- Update: Software billionaire Mike Cannon Brookes is a big step closer to controlling giant energy retailer AGL as Australia’s industry superannuation sector with shares in the company have backed three of his director nominations to be voted on at an AGM on 15 November.
- Following a stunning shareholder coup, Cannon-Brookes became the world’s first corporate raider with a mission to rapidly move AGL out of coal and radically reduce Australia’s carbon footprint.
- Cannon-Brookes made billions in software, but he is not retiring from the game in order to “give back” in the pursuit of charity.
- His victorious raid demonstrates that real climate action requires more than just writing checks.
- Instead Cannon-Brookes channeled corporate raider Carl Icahn, investor Henry Kravis, feminist organizer Gloria Steinem, Cajun political strategist James Carville and to do what no person has ever done: Merge political, financial, shareholder, and climate action into a single, ground-breaking capitalist moment to take on global warming.
- We thought Jeff Bezos should know Mike.
Dear Jeff Bezos,
Greetings from Climate & Capital Media. We tried to send you a message on LinkedIn, but there are like at least two dozen Jeff Bezoses and you are not one of them. We applaud your commitment to climate action and setting up the $10 Billion charitable Earth Fund.
But word in New York is you are a tad frustrated with the fund’s impact. We’re told your entrepreneurial impatience is being tested by a fund that operates more like a multilateral institution than a Seattle start-up.
For a self-made, bootstrap tech capitalist like yourself, we can understand your impatience with the often insular, capitalism-lite, consensus-heavy, nature of large environmental groups.
Meet Mike Cannon-Brookes
That’s why we are so eager to connect you with Mike Cannon-Brookes. He’s Australia’s favorite billionaire entrepreneur, and boy does this guy think and act big. We think you guys would get along like a house on fire. He is kind of like you Jeff, though his style is more tech bro than Silicon savvy. But there is one other really big difference: He is addressing climate change, not as a check-writing philanthropist, but as a brass-knuckled capitalist.
He is kind of like you Jeff, though his style is more tech bro than Silicon savvy. But with one other big difference: He is addressing climate change.
Cannon-Brookes may have engineered the single most important climate action ever by successfully orchestrating a shareholder revolt against the management of Australian energy and coal consuming giant, AGL. Last week AGL’s CEO, chairman, and two board members resigned in shock after shareholders sided with Cannon-Brookes who had campaigned against a company proposal to restructure in such a way that Cannon-Brookes and some influential institutional investors thought would both destroy shareholder value and accelerate climate change.
With the victory, Cannon-Brookes now has de facto control of Australia’s largest carbon emitter. That, Jeff, is the definition of impact.
How does one man now control Australia’s carbon future?
Think about that Jeff. Australia’s carbon future will now be heavily influenced, not by a philanthropist, or NGO, but by a tech bro like yourself! With his newfound influence over Australia’s largest coal user, Cannon-Brookes has just made it a lot easier for Australia’s new, climate-aware Labor government to accelerate decarbonization to meet its Paris climate agreement goals. “This was an election won and lost on climate,” Cannon-Brookes triumphantly declared. “The AGL board should pay attention to its shareholders and the mood of the country.”
It’s also a lesson that money can’t solve everything. Rather it shows the power of thinking and delivering big. This is more like, hmm, let us think, as if someone thought they could change the way the world shops forever by demonstrating you could sell a book online rather than at a bookstore.
The ungentlemanly pursuit of climate business, not charity
Ok that got your attention. You see Jeff, Cannon-Brookes may have made a couple of billion in software, but he is not about to retire from the capitalist game in order to “give back” in the gentlemanly pursuit of charity. Cannon-Brookes approach is to do what he does best, and what you do best, which is being a maverick capitalist. His victorious raid demonstrates real climate action requires more than just writing checks.
What is going on in Australia is remarkable, and he is at the center of the action. You may have heard about this amazing “teal” political movement, where a group of mostly women, of independent political persuasion, who focused on climate change, helped engineer the defeat of the conservative coal-mad Prime Minister Scotty’ Morrison. For the past three years, Morrison and his administration had been tone deaf to the growing anger against his government’s failure to acknowledge the near biblical impact of climate-induced drought, fires and floods. All the while he was happily promoting antediluvian coal and gas policies that would make even Senator Joe Manchin blush.
Well, the women in teal — and it turns out their electorates — had had enough of Morrison and his policies. He suffered a stunning defeat in a federal election last month at the hands of the Labor Party and the teals and Greens. It is the biggest political development in Australia in a generation. (Listen to our own Blair Palese on NPR explain the movement.)
Earlier this year, Cannon-Brookes sensing an opportunity, launched two brazen takeover attempts of AGL, only to have the company’s CEO Graeme Hunt and Chairman Peter Botten beat back both attempts.
But that did not deter Cannon-Brookes. Jeff, think of Mike as the honey badger of climate action: He just doesn’t give up.
After AGL’s board rejected his takeover bids, he went to Plan B and morphed into a corporate raider. Working with a group of advisors pulled together by Cannon-Brookes’ private investment company Grok Ventures, he devised a devilishly clever hybrid proxy, political and media campaign to oppose the AGL management plan to split into two separate companies (for details, read The Australian Financial Review).
Jeff, think of Mike as the honey badger of climate action: He just doesn’t give up.
First, Grok Ventures sought the advice of J.P. Morgan to develop some clever financial engineering to support Cannon-Brookes’ effort. According to Australia’s Financial Review, J.P. Morgan would acquire an 11.5% stake in AGL by using a cash-settled total return swap derivative to buy a blocking stake, ensuring Cannon-Brooke did not pay a premium for shares, and then swapped the derivatives into physical shares in time for the AGL vote.
Now Jeff, don’t you just love the idea that a financial tool as sophisticated as a derivative is being used to drive climate change? That is definitely not in the Earth Fund playbook.
Next, he started gathering like-minded institutional investors such as industry retirement fund HESTA and the UK-based investment firm Martin Currie, which holds 3% of AGL’s stock. They too feared AGL’s proposal would destroy shareholder value by making it harder for the company to make the kind of big investments needed to bring forward the closures of its coal-fired power stations and switch to alternative forms of energy.
Going to the voters
Despite his institutional support, Cannon-Brookes still needed more votes to win. And that meant wooing thousands of individual shareholders across Australia. He launched what the Sydney Morning Herald described as the “biggest, slickest and most sophisticated campaign in Australian corporate history.” The “Keep it Together Australia,” campaign positioned the AGL demerger proposal as part of Australia’s climate problem.
Cannon-Brookes is charting a new, and unprecedented sustainable shareholder and stakeholder path to climate action.
With a bit more than four weeks before the AGL shareholder vote, the climate-driven “teal” electoral upset rocked Australia’s political system. Sensing something big, Cannon-Brookes’ proxy team used ultra-sophisticated political campaign data tools and began cross-checking postcodes in mostly progressive-mined urban areas of Australia and were astonished to discover that 8.5% of AGL’s shareholders were the same voters who were pissed off at now former Prime Minister Scott Morrison’s antediluvian coal policies. They began a furious outreach to the smaller shareholders.
By last week, the final chess pieces were falling into place. Cannon-Brooke had built a winning coalition of retail and institutional investors who were ready to vote the demerger down. Staring at a checkmate, the board scrapped the demerger, and Hunt, Botten and two independent directors resigned. The board then announced a strategic review into the future of the 180-year-old company.
Kaboom! The first successful climate raid ever
And with that Cannon-Brookes had pulled off the first corporate climate raid ever, and perhaps the most important effort ever in Australia to begin to break its addiction to coal. “Huge day for Australia … had to sit down and take it in,” Cannon-Brookes, who will seek two nominees to the board of directors, posted on Twitter. “Lots of work, but we CAN do this.”
Out of coal in a decade
Tim Buckley, Climate & Capital Media contributor and Director of Climate Energy Finance offered a “blueprint” of what Cannon-Brooke’s needs to do to capitalize on his victory: Exit coal-fired power generation and move to renewable energy and power generation in a decade; leverage the consumer power of the company’s 4.5 million customers, invest in new disruptive technologies and extend future energy system offerings.
Capitalism in the right hands
But Jeff, perhaps the biggest lesson to learn from Cannon-Brooke’s victory is the power of capitalism in the right hands. He is charting a new, and unprecedented sustainable shareholder and stakeholder path to climate action. In spirit, at least, he is channeling the legendary energy and free-spirited creativity of corporate raider Carl Ichan, feminist organizer Gloria Steinem, credit derivatives guru Blyth Masters and Cajun political strategist James Carville to do perhaps what no person has ever done before: Merge political, financial, shareholder and climate action into a single, ground-breaking moment to take on global warming.
Sorry Jeff, but this is the kind of climate action your Earth Fund could only dream of.
So Jeff, you knew this was coming…Here is our pitch.
While shareholder action by the likes of Engine No. 1, the Australasian Centre for Corporate Responsibility (ACCR) and the Uniting Church are having real impact within laggard companies, combining their efforts with billionaires taking over the biggest climate blockers would be climate action at scale.
Billionaires might just find that taking over laggard energy companies makes them money while doing good.
This is especially true now that the economics of moving to more affordable renewable energy is a solid bet around the world. Billionaires might just find that taking over laggard energy companies makes them money while doing good.
Cannon-Brookes is not alone in having the encouraging recipe of government support, investor interest and a public frustrated by climate inaction at the ready to back aggressive action.
So Jeff, time to get back in the game, and do what you love most – being a capitalist. But this time do it to deliver value that your philanthropic Earth Fund is never likely to achieve. Go on, do it for the planet.
And the Climate & Capital Media team