Business Value Driver
Communities & Relationships
The strength of working relationships with key stakeholders; our brand and
Our social licence objective is to meet and exceed rising community expectations. Building trust with our broad set of external stakeholders is founded on our ability to listen to their priorities and concerns, respect and balance their needs in our decision-making, and continuously measure and improve outcomes. Our enterprise-wide Social Licence Program was established to drive cross-functional consideration of how we address these issues.
AGL strives to make a net positive social, economic and environmental contribution to the communities in which we operate. A wide variety of people and groups are interested in, or affected by, the decisions that AGL makes. We proactively engage with our stakeholders on relevant issues in ways that are most appropriate to each group. We understand that the current state of energy market transition and policy uncertainty can lead to challenges, and we consider it important to understand the different views and perspectives held by our stakeholders.
We conduct sentiment surveys every six months across our major operating communities to understand key local issues, attitudes towards AGL, the energy industry and its transition, and to identify opportunities to better partner with communities. The results of the most recent survey indicated that the most prominent national issues of concern were environment/global warming, jobs and employment, and the impact of COVID-19 on the health of Australians. This data informed our areas of focus for FY20.
We understand and acknowledge our significant role in the energy transition, and we support the communities in which our thermal assets operate in the Hunter Valley and Latrobe Valley as we plan for asset retirement. As we prepare for the retirement of the Liddell Power Station, we are engaging with local business, industry and governments to identify further opportunities for economic diversification and job creation in the Hunter region. We have committed to no forced redundancies when the power station closes, and in FY20 this was formalised through its inclusion in the 2020 AGL Macquarie Enterprise Agreement. We are also working closely with our employees and unions through the Transition Working Group to understand training, redeployment opportunities and other support services we can offer as we approach closure. Work is also underway to develop the Future U Hub, a centre aimed at providing outplacement services, support and training programs to employees, their families and embedded contractors onsite.
For new development projects, our approach to community engagement is based on principles of transparency and open engagement with all stakeholders. For the Crib Point LNG import project, AGL has regularly engaged with a range of stakeholders since the project’s inception in July 2017. Community feedback has related to issues including potential impacts to the marine environment and along the pipeline route, safety of the terminal and the rationale for the project. This feedback has been important to informing the design of the terminal and pipeline alignment, as well as the scope of 17 specialist studies and impact assessments prepared for the project's Environment Effects Statement.
More broadly, we work with government stakeholders at all levels on critical energy-related issues, with these relationships particularly important in the context of the major system/market transition and ongoing policy uncertainty. We act in good faith with all government stakeholders, and seek to be a trusted partner of government and contribute to policy development through the provision of data and technical expertise where useful. We regularly assess our government engagement to identify areas of strength and opportunity.
As a provider of essential services and a major regional employer, supporting our communities through the drought and bushfires of FY20 has been a priority. In response to the devastating fires over the summer of 2019/2020, AGL has committed $350,000 to supporting recovery efforts in our local communities (in addition to the range of customer support measures introduced). This included $200,000 donated to the Gippsland Emergency Relief Fund in January to provide immediate support to one of our hardest-hit operating communities. The relaunch of our Farmers and Business Assist program in FY20 has also provided much-needed support to small businesses in drought-affected regions, through access to debt relief and financial assistance on the installation of solar panels.
Measuring our reputation
AGL’s RepTrak score has improved by 6.9 points to 68.3 in FY20, the highest score recorded since tracking began. This reflects improvements in the overall reputation of the energy/utility industry which recorded a greater proportion of Australians rating the reputation of the industry positively rather than negatively. AGL’s reputation score was driven by improvements across all drivers including the key reputation drivers for the energy/utility industry of Citizenship, Governance and Products & Services. AGL experienced the largest year on year movement in the Workplace driver, which includes attributes relating to equal opportunities in the workplace, concern for the health and wellbeing of employees and rewarding employees fairly.
Transparent policy and industry engagement
It is important to our stakeholders that our involvement in public policy development is undertaken transparently and consistently. Submissions to government processes are published on AGL’s online channel, The Hub. Further, the community expects that corporations should not have an undue level of influence on government policy by providing financial contributions to political parties that could result in, or could be perceived to result in, preferential treatment. We adopted a Political Donations Policy in August 2015, which prohibits AGL from making political donations. No political donations (monetary or in-kind) were made during FY20, nor were any political donations made through third parties.
During FY20 AGL developed an Industry Association Membership Policy. This policy formalised our commitments to monitor the policy positions and public advocacy of industry associations of which we are a member and to disclose all memberships, membership fees, and areas where AGL's policy positions differ materially from the associations of which we are a member. We undertook a review of the associations of which we are a member to determine areas of material policy difference, association utilisation and value for money, the results of which are available in the ESG data centre. As a result of this review, we made the decision not to renew our membership of a number of organisations for FY21.
Community contributions and investment
We invest in the communities in which we operate through a structured program of community investment. Almost $4.3 million was invested in the community over FY20 in a wide range of initiatives in our operating communities to support local organisations and priorities, including the Powering our Communities fund, which provides solar systems to local community groups nominated by our employees. While we have increased our investment in several areas, our completion of the Gloucester Independent Community Legacy Fund in FY19 was the largest contributing factor to the reduction in overall investment in FY20. We are reviewing our investments to ensure they continue to deliver benefits for our stakeholders and AGL.
We are also committed to supporting local businesses in our community, through, for example, national contracts with local suppliers (for example, all our Personal Protective Equipment is supplied by a business in the Latrobe Valley) and providing favourable payment terms for small businesses. In addition, to lend support as the economy was hit by the impacts of the COVID-19 pandemic, we introduced measures to ensure that small business suppliers were paid by AGL within 14 days.
We are committed to meeting all our tax compliance obligations, and to providing our stakeholders with information about the taxes we pay. In this regard we have adopted the Board of Taxation’s voluntary Tax Transparency Code.
Underlying effective tax rate
Improving trend and/or satisfactory outcome
KPI linked to FY20 remuneration outcomes for CEO and Key Management Personnel (page STI approach and outcomes )
We will continue to evolve our Social Licence Program, anchoring it to critical stakeholder issues where we need to build and maintain trust. For FY21 we have defined four focus areas: affordability and customer vulnerability; climate and environment; economic recovery and resilience; and making and shaping markets. As part of our commitment to reconciliation, we are developing our inaugural Reconciliation Action Plan (RAP) which will be launched in FY21.
Visit 2020datacentre.agl.com.au for various measures of community investment. Information about the ways in which we engage with local communities is available on our website at agl.com.au/about-agl/how-we-source-energy.
AGL's Industry Association Membership Policy is available at agl.com.au/about-agl/who-we-are/our-company.
Information about the taxes that we pay and the taxation policies that we employ (meeting the requirements of the ATOs’ Tax Transparency Code) is available at agl.com.au/about-agl/who-we-are/our-commitments.