Glencore investors demand clarity around thermal coal projects

LGIM and HSBC AM among coalition of investors filing shareholder resolution seeking greater transparency

Institutional investors from across the world representing $2.2trn have co-filed a shareholder resolution pressuring Glencore to shed light on its thermal coal projects, and how they align with the group’s public commitment to support the Paris Agreement’s goals.

The investors – Legal & General Investment Management (LGIM), HSBC Asset Management Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, and Vision Super, an Australian industry super fund – have come together to file a climate resolution specifically focused on transparency around thermal coal production at the world’s largest coal trader. The resolution has also been co-filed with ShareAction and the Australasian Centre for Corporate Responsibility (ACCR).

In a statement it is described as a “significant escalation of pressure on Glencore” and flagged the group is already on notice after nearly one quarter of shareholders rejected its climate plan in 2022.

It is asking Glencore to 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.

LGIM’s global ESG analyst for investment stewardship Dror Elkayam said Glencore’s exposure to thermal coal is “material” and, more specifically, the coalition of investors would like to understand further how its coal production plans are aligned with the IEA Net Zero Scenario milestones of not using unabated thermal coal for electricity generation in advanced economies by 2030, and globally by 2040.

Elkayam also explained to ESG Clarity that Glencore sits within LGIM’s targeted list of companies for “engagement with consequences” under its Climate Impact Pledge (CIP), and Glencore has already been sanctioned through voting activities for not meeting the group’s “core expectations with respect to its energy transition strategy”.

“As long-term investors, the ability to assess and evaluate companies’ exposure to financially material risks stemming from the energy transition is vital,” he said. “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.”

Vincent Kaufmann, CEO of the Ethos Foundation, added: “The greater disclosure we are asking for on how Glencore’s capital expenditure plans align with the Paris Agreement is key to protect the long-term interests of the company’s stakeholders – which is why we are so keen to see it.”

The coalition of investors added they are hoping for “constructive dialogue” with Glencore and the company’s updated climate report, expected to be published ahead of the 2023 AGM season, will provide the clarity being sought.