Glencore investors have been forced to disclose more about its coal production plans, as the world’s most profitable fossil fuel miner faces questions about its gas impact its aftermath.
A group of shareholders including Legal & General Investment Management and HSBC Wealth Management has submitted a resolution requesting details on the matter, which will be voted on at by Glencore annual meeting in May.
The resolution requires “disclosure on how the company’s projected thermal coal production aligns with the goals of the Paris agreement. . . to limit global temperature rise to 1.5C”, and request information on capital expenditures for coal mines.
Glencore is listed as the most profitable in the world miner of thermal coal. However, it has adopted climate targets that will ultimately limit its coal operations.
Dror Elkayam, global ESG analyst at LGIM, which holds about 1.5% of Glencore’s outstanding shares, said the resolution is important to help investors assess risk.
“We wanted to be able to really look inside and gauge where the company is in a low-carbon environment,” says Elkayam. “We believe there is insufficient evidence that Glencore’s thermal coal production plans are in line with the objectives of the Paris agreement,” he added.
Glencore’s coal division is super profit last year — contributed $8.9 billion to the company’s earnings in the first half of the year alone and helped drive shareholder returns to record highs.
As the energy crisis caused by Russia’s invasion of Ukraine pushed prices to record highs, Glencore’s coal business thrived by producing high-quality thermal coal used in factories. electricity in Europe.
But shareholders have raised questions about how the coal business aligns with its climate plans, which include targets to cut direct and indirect emissions by 50% from 2019 levels by 2019. year 2035.
Shareholders supporting the new resolution have a total of $2.2 trillion under management and include LGIM, HSBC, Vision Super and the Switzerland-based Ethos Foundation, which represent pension funds Pensionskasse Post and Bernische Pensionskasse.
“It is disappointing to see Glencore continue to invest in thermal coal,” said Michael Wyrsch, chief investment officer of Vision Super, an Australian superannuation fund. He added that Glencore is also “well positioned” for exposure to key commodities for the energy transition, such as copper and nickel.
Glencore is expected to produce about 110 million tonnes of coal per year between 2023 and 2025, equivalent to 2022 levels.
The company said it would cap coal production at 150 million tonnes per year but did not give specific annual targets beyond 2025.
Glencore’s coal production concerns also flared up at last year’s annual meeting, when nearly a quarter of shareholders voted against the company’s climate action plan.
That triggered a review, published in October, of which Glencore said it would publish more details in its upcoming climate report in March.
Glencore’s direct and indirect emissions in 2021 amount to 280 million tonnes of carbon dioxide equivalent — the equivalent of Spain.
The company has a short-term goal of reducing direct and indirect emissions by 15% from 2019 levels by 2026 and reaching net zero emissions by 2050.
“Glencore will publish its next Climate Progress Report in March, which will provide an update on our progress toward our 2020 climate strategy,” the company said. in a statement on the resolution organized by the Australian Center for Corporate Responsibility and ShareAction, a UK charity.
