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Introduction
AGL Energy Limited 10
Governance andmanagement
Governance and management
Best practice corporate governance standards support
sustainable performance by AGL over time.
Sustainability and corporate governance
AGL’s governance structures and processes are consistent with
the Australian Securities Exchange (ASX) Corporate Governance
Council’s ‘Corporate Governance Principles and Recommendations -
2nd Edition’ issued in August 2007. The eight ASX principles are:
>>
Principle 1:
Lay solid foundations for management and oversight
>>
Principle 2:
Structure the Board to add value
>>
Principle 3:
Promote ethical and responsible decision making
>>
Principle 4:
Safeguard integrity in financial reporting
>>
Principle 5:
Make timely and balanced disclosure
>>
Principle 6:
Respect the rights of shareholders
>>
Principle 7:
Recognise and manage risk
>>
Principle 8:
Remunerate fairly and responsibly
AGL’s Annual Report includes a full statement disclosing the
extent to which AGL has adopted and met the ASX principles
and recommendations. The AGL Annual Report is available at
2012annualreport.agk.com.au.
AGL Board and AGL Board Committees
At 30 June 2012, the AGL Board comprised seven independent non-
executive directors (including the Chairman of the Board), and one
executive director who is the Managing Director and CEO. Detailed
information about the structure, responsibility and experience of the
AGL Board is included in AGL’s Annual Report.
The Board has established three standing committees of its members
that meet regularly to oversee key risks affecting the business.
Safety, Sustainability and Corporate Responsibility Committee
The Safety, Sustainability and Corporate Responsibility Committee
operates under a formal Charter, which requires it to oversee
promotion across AGL of the principles of safety, sustainability and
corporate responsibility as the foundations of good management
and good business. The Committee meets on a quarterly basis,
visiting various AGL locations, to oversee and review:
>> AGL’s actions to meet its obligations to maintain the health and
safety of its people;
>> the social, environmental and ethical impact of AGL’s policies
and practices;
>> initiatives to enhance AGL’s sustainable business practices and
reputation as a responsible corporate citizen; and
>> the integration of safety, sustainability and corporate
responsibility in the formulation of AGL’s corporate strategy, risk
management framework, and people and culture priorities.
A suite of internal sustainability key performance indicators is
reported to the Committee at each meeting.
The Safety, Sustainability and Corporate Responsibility Committee
Charter is available at agl.com.au/SSCR.
Audit and Risk Management Committee
The primary function of the Audit and Risk Management Committee
is to assist the Board in fulfilling its responsibilities to provide
shareholders with timely and reliable financial reports and to
protect the interests of shareholders, customers, employees
and the broader community through the effective identification,
assessment, monitoring and management of risks. The Committee
operates under a formal Charter.
The Audit and Risk Management Committee Charter is available
at agl.com.au/ARMC.
People and Performance Committee
The People and Performance Committee convenes at least twice
yearly to oversee the appropriate recruitment, retention and
remuneration of directors, senior managers and other employees
with the capabilities necessary to promote AGL.
The People and Performance Committee Charter is available at
agl.com.au/PPC.
Sustainability management structure
The AGL executive team builds sustainability considerations into
business strategy and day-to-day operations.
Responsibility for AGL’s sustainability strategy lies within the
Economic Policy and Sustainability team within the Corporate Affairs
business unit. This team is responsible for developing sustainability
strategy and policies, liaising with the business on these policies and
reporting progress on sustainability issues.
Key systems and policies
A range of formal policies, plans and management systems govern
AGL’s day-to-day operations:
Risk management
AGL recognises that risk is dynamic and is inherent in all external and
internal operating environments. AGL is committed to managing all
risks effectively, and integrates risk management practices into all
business processes and operations to drive consistent, effective and
accountable action, decision making and management practice.
AGL has an integrated approach to Enterprise Risk Management
which is consistent with the International Standard for Risk
Management ISO 31000, the COSO Framework and ASX Corporate
Governance Principles. The AGL Board has ultimate responsibility for
overseeing the performance of AGL, including effectively monitoring
risk management and internal control systems. To assist it in
discharging its responsibilities, the Board has established the Board
Audit and Risk Management Committee. AGL’s Risk Management
Policy sets out the objectives and accountabilities for the
management of risk within AGL such that it is structured, consistent
and effective. Key aspects of AGL’s approach to risk management
are outlined in the Economic chapter of this report.
AGL’s Risk Management Policy is available at agl.com.au/RiskPolicy.