2045.
AGL CEO Graeme Hunt hit back at Cannon-Brookes' comments. The publication quoted Hunt as saying:
AGL shares the ambition for decisive action on climate, while ensuring affordable energy, and looks forward to working with the Albanese government to achieve this.
[AGL's decarbonisation] must be done in a way that protects and enhances system stability, affordability, and reliability for customers and shareholder value.
