Investors still in the dark on Glencore’s transition risk

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on the results of Glencore plc’s 2024 Annual General Meeting (AGM).

• There was a notable rise in shareholders abstaining from voting on the Climate Action Transition Plan (CATP) this year. Votes withheld were 3 times higher than last year for the climate plan of those who submitted a vote.
• 90.07% voted in support of Glencore’s 2024-2026 CATP. (34.45% of the issued share capital (ISC) abstained from voting, compared to 25.37% in 2023.)
• 94.07% voted for the re-election of Chair Kalidas Madhavpeddi.

Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“The climate plan before this AGM didn’t reflect the near-term future of Glencore’s coal business and continues to leave investors in the dark about climate transition risks. Higher than usual number of shareholders abstaining from voting reflects investor uncertainty about the future of Glencore’s coal business.

“With the upcoming acquisition of the Teck coal mines and a demerger of Glencore’s coal business on the table, investors’ ability to assess forward transition risk is unfortunately very limited.

“Going forward, investors would reasonably expect climate-related information relevant to Teck’s Elk Valley Resources coal mines to be incorporated into Glencore’s group climate strategy from the date it obtains control of the mines, similar to the disclosure of financial information for acquired assets.

“Given the huge international scale of Glencore’s coal business and the enormity of its energy transition challenge, investors need a full and accurate account of their risk exposure.

“Glencore’s forward reporting should also include emissions and capex information about the large new coal extensions the company is pursuing in Australia, like the 25 year extension to the predominantly thermal coal project at Hunter Valley Operations.

“Glencore says it is now going to consult with shareholders on the demerger. Given the rapidly diminishing global carbon budget, a responsible wind down of coal production is a better way to manage emissions than divestment of coal assets.

“Were the demerger to go ahead, one potential safeguard against poor climate outcomes could be for Glencore to put in place spin out conditions that enforce strong Paris-aligned climate commitments. However, given the scale of emissions involved, these conditions would need to be stringent, transparent and led from board level.

“Fundamentally, good corporate governance requires Glencore to take responsibility for the emissions from its coal portfolio.

“All investment portfolios are exposed to the systemic costs of failing to cut real world emissions in line with the timeframe science demands. Considering the massive coal volumes in play for any Glencore deal, decisions the company makes must be carefully considered and will rightly be scrutinised by investors.”