Surge in investors demanding greater transparency from Glencore on thermal coal production

The world’s largest coal trader, Glencore plc, is facing renewed pressure from shareholders ahead of its May AGM, after nine institutional investors publicly backed a shareholder resolution seeking greater transparency on how the company’s thermal coal production aligns with the Paris objective of keeping global temperature increase to 1.5°C.

Glencore's recent merger bid for Teck Resources and the proposed coal demerger only strengthens the need for greater transparency on how Glencore’s coal business aligns with Paris.

In late December 2022, a global coalition of institutional investors collectively representing $US2.2 trillion of assets under management co-filed a shareholder resolution seeking disclosure on how Glencore's 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 co-filers of the resolution include: 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; Vision Super, an Australian industry super fund; and HSBC Asset Management.

Now, an additional group of institutional investors representing well over half a trillion dollars (approx US$596 billion) in assets under management have added their support to the terms of the resolution.

The investors and their representatives, listed below,  agree that clarity is needed on how Glencore’s ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.

• Man Group
• Brunel Pension Partnership
• EFG Asset Management
• Swiss Federal Pension Fund PUBLICA
• Border to Coast Pensions Partnership
• Pensionskasse SBB
• Scottish Widows
• Downing Fund Managers
• Fulcrum Asset Management

This group of investors see the resolution as playing a crucial role in ensuring Glencore demonstrates  Paris alignment of its forward coal production, particularly as Glencore’s recent Climate Report released in March 2023 did not offer the disclosures that were sought.

This show of support for the co-filed resolution comes as Glencore is already on notice,  after nearly one quarter of shareholders rejected its climate plan at the 2022 AGM.

“As a significant shareholder in many of the world’s companies, we believe it’s our responsibility to use our influence to encourage the companies we invest in on behalf of our customers to make positive changes to address climate change at a scale and pace needed to meet the 1.5°C global warming objective of the Paris Climate Agreement. We will be supporting this shareholder resolution towards disclosure of how the Company’s projected thermal coal production and capital expenditure aligns with the Paris Agreement’s objective.” Shipra Gupta, Investments Stewardship Lead, Scottish Widows

“Glencore has been playing cat-and-mouse with its stakeholders on environmental issues for several years. The time has come to give up coal expansion projects once and for all. The sustainable profile of our investments also depends on Glencore’s willingness to align with the Paris Agreement in a tangible and documented way. That is why we will be voting FOR the Thermal Coal shareholder resolution.” Simona Campioni, Senior ESG Analyst, EFG Asset Management

“As a company with upside potential from strengthening sustainability, Glencore is on Fulcrum’s priority list of climate engagements. We think a cleaner portfolio, with declining exposure to coal, would help improve Glencore’s cost of capital, reduce reputational risk and allow the company to invest further in the metals and minerals needed in the energy transition, a view that also seems to underpin the company’s planned demerger. We will be supporting the shareholder proposal calling for clarity on the climate alignment of the company’s coal plans.” Fawaz A Chaudhry, Partner & Head of Equities, Fulcrum Asset Management

“Glencore’s thermal coal business is exposed to significant risk in the energy transition and investors expect the company to be upfront about the level of exposure. The recent proposal from Glencore to merge with Teck and demerge coal highlights how crucial it is for all current and potential future shareholders to have clear disclosures as outlined in this resolution. In its proposed Teck merger and coal demerger Glencore said it remains committed to the Paris Agreement and the responsible decline of its thermal coal production - if this is the case, then now is the time for Glencore to demonstrate it. All long-term investors must have the ability to evaluate the company’s exposure to financially material risks in the energy transition.” Naomi Hogan, Strategic Projects Lead, Australasian Centre for Corporate Responsibility

* The Statement of Indicative Support for the Glencore Thermal Coal Resolution*

[17th April 2023]

The below investors and their representatives give their indicative support for the terms of the shareholder resolution to Glencore plc seeking greater transparency on how the company’s thermal coal production aligns with the Paris objective of keeping global temperature increase to 1.5°C.

This indicative support is subject to any response which the company may make prior to the annual general meeting in May 2023.

The resolution was co-filed in December 2022 by Glencore investors including Legal and General Investment Management, Ethos Foundation on behalf of Pensionskasse Post and Bernische Pensionskasse, Vision Super and HSBC Asset Management. The wording of the resolution is included below.

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:

1. 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;
2. Details of how the Company’s capital expenditure allocated to thermal coal production will align with the disclosure in a. above; and
3. 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.

Indicative support for this resolution is given by:

• Man Group
• Brunel Pension Partnership
• EFG Asset Management
• Swiss Federal Pension Fund PUBLICA
• Border to Coast Pensions Partnership
• Pensionskasse SBB
• Scottish Widows
• Downing Fund Managers
• Fulcrum Asset Management
• ClientEarth Limited (UK)