Global investors unite on first ever shareholder resolution targeting Glencore’s coal production

Major institutional investors spanning Europe, the United Kingdom and Australia have co-filed a shareholder resolution at the world’s largest coal trader, 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.

The global coalition of institutional investors, collectively representing $US2.2 trillion of assets under management, 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 (BPK); Vision Super, an Australian industry super fund; and HSBC Asset Management.

This is the first time investors have filed a climate resolution specifically focusing on Glencore’s thermal coal production, and is a significant escalation of pressure on Glencore, already on notice after nearly one quarter of shareholders rejected its climate plan in 2022.

The proposals, facilitated and co-filed with the Australasian Centre for Corporate Responsibility (ACCR) and UK-based responsible investment NGO ShareAction, ask 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.

Investors want clarity on how Glencore’s ongoing pursuit of thermal coal projects aligns with the company’s public commitment to support the Paris Agreement.

Investors are seeking a constructive dialogue with Glencore on the opportunity for corporate value creation if Glencore’s thermal coal business is Paris-aligned.

“As long-term investors, the ability to assess and evaluate companies’ exposure to financially material risks stemming from the energy transition is vital. Having both invested in and engaged with Glencore over many years, a higher degree of transparency is necessary in order to clarify how the company’s exposure to thermal coal is aligned with the 1.5C pathway and corresponds to its net zero commitment.” Dror Elkayam, Global ESG Analyst – Investment Stewardship, Legal & General Investment Management (LGIM)

“Glencore has a tremendous opportunity to be part of and profit from the energy transition. It is well placed with its exposure to many key commodities for the transition including copper and nickel. Its growing recycling business should also see a tailwind from the energy transition. That’s why it is so disappointing to see Glencore continuing to invest in thermal coal, which is a contracting industry. Glencore’s strategy does not reconcile with the company’s public commitment to alignment with the Paris Agreement.” Michael Wyrsch, Chief Investment Officer & Deputy CEO, Vision Super

“Some parts of Glencore’s business are well positioned to benefit from the energy transition. To seize these opportunities and avoid fueling climate change, the company urgently needs further capex commitments. The greater disclosure we are asking for on how Glencore’s capital expenditure plans align with the Paris Agreement is key to protect the long-term interests of the company’s stakeholders - which is why we are so keen to see it.” Vincent Kaufmann, CEO, Ethos Foundation

“Glencore has significant exposure to thermal coal - approximately 90% of its total annual coal production. Climate disruption and transition risks are already biting, and investors expect Glencore to be upfront about the level of exposure to thermal coal from now until 2035. If Glencore truly seeks to have a Paris-aligned coal run down strategy, then this resolution is the catalyst for the company to clearly disclose to investors precisely what that strategy involves and how it will be managed.

The recent decision by Glencore to withdraw an application for the huge new Valeria greenfield coal mine in Australia shows that substantial reductions in coal output are possible and that Glencore is capable of responding to investor concerns and to the global headwinds against new coal. This resolution provides additional momentum for Glencore to keep acting and to take genuine actions to align coal production with the goals of the Paris Agreement.” Naomi Hogan, Strategic Projects Lead, ACCR

Background

The global coalition of institutional investors is joined in the co-filing of this resolution by 68 individual shareholders. 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.

Legal & General Investment Management (LGIM)

LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of US$1.57 trillion. It works with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors. For more than 50 years, it has built a business through understanding what matters most to its clients and transforming this insight into valuable, accessible investment products and solutions. It  provides investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Its capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.

The Ethos Foundation

The Ethos Foundation was created in 1997 with the goal to enable Swiss pension funds to invest responsibly, taking into account environmental, social and governance (ESG) criteria. Its 245 current members, which must be Swiss pension institutions or charitable foundations, together represent approximately US$393.6 billion under management or a quarter of second pillar wealth in Switzerland. In 2000, the Ethos Services company was created to help the Ethos Foundation achieve its goals. Over the years, it has developed and expanded its range of services dedicated to SRI and currently offers four lines of products and services – investment funds and stock indices, exercise of voting rights, shareholder dialogue programs and sustainability analysis of listed companies – as well as training in sustainable finance.

HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 30 September 2022, HSBC Asset Management managed assets totalling US$571 billion on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

Vision Super

Vision Super is a strong performing industry super fund that was established in 1947. It has US$8.2 billion in assets it manages on behalf of around 84,000 member accounts. Vision Super is a long-term investor and aims to improve the long-term sustainable value of the companies it invests in. It looks to the Boards and Executive management of those companies to serve in the best interests of long-term shareholders and other stakeholders. It integrates ESG issues and risks as part of its investment governance framework and incorporates dialogue with its fund managers and the companies it invests in more broadly. It focuses on delivering low fees, strong risk-adjusted returns with appropriate consideration of environmental, social and governance factors (ESG). Its investment strategy aims to provide members with favourable long-term returns.

ShareAction

For more than 15 years, ShareAction, the responsible investment NGO, has been working to shape a world where the financial system serves our planet and its people. Through research, campaigns and advocacy we mobilise global investors to drive up labour standards, tackle climate change, protect the natural world, and improve people’s health. We push policymakers to ensure the financial system is working in the best interests of people and the planet. Visit shareaction.org or follow us @ShareAction to find out more.

ACCR

The Australasian Centre for Corporate Responsibility (ACCR) is an independent, not-for-profit, philanthropically-funded research and shareholder advocacy organisation, based in Australia. Our focus is engaging with investors on how listed companies, industry associations, and other entities are managing climate, labour, human rights and governance issues. We publish research and analysis on various environmental, social and governance practices to empower all shareholders. We have a small portfolio of shares that we hold for the purpose of engaging with companies, including through the filing of shareholder resolutions. We are a member of both the UN Principles for Responsible Investment (UNPRI) and the Responsible Investment Association of Australasia (RIAA). For more information, follow ACCR on Facebook, Twitter and LinkedIn.

The Resolution

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 generation in (i) advanced economies, and (ii) developing economies.

Read the full supporting statement here.