Glencore Faces Sustainability Report Backlash

    Stockholm (NordSIP) – As the rest of the world catches on to the benefits of sustainable investment practices and goals, the mining industry is no exception. However, the process is not always straightforward. Now, Glencore, an Anglo-Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland, is facing a backlash by proxy voter advisers due to the lack of ambition displayed in its latest sustainability report.

    The Sustainability Report

    “During my first year as Glencore’s Chair, a large part of my time has been meeting with our shareholders and hearing their thoughts on our business. A key topic of our discussions has been our climate strategy. Climate change is a Board-level standing agenda item. In 2021, we revised our internal climate change governance framework to drive implementation of our climate strategy and the supporting work programmes. Strategic decisions in respect of our climate programme are made by the Board and our new Climate Change Taskforce has its objectives set by the Board, which oversees its work,” notes Kalidas Madhavpeddi, Glencore’s Chairman on occasion of this report’s announcement

    “We continue to review the alignment of our industry organisations’ positions and activities relating to climate change and energy with our own climate change position and the goals of the Paris Agreement. If an industry organisation adopts an approach inconsistent with our Values, Code of Conduct or Political Engagement Policy, or the goals of the Paris Agreement, we will take appropriate action. This may include constructively engaging with the organisation or, if no progress can be made, resigning from that organisation and establishing independent advocacy,” Madhavpeddi adds.

    “I am proud of the progress that Glencore is making to embed sustainability throughout our business activities. During 2021, the roll out of new and revised Group policies and their accompanying governance documents has initiated a more robust and consistent approach to health, safety, environment, community and human rights at all our operations,” Gary Nagle, Glencore’s CEO said.

    “We also recognise our stakeholders’ keen focus on climate change and their expectation for Glencore to align its business strategy with the goals of the Paris Agreement. We undertake extensive engagement with interested stakeholders, particularly with the investor group, Climate Action 100+. We use the Intergovernmental Panel on Climate Change (IPCC) scenarios to illustrate our compliance with the net zero ambition. Our 2026 target lies within the range of IPCC 1.5-degree scenarios (IPCC SR1.5) and our 2035 target is aligned to the IEA NZE 2050 scenario, which is consistent with IPCC SSP1-1.9 (IPCC AR6WGI),” Nagle continues.

    A Lack of Ambition

    Media reports suggest that Glass Lewis & Co., Institutional Shareholder Services (ISS) and the Australasian Centre for Corporate Responsibility (ACCR) have all warned investors against the report.

    One of the problems seems to come from the revised targets of the company, which hopes to reduce Scope 1, 2 and 3 emissions by 15% by 2026 and by 50% as of 2035 vis-à-vis 2019 so as to achieve net-zero total emissions by 2050.

    According to the ACCR, glencore has a methane problem. “Based on estimates from the SRON Netherlands Institute for Space Research, ACCR conservatively estimates that Glencore has underreported its operational emissions by 11-24% between 2018 and 2021. Glencore’s 2019 emissions baseline is understated by at least 6.9 million tonnes CO2e or 24%. Glencore’s 2019 emissions are significant, because it is the baseline year for its 2026, 2035 and 2050 emissions reduction targets,” the ACCR said.

    “The satellite data is damning for Glencore, as it has failed to disclose to shareholders the excessive methane emissions from its Bowen Basin coal mining operations,” Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) said. “The underreporting of methane emissions is a material risk for shareholders, and this analysis is yet another reason to vote against Glencore’s progress on its climate plan at its AGM on 28 April.”

    “Whether this is a mistake or a blatant misreporting of emissions, the Board needs to be held to account. As such, shareholders should oppose the re-election of Peter Coates given his role as Chair of the Health, Safety, Environment and Communities Committee. Of utmost concern are Glencore’s 2019 emissions as that is the baseline year for its 2026, 2035 and 2050 emissions reductions targets. Glencore’s entire climate strategy should be called into question. Glencore has previously attempted to discredit the peer-reviewed research which identified excessive methane emissions from its Hail Creek and Oaky North coal mines. Given Glencore’s record of disputing climate science, this is hardly surprising,” Gocher adds.

    Glencore will put the report to an shareholder vote at its investor meeting on April 28.

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

    Latest Posts


    NordSIP Insights Handbook

    What else is new?

    ESG Leaders 2023