Glencore commits to limit coal production & focus on minerals for low-carbon energy transition following investor pressure

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Article
27 February 2019

Glencore’s cap on coal shows new investor muscle

Author: Financial Times

"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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Article
22 February 2019

Australia's biggest coal miner moves to cap global output

Author: Cole Latimer, The Sydney Morning Herald

20 February 2019

Australia's largest coal miner Glencore will cap its global coal output at current levels in the wake of pressure from activist shareholders as part of a pivot towards minerals used in renewable technologies.

..."We aim to prioritise capital investment to grow production of commodities essential to the energy and mobility transition and to limit our coal production capacity broadly to current levels," the company said as part of its results announcement.

...Glencore said it would examine its membership of trade associations to ensure those groups aligned with the Paris climate agreement and Paris goals.

..."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," a company statement said.

...Emma Herd, chief executive of the Investor Group on Climate Change, said: "Glencore's announcement is a significant step for the mining sector with potentially wide-reaching implications ... Investors will now be looking for more companies in the sector to align their business decisions with the Paris Agreement".

...Anne Simpson chair of the steering committee of Climate Action 100+, representing major investors that are pushing for emissions cuts. "Keeping global warming to well below two degrees demands bold and urgent action from the world's largest greenhouse gas emitters."

The Australian Centre for Corporate Responsibility, which is part of a global network of activist investors, said the decision was part of a shift away from coal.

..."This announcement will also reverberate around state parliaments, and in Canberra. Governments can no longer budget on the infinite flow of revenues from coal exports."

[Companies also mentioned are Rio Tinto & Adani]

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Article
20 February 2019

Church Commissioners for England and leading institutional funds welcome Glencore’s climate change commitments

Author: Church Commissioners for England

The Church Commissioners for England and a leading coalition of investors participating in Climate Action 100+ today welcomed a position statement issued by Glencore significantly strengthening its commitment to combat climate change...Speaking as the lead of the Climate Action 100+ dialogue with Glencore, Edward Mason, Head of Responsible Investment for the Church Commissioners for England said: “Delivering on the goals of the Paris Agreement requires unprecedented collaboration and today’s announcement is a positive step forward for Glencore, its investors and the fight against climate change. Investors will now want to hold the company to its commitments and to ensure that the methodology for determining the company’s alignment with the Paris goals is robust.”...The investor engagement with Glencore has been led by the Church Commissioners for England, the endowment fund of the Church of England, with active participation from Investec Asset Management and Kempen. The Church Commissioners were supported by environmental law organisation ClientEarth and with shareholder outreach by ShareAction.

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Article
20 February 2019

Glencore announcement

Author: Glencore

"Furthering our commitment to the transition to a low-carbon economy", 20 Feb 2019

As one of the world’s largest diversified resource companies, Glencore has a key role to play in enabling transition to a low carbon economy. We do this through our well-positioned portfolio that includes copper, cobalt, nickel, vanadium and zinc - commodities that underpin energy and mobility transformation. We believe this transition is a key part of the global response to the increasing risks posed by climate change...To meet the growing needs of a lower carbon economy, Glencore aims to prioritise its capital investment to grow production of commodities essential to the energy and mobility transition and to limit its coal production capacity broadly to current levels. Following engagement with investor signatories of the Climate Action 100+ initiative, we are taking the following steps to further our commitment to the transition to a low-carbon economy:

  1. Paris-consistent strategy / capital discipline
  2. Public Scope 1 and 2 targets
  3. Review of Progress
  4. Alignment with Taskforce on Climate-related Financial Disclosures (TCFD) recommendations
  5. Corporate climate change lobbying

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