AGL plans to keep its Loy Yang coal plant, pictured above, in Victoria, Australia, running until 2032. Photo by Carla Gottgens/Bloomberg
Wearing blue jeans and a black pair of R.M. Williams boots, with his signature unkempt beard and ponytail, Mike Cannon-Brookes looks more like an Aussie wheat farmer than a tech billionaire who’s just done 28 media interviews in 24 hours. It’s a whirlwind that’s made him Australia’s most-talked-about person for the day while ensuring his message is delivered: He wasn’t backing down from his months-long fight to force AGL, Australia’s biggest power company and largest carbon polluter, to fast-track ridding itself of coal.
Partnering with Brookfield Asset Management, the co-CEO and co-founder of software giant Atlassian had tried and failed, twice, to buy AGL for almost $6 billion with the intention of shutting down its coal plants 15 years ahead of schedule and moving the company to more quickly embrace renewable energy sources. Along the way, he publicly shamed the board and took aim at the coal-friendly government, branding its support for AGL’s board “fables and lies.”
Mike Cannon-Brookes says he is taking calls from climate-conscious business leaders in the U.S. who have followed his campaign against AGL.
Renee Nowytarger/The Sydney Morning Herald/Getty Images
Last week, as a last-ditch effort, Cannon-Brookes moved more chips to the middle of the table. He announced on Twitter he’d acquired an 11% stake in AGL valued at $450 million, making him its largest shareholder. He said he would urge other shareholders to stop the company from moving ahead with a proposed spinoff of its coal plants, which would essentially guarantee they’d operate for another two decades. Over dinner with Forbes at a Sydney casino, Cannon-Brookes explains that the effort is driven by two things: to have an impact, and to make money while doing so. “We’re trying to make a change,” he says. “But it’s not climate change as much as challenging some part of the Australian corporate establishment, which is, let’s face it, pretty backwards.”
In the billionaire-environmentalist club, Cannon-Brookes joins Bill Gates and Jeff Bezos, who’ve invested billions of dollars in companies and nonprofits to address climate change, and major investors like BlackRock’s Larry Fink, who’s advised multinational corporations to make changes in line with the Paris Climate Agreement, like phasing out coal. Last week, the venture capitalist John Doerr announced he would donate $1.1 billion to Stanford University to launch a school named after himself to study climate change.
But Cannon-Brookes’ bare-knuckle, kick-down-doors approach to activist investing — attempting to buy a country’s largest polluter and speed its coal plant closures — has forged a new playbook for addressing climate change and spurred a more urgent realization beyond Australia: Could billionaires, especially those in America, be doing more?
Michael Bloomberg, pictured, was reappointed United Nations Secretary-General’s Special Envoy on Climate Ambition and Solutions in 2021.
Joe Raedle/Getty Images
Michael Bloomberg, the media mogul, former U.S. presidential candidate and New York City mayor, who in 2019 pledged $500 million to shut coal plants, believes that while government, philanthropy and the private sector need to join forces to end coal, Cannon-Brookes is “helping to lead the way.” He “deserves a lot of credit for his boldness in pushing to do more, faster, in Australia,” Bloomberg told Forbes in a statement. “Ending coal use is the most important thing we can do to fight climate change.”
Right-wing politicians, government leaders and pundits have dismissed Cannon-Brookes as an eccentric — “an incessant poseur,” wrote one columnist — but his campaign, successful or not, has cemented his reputation as a champion of environmental stewardship and has forced a hot spotlight on Australia’s role as one of the world’s biggest carbon polluters.
Cannon-Brookes, 42, who Forbes estimates is worth $11.6 billion, says he has already been taking calls from American business leaders who’ve followed his campaign against AGL. He declines to say who. “There’s a lot of people in the U.S. — name-brand, very large scale, interesting people — who are very interested in this idea that if we’re going to solve climate change, are there positive economic ways to do so that involve slightly more activism,” he says.
AGL’s Loy Yang coal plant, pictured, is one of three power stations set to be spun off into a demerged company called Accel Energy.
Carla Gottgens/Bloomberg
As he slices into a strip of Wagyu Black Angus beef, Cannon-Brookes is off and running. He dives into the minutiae of live power pricing of the Australian National Electricity Market, then the complexities of the U.S. power grid, barely stopping for breath.
Environmental activism has lifted Cannon-Brookes to some measure of renown. After 15 years of helming Atlassian, now valued at $46 billion, alongside his University of New South Wales mate Scott Farquhar, Cannon-Brookes was a largely unknown figure outside of tech circles. That all changed in 2017, when he famously made a bet on Twitter with Elon Musk — whom he’d never spoken to — to build the world’s largest lithium battery farm in South Australia at a time when the state was suffering from rolling blackouts. Musk completed it in under 100 days.
Cannon-Brookes is “not afraid to get involved in the political battle.”
Cannon-Brookes realized he could have more impact on the planet’s health, and he has since become one of the most prolific investors in Australia, gearing much of his wealth toward climate-focused initiatives. He purchased massive tracts of land in New South Wales to develop green farming, including the use of electric tractors and solar-powered-farms.
In October, he doubled down ahead of the annual UN climate summit, COP26, and announced that he and his wife Annie had pledged to donate $1 billion in coming years to nonprofits and green investments with the goal to limit global warming to 1.5 degrees by 2030. This was on top of $750 million already deployed to climate-focused ventures through the couple’s personal investment vehicles, including Grok Ventures.
Cannon-Brookes has one idea even he calls the “true nut zone.” It’s his vision to build a network of solar-powered cables that provide energy to one side of the world at night by absorbing sunshine from the other side, a feat that would involve at least 12,500 miles of cable criss-crossing the globe.
It might sound out of this world, but along with Australia’s richest man, mining magnate Andrew Forrest, Cannon-Brookes has already started working on it. The two men were the leading investors in a $150 million round for a venture called Sun Cable to build the world’s largest solar farm in Australia’s Northern Territory. The goal is to send power to Asia via undersea cable, a $21 billion project expected to be complete by 2027. He’s a “zany thinker whose thought process I agree with, mostly,” Forrest told Forbes by email.
Andrew “Twiggy” Forrest, chairman of Fortescue Metals Group, has pledged to make his iron ore company reach net-zero carbon emissions by 2030.
picture alliance/Getty Images
Cannon-Brookes seems goaded by the apparent lack of interest by the Australian government to drive change. Australia has fallen behind its commitments to the Paris Climate Accord, and is ranked last in the world on effective climate policy, behind Russia and Saudi Arabia, according to the Climate Change Performance Index. Prime Minister Scott Morrison has been a frequent target of Cannon-Brookes. As head of the right-wing Liberal Party, Morrison is campaigning ahead of a national election this month, and in October insisted at COP26 that it is up to business, not government, to lead the charge on renewables. “What they mean is, we’re not going to put on tariffs and other things or put your bill up, we’re not going to do a carbon tax,” Cannon-Brookes says. Morrison didn’t respond to requests for comment.
A lot of business people are worried about criticizing politicians, Malcolm Turnbull, Morrison’s predecessor as Australian prime minister, told Forbes. Cannon-Brookes, on the other hand, is “not afraid to get involved in the political battle.”
Cannon-Brookes wasn’t the only person who’d been looking at AGL as a potential acquisition. After the board proposed in 2021 spinning off the coal plants into a company called Accel Energy, capping a four-year run of dropping share price, other investment firms, including Brookfield, came to believe AGL was undervalued. But it needed to decarbonize and switch to renewable energy sources pronto.
Cannon-Brookes teamed up with the Canadian asset manager and sent AGL a letter informing the company of their first offer in February, with a commitment to spend up to $15 billion decarbonizing the company and investing in renewables. The board swiftly rejected the bid on the grounds that it “materially undervalued” the company. When the offer was hiked by almost half a billion dollars the next month, only to be rejected, Cannon-Brookes said on Twitter that it was a “terrible outcome” but that he was “putting his pens down.”
Yet, two months later, he was back again with his majority stake. Last year, with a similar approach, hedge fund Engine No. 1 acquired just a .02% stake in ExxonMobil and was able to win two board seats after convincing major investors like BlackRock and the New York State Common Retirement Fund that the oil company wasn’t doing enough to reduce its carbon footprint. “What Mike Cannon-Brookes has done here is on a bigger scale,” says Laura Hillis, the head of Australia-based Investor Group on Climate Change, which advises funds, including AGL investors Blackrock and Vanguard, on how to push portfolio companies to address the environment. “I’ve never seen anything like this before in my years of working on climate change.”
Prime Minister Scott Morrison committed in October to zero out Australia’s carbon emissions by 2050, but said he wouldn’t enforce the target by legislation, instead relying on energy companies to meet the goal.
Carla Gottgens/Bloomberg
Cannon-Brookes’ latest attempt, and the purpose of the press campaign, involves convincing retail investors, which make up about half of AGL’s shareholders, to vote against the demerger plan at a shareholder vote in June. Cannon-Brookes’ main arguments are that the demerger will destroy shareholder value by creating “two weaker, interdependent entities that are more costly to run,” that Accel will not be a viable standalone company, and that keeping the coal plants running is environmentally irresponsible. He previously said all of AGL’s coal plants should be closed by 2030.
AGL, which provides power to 4.5 million consumers and emits 8% of Australia’s carbon, is in the process of closing down one coal plant in New South Wales. It has said it would close another in 2032, and a third plant in 2045. Following Cannon-Brookes’ announcement, the board said last week that its plan to spin off the coal plants, while continuing to serve consumers through AGL, will cost the company $180 million, but would ultimately provide the best value to shareholders. “This is a plan backed by real investment and a pipeline of real projects to lead Australia’s energy transition,” AGL CEO Graeme Hunt said in a statement to Forbes. “The two companies that will be created through the demerger will both have investment-grade credit ratings and this creates a direct opportunity to invest in leading aspects of Australia’s energy transition.”
VanEck Australia, an investment firm that’s among AGL’s top 10 shareholders, is currently weighing whether to support Cannon-Brookes’ push to stop the demerger. “We are of the opinion that we would like to see the coal power stations shut as early as practical,” says Jamie Hannah, VanEck Australia’s deputy head of investments. But, Hannah adds, it remains unclear whether Cannon-Brookes has a cohesive plan to close the plants ahead of schedule.
Cannon-Brookes dismisses this. “I have a lot of ideas about how it can be done differently,” he says. “But it’s [the AGL board’s] job to put up the fucking plan … and I’m voting that I think it’s a bad plan.”
As dinner wraps up, the discussion turns to Cannon-Brookes’ fascination with poker. There’s a term called “resulting,” coined by the professional poker player Annie Duke in her 2018 book, Thinking in Bets, which loosely posits that in poker, as in business, if you lose with a strong hand, the decision to play the hand remains a good one, regardless of the outcome. Cannon-Brookes has applied Duke’s theory in business and in life. “You make decisions, knowing you made the right decision at the given time,” he says, “and then you let the cards play out.”
Cannon-Brookes’ stake in AGL is the most money he’s ever put on the table in a single company. What would happen if he fails to convince shareholders to oppose the board, the demerger proceeds, and AGL’s coal plants keep spewing carbon for decades? “Well, bummer, we’ll lose a bunch of money,” Cannon-Brookes says. “But I think we have a strong, logical case.”
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Source: https://www.forbes.com/sites/davidjeans/2022/05/11/mike-cannon-brookes-bets-agl-coal-climate-change/