By Charlie Conchie
Legal and General and HSBC are among a group of top investors to round on mining giant Glencore this morning, demanding explanation of how its coal production aligns with United Nations climate targets.
Big institutional financiers spanning the UK, Europe and Australia have co-filed a shareholder resolution today demanding the FTSE-100 firm explain how its coal output aligns with the Paris climate objective of keeping the rise in global temperature to 1.5 degrees.
The move has been backed by Legal and General Investment Management – which manages some £1.3trillion in assets – as well as HSBC Asset Management, Swiss-based Ethos Foundation, and Aussie super fund Vision Super.
Chiefs at the firms said today it was essential that Glencore coughed up an explanation for its thermal coal output so investors could make proper decisions over whether to back the firm.
“As long-term investors, the ability to assess and evaluate companies’ exposure to financially material risks stemming from the energy transition is vital,” said Dror Elkayam, Global ESG analyst for investment stewardship at Legal & General Investment Management (LGIM).
“Having both invested in and engaged with Glencore over many years, a higher degree of transparency is necessary in order to clarify how the company’s exposure to thermal coal is aligned with the 1.5C pathway and corresponds to its net zero commitment.”
The resolution marks a significant escalation of pressure on Glencore which has already been dealt a heavy blow from shareholders after nearly a quarter rejected its climate plan in 2022.
The proposals, co-filed with the Australasian Centre for Corporate Responsibility (ACCR) and UK-based responsible NGO ShareAction, demand Glencore disclose how its projected thermal coal production and thermal coal capital expenditure aligns with the Paris Agreement’s goals and the International Energy Agency (IEA) Net Zero Emissions pathway.
Glencore produced over 103m tonnes of coal at its sites and sold over 67m tonnes of coal through its marketing business in 2021 – the latest full year statistics – according to its website.
A report from the International Energy Agency found that CO2 emitted from coal combustion was responsible for over 0.3°C of the 1°C increase in global average annual temperatures above pre-industrial levels, making coal the single largest source of global temperature increase.
The move against Glencore comes as top investors ramp up pressure on firms for greater carbon disclosure detail as the demand for environmental, social and governance (ESG) from their own investor base grows.
Regulators are similarly tightening the screws on firms and requiring greater detail on disclosures, with the Financial Conduct Authority last year mandating big firms provide a breakdown of emissions as part of the wider drive to net zero.
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