New research raises doubts about Paris-alignment of mining giant Glencore - increasing pressure as the company faces a shareholder resolution on thermal coal.
Shareholder advocacy and research organisation, the Australasian Centre for Corporate Responsibility (ACCR) today released research showing that based on current disclosures by Glencore and its stated strategy, the company’s forecast cumulative emissions from coal production do not appear to be Paris-aligned.
The findings increase pressure on the world’s biggest coal trader - already facing a shareholder resolution from a global coalition of institutional investors representing $US2.2 trillion of assets under management - to provide clarity on how its ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.
The new research shows:
- Based on current disclosures by Glencore and its stated strategy, the company’s forecast cumulative emissions from coal production do not appear to be Paris-aligned.
- Glencore’s ability to reach its own target of a 50% reduction in emissions by 2035 is achieved with the assistance of beneficial carbon accounting, making its emissions reductions appear more significant. For example, Glencore's selection of a 2019 baseline and a 2035 target year achieves nominal emissions reductions, whilst still producing significant cumulative emissions.
- If Glencore proceeds with its plans for the greenfield development of the Wandoan mine in Australia, alignment with the International Energy Agency Net Zero Emissions (IEA NZE) 2050 coal pathway does not appear feasible.
- While Glencore says it is exploring the potential to reduce emissions associated with Wandoan coal by using CCS to sequester emissions, to fully sequester all its emissions will require more CCS capacity than in the pipeline for coal-related capture across the entire globe in 2030.
- Analysis of the proposed CCS projects shows they are costly, unproven on an industrial scale, and do not necessarily stop greenhouse gases being emitted. One of the proposed projects may use CO2 for enhanced oil recovery (EOR), which cannot be classified as CCS, since far more CO2 is emitted than sequestered.
ACCR is one of the co-filers of the shareholder resolution on thermal coal to Glencore, alongside institutional investors including: Legal and General Investment Management (LGIM), one of Europe’s largest asset managers; Swiss based Ethos Foundation, on behalf of large Swiss pension fund members of the foundation, including Pensionskasse Post and Bernische Pensionskasse (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management.
The resolution, due to be voted on at the AGM in May, asks 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.
“The research published today by ACCR provides additional context as to why we seek further disclosure from Glencore on their thermal coal production plans. In particular, it outlines the potential misalignment between the company’s exposure to coal and the 1.5°C trajectory, which we request more clarity on,” said Dror Elkayam, Global ESG Analyst – Investment Stewardship, Legal & General Investment Management (LGIM)
“If Wandoan goes ahead, it’s likely to become a stranded asset. And the plans for offsetting it using carbon capture and storage are at best unproven and possibly reckless. Glencore needs to bite the bullet on Wandoan and start focusing on growth that will actually benefit shareholders – not coal projects that will diminish shareholder value and contribute to the planet becoming uninhabitable,” said Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super.
“This research demonstrates that Glencore has big decisions to make about its proposed new and expanded coal projects. Investors see the opportunity for corporate value creation if Glencore’s thermal coal business is Paris-aligned, but this research shows that currently this does not appear to be the case,” said Naomi Hogan, Strategic Projects Lead, ACCR.
“The ball is now in Glencore’s court to accept the reasonable requests of the shareholder resolution and to make a commitment to disclose to shareholders how its thermal coal production is in fact Paris aligned, as we are not seeing it based on the numbers and forecasts available today.”
Download ACCR’s research deck here.
Under Article 53.3 of Glencore’s Articles of Association (AA), members have a right to require the company to circulate a resolution for an Annual General Meeting.
The Resolution for the 2023 Glencore AGM
ORDINARY RESOLUTION - PROJECTED THERMAL COAL PRODUCTION
That the Climate Action Transition Plan to be presented for a vote (by whatever name called) at the 2024 Glencore plc Annual General Meeting includes:
- Disclosure of how the Company’s projected thermal coal production aligns with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C;
- Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
- The extent of any inconsistency between the disclosure in a. above with the IEA Net Zero Scenario timelines for the phase out of unabated thermal coal for electricity generation in (i) advanced economies, and (ii) developing economies.
Read the full supporting statement for the resolution here.
Download ACCR’s research deck here.