## Sustainability Strategy 

The material risks that influence AGL’s business priorities include: 

> Economic performance – delivering AGL’s integrated strategy and managing longer term challenges that may affect sustainable returns to investors. 

> Customers  – delivering excellent service and value to customers and providing access to energy for vulnerable customers. 

> Community  – engaging with local communities and managing the impact of development activities, as well as responding to broader community needs. 

> People  – providing a safe workplace environment and developing the skills and talents of employees to deliver outstanding business results. 

> Climate change  – structuring AGL’s portfolio of assets in readiness for a carbon constrained future, and adapting to climate change risks. 

> Environment  – managing the environmental impacts of supplying energy to customers, throughout the energy supply chain. 

## Sustainability Reporting 

AGL measures and reports on sustainability performance to give stakeholders an understanding of the social, environmental and economic challenges facing AGL and the energy industry, and the steps that AGL is taking to protect and grow the long-term value of the business. AGL has published an annual sustainability report since 2004 to communicate sustainability performance in the areas of customers, community, people, economic, climate change and environment. 

In 2010, AGL established a new framework for sustainability reporting. Twelve strategic indicators of success were established, together with visions to guide performance in the longer term. Short-term targets for FY2011 were published for each indicator in the 2010 Sustainability Report. 

Performance in each of these areas is monitored on a quarterly basis by the Board’s Safety, Sustainability and Corporate Responsibility Committee. 

The following pages provide an account of AGL’s performance against each of the 12 strategic sustainability targets, and also commit AGL to new targets for FY2012. Further sustainability performance data will be available in the 2011 Sustainability Performance Accounts, which will be published online in November 2011. 

## Recognition and Awards 

AGL’s sustainability performance has been recognised domestically and internationally by independent experts, through inclusion in: 

> Dow Jones Sustainability World Index 2010/11 

> FTSE4Good Index 

> Carbon Disclosure Project ASX200/NZX50 Carbon Disclosure Leadership Index 2010 

> Carbon Disclosure Project ASX200/NZX50 Carbon Performance Leaders List 2010 

In August 2011, AGL’s 2010 Sustainability Report was awarded Best Sustainability Report, Best Sustainability Report in the ASX 50 and Best Sustainability Report in the Energy Sector at the ACCA Australia 2011 Sustainability Reporting Awards. 

## Sustainability Performance Data 

Sustainability performance data in this report covers the activities and facilities over which AGL had operational control for all, or part of, the financial year ended 30 June 2011. Data relates to FY2011 unless otherwise stated. 

AGL engaged Net Balance Management Group (Net Balance) to undertake moderate assurance over the 12 strategic sustainability indicators in this report using the AA1000 Assurance Standard (2008). In addition, Net Balance will be carrying out independent assurance over the 2011 Sustainability Performance Accounts and conducting a third-party application level check against the Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Guidelines. The 2011 Sustainability Performance Accounts and Net Balance’s assurance statement will be available on the AGL website in November 2011. 

## Applied Economic and Policy Research Working Paper Series 

The Applied Economic and Policy Research Working Paper Series is a series of research papers prepared by AGL to provide a critical analysis of energy market trends and energy policy settings, to contribute to the long-term sustainability of the energy industry. 

Papers published during FY2011 include: 

> The Boomerang Paradox, Part I: How a Nation’s Wealth is Creating Fuel Poverty & Part II: Policy Prescriptions for Reducing Fuel Poverty in Australia – These papers identify fuel poverty as a future issue in Australia, and suggest policy settings which could reduce its impact. 

> Delayed Carbon Policy Certainty and Electricity Prices in Australia –  This paper provides evidence to support the introduction of a price on carbon emissions. Policy uncertainty surrounding carbon pricing is leading to sub-optimal investment in new power generation capacity, with resultant additional costs to electricity users. 

> Limited-form dynamic pricing: applying shock therapy to peak demand growth –  The paper suggests policies for utilising existing electricity infrastructure more effectively, thus delaying the need for new investments. Given that all consumers bear the costs of augmenting the power system, this provides economic and social benefits. The paper also provides evidence to support the roll out of smart meters which can assist households to reduce their carbon footprint. 

The full working paper series can be found on the AGL Sustainability Blog at aglblog.com.au. 

Other sustainability awards received during FY2011 include: 

> Energy Supply Association of Australia’s Sustainability Reporting Award (March 2011) 

> ACCA Australia Sustainability Reporting Awards: Best report in the energy and utilities sector (November 2010) 

> ACCA Australia Sustainability Reporting Awards: Joint winner for best ASX Top 50 listed company (November 2010) 

> New South Wales Government Green Globe Award: Business Sustainability (July 2010) 

> New South Wales Government Green Globe Award: Climate Change Leadership (July 2010) 

