Climate Action 100+ investor engagement behind Glencore coal cap

Success for investor coalition hailed as example of “forceful engagement”.

Mining titan Glencore has committed to cap its coal production and focus on investing in the production of materials needed for the energy transition, in a move prompted by “engagement with investor signatories of the Climate Action 100+”.
One of the world’s biggest resources and trading companies, the Anglo-Swiss firm said it wanted “to deliver a strong investment case to our shareholders”, and “invest in assets that will be resilient to regulatory, physical and operational risks related to climate change”.
Its engagement with members of CA100+ (a mammoth investor coalition focused on engagement with listed companies on climate change issues) resulted in Glencore committing to “further our commitment to the transition to a low-carbon economy”.
The Church Commissioners, the investment body of the Church of England, was the lead investor on the engagement process with Glencore.
It said it was well-positioned to seize on growing demand for resources such as copper, cobalt, nickel, vanadium and zinc, which will be required for low-carbon technologies and products, including energy storage and electric vehicles.
It also named-checked both the UN’s Intergovernmental Panel on Climate Change and the Sustainable Development Goals in the statement, with an emphasis on Goal 7: Universal Access to Affordable and Clean Energy.
Most specifically, Glencore has committed to disclosing long-term projections for Scope 3 emissions reductions.
“As Glencore rebalances its portfolio towards commodities that support the transition to a low-carbon economy, the intensity of Scope 3 emissions is expected to decrease. Starting in 2020, we will start disclosing our longer-term projections for the intensity reduction of Scope 3 emissions, including mitigation efforts,” it said.

It added that it would show “capital discipline”, disclosing how it ensures capital expenditure and investments are Paris-aligned.
“This includes each material investment in the exploration, acquisition or development of fossil fuel (including thermal and coking coal) production, resources and reserves, as well as in resources, reserves and technologies associated with the transition to a low carbon economy,” it explained.

“Starting in 2020, we intend to report publicly on the extent to which, in the Board’s opinion, this was achieved in the prior year and the methodology and core assumptions for this assessment.”Glencore already has reduction targets for its Scope 1 and 2 emissions, which require it to reduce GHG emissions by 5% by next year, compared to 2016. It said it was on track to meet this pledge, and is developing the next set of targets “based on policy and technological developments that support the Paris Goal”.
Both the new targets and the “capital discipline” disclosures will be included in Glencore’s annual report.
Included in the set of commitments was one to “give consideration to how our climate change objectives can be reflected in the design of the relevant schemes for executive management”, hinting that it may follow in Shell’s footsteps. In December, the oil giant hit headlines when it said it would link up internal carbon emissions targets with executive pay packages.
Glencore also said it would this year publish a review on whether its membership of any trade associations undermined its support for the Paris Agreement, “acknowledg[ing]” a statement put out by the Institutional Investor Group on Climate Change on expectations around corporate climate lobbying. This reflects growing pressure from investors across the world on the topic, with an increasing number of resolutions being filed at firms including Rio Tinto, BHP Billiton and Origin Energy.
NGO ShareAction described the commitments from Glencore as an example of “forceful investor engagement”.  
“Today’s announcement is a good step forward for Glencore – the black sheep of the energy world – which for far too long refused to come out in support of the Paris Agreement,” it said in a statement. “However, it’s actions not words that matter. Glencore’s South East Asian coal frenzy will be a true test of the company’s commitment to the Paris goals. 

“The IPCC has made it clear that coal has no role to play in a low-carbon future, a finding seemingly at odds with Glencore’s recent coal acquisitions and own production forecasts for thermal coal,” it pointed out, adding that it would “watch closely” to see if Glencore keeps its new promises.

ShareAction’s call for the firm to further rethink its coal activities was mirrored by law firm Client Earth, which said in a statement that “Glencore should wind up its coal operations in a just transition and return any remaining capital to shareholders”.