Glencore shareholders push back against climate strategy

Glencore has faced pushback from shareholders over its climate plans at its annual meeting, in a sign of rising concerns over environmental strategy at the coal-mining giant.

Thirty per cent of shareholders voted against the company’s 2022 Climate Report — a drop in support compared to last year and a show of dissent that will force the company into a mandatory consultation process under UK law.

A separate resolution asking for more disclosure of the company’s coal plans gained 29 per cent of the vote, failing to pass, but enough to force a consultation.

“This is a clear signal by shareholders that further disclosure around the company’s thermal coal business is imperative,” said Dror Elkayam, analyst at Legal & General, which supported the resolution.

That resolution — which calls for Glencore to explain how its coal plans are compatible with its climate targets — was supported by institutional investors including LGIM, HSBC Asset Management and Scottish Widows, and recommended by proxy advisers Glass Lewis and Institutional Shareholder Services.

Switzerland-based Glencore is the world’s most profitable coal mining company and the biggest producer of thermal coal, which is used to produce energy and heat, outside China and India.

While the coal division has been hugely profitable — generating 53 per cent of earnings last year due to high coal prices — it has also come under scrutiny from shareholders concerned about Glencore’s climate record.

“We will continue to engage with shareholders so as to ensure their views are fully understood and to better understand the reasons behind these results,” Glencore said in a statement.

During the shareholder meeting held in Zug, Switzerland, chair Kalidas Madhavpeddi faced repeated questions about Glencore’s environmental record, labour relations and impact on local communities — particularly in Colombia, where it operates two giant coal mines.

While the meeting lacked the high-profile environmental protests of some other annual meetings this week — protests at Shell delayed its AGM by nearly three hours — discontent was clear.

Shareholder Richard Sully told the meeting he was “horrified by the inadequacy of the answers given” by Glencore’s management at the AGM, and raised questions about the company’s mining operations in Colombia and Peru.

The vote results show growing shareholder concern about Glencore’s climate plans: last year 24 per cent rejected Glencore’s climate transition plan, this year it was 30 per cent.

The company is also due to consult shareholders this year about its next climate plan, which is updated on a three-year cycle. Its current climate targets include cutting its emissions (both direct and indirect) by 15 per cent by 2026 and by 50 per cent by 2035.

In his opening remarks, Madhavpeddi emphasised Glencore’s financial performance, pointing out that last year was the company’s strongest set of results since its initial public offering.