Wesfarmers chairman Michael Chaney urges caution on AI in farewell to investors

Michael Chaney will step down as Wesfarmers chairman after Thursday's annual meeting, ending a tenure that has spanned most of the group's four decades on the ASX. In a final message to investors, he says the company's success rested on its culture. "Over the 42 years since we listed on the exchange, we've outperformed every other company financially, but we've done it in a way that's given us – and preserved for us – a very good corporate reputation, and I think that's because of the culture that was developed in Wesfarmers," he says.

Chaney, who has been with the group for most of that time apart from a decade between retiring as chief executive and returning as chairman in 2015, says the company's mission of providing a "satisfactory return to shareholders" has made it a corporate chameleon. "If you said to me or [chief executive] Rob Scott, 'What will the company look like in 10 years' time?' none of us would give you an answer because it'll be opportunity-driven."

He describes the approach as "logical incrementalism": making multiple investments in promising areas and pursuing the ones that succeed, the opposite of companies that set growth or market-share targets. "You end up making investments simply because they give you top-line growth, even though they may give you hopeless returns. And there are plenty of examples of that," he says. The strategy saw Wesfarmers buy a timber and forestry business in the 1990s, sell most of it, and keep what became Bunnings. "[Hardware] was tiny when we bought it, and is now producing a few billion dollars of profit."

On AI, Chaney says Wesfarmers regards the technology at this stage as a productivity facilitator, not a source of large job losses. "We don't currently see a big decrease in employment in the group ... rather, AI is changing the way people work. For example, moving people out of back-office to customer-facing roles." The cost question remains open: "Costs of tokens, for example, can get out of control. Are you really getting revenue benefits that make it worthwhile?" and "There are issues like whether you should be using large language models or smaller models internally that don't cost as much, don't have all the bells and whistles, but still do the job."

On cyber threats, he says: "The whole question of cyber risk is one that's not only increased pretty dramatically in the last couple of years, but will increase even more ... And I think it's a real challenge keeping abreast of it because one thing about AI is that we really don't know where it's going to lead us, and there'll be surprises." He cites AI agents that have breached IT systems to execute user commands: "It's a real surprise when agents are talking to each other, and there are things that are going to happen that make doing business a lot harder. I think boards and management need to be really diligent about the security of their systems and making sure that they have plans in place if problems arise."

Chaney also chairs gold miner Northern Star, which is fending off a takeover from South African-based Gold Fields. He has said he will step down from that role at its annual general meeting next month.