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Glencore’s cap on coal shows new investor muscle

Author: Financial Times, Published on: 27 February 2019

"Glencore's cap on coal shows new investor muscle", 26 February 2019

...Glencore's language last week was striking. "We recognise climate change science as set out by the United Nations Intergovernmental Panel on Climate Change," its statement said. It supported the temperature-limiting goals of the Paris climate agreement.

But, above all, there was a recognition of how many investors now cared about these issues.

"To deliver a strong investment case to our shareholders, we must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change," Glencore said...

...Today, it is mainstream investors who are demanding that companies account for their use of fossil fuels and their carbon emissions. They are alert to the public mood and worried that companies they invest in might be too tied up with what will eventually become "stranded assets".

In 2017, McKinsey reported that more than a quarter of global assets under management were being invested with environmental, social and governance criteria in mind. Sustainable investing, McKinsey said, had become the "new normal".

Initiatives like Glencore's show the increased muscle of large investor groups. The company referred to the discussions it had had with the Climate Action 100+ initiative....

...But large investors are increasing the pressure on companies. And they have signalled that they intend to keep up the scrutiny. Acknowledging that Glencore's production cap and promises were a "positive step forward", Edward Mason, head of responsible investment for the Church Commissioners for England, said investors would hold Glencore to its pledges and "ensure that the methodology for determining the company's alignment with the Paris goals is robust".

 

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Related companies: Glencore