11 AGL Energy Limited 2011 Annual Report The material risks that influence AGL’s business priorities include: 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. 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. 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. Papers published during FY2011 include: 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. The full working paper series can be found on the AGL Sustainability  Blog at aglblog.com.au. AGL’s sustainability performance has been recognised  domestically and internationally by independent experts,  through inclusion in: Other sustainability awards received during FY2011 include: 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. > 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 > 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) Recognition and Awards > 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. > 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. > 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. > 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. Applied Economic and Policy Research Working Paper Series Sustainability Reporting Sustainability Strategy Sustainability Performance Data