BlackRock breaks with Glencore over environment policy

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BlackRock and MFS Investment Management both voted against Glencore’s climate plan at the Swiss miner’s annual general meeting earlier this year, marking a rare break between the mining company and two of its largest institutional shareholders over environmental policy.

Glencore, which is the world’s most profitable coal miner, has been facing growing questions from investors about how it will cut emissions while continuing to produce coal.

The new disclosures made in US securities filings show that many big institutional shareholders supported Glencore’s climate report, which passed with 70 per cent approval even though dissent increased to 30 per cent, up from 24 per cent in 2022.

BlackRock is Glencore’s third-largest shareholder, holding an 8.2 per cent stake worth more than £4bn, while MFS is the ninth-largest shareholder with a 1.1 per cent stake, according to records from S&P Capital IQ.

BlackRock said that concerns about “inconsistencies” in the company’s stated strategy drove its decision to vote against the climate plan, according to its 2023 investment stewardship summary.

In the weeks leading up to Glencore’s AGM in May, the company made a takeover bid for Teck Resources of Canada, a miner of coal used in steel making as well as base metals.

While Glencore’s bid for all of Teck was rejected, the two companies are still in talks over whether Glencore might buy Teck’s coal operations.

If its acquisition of Teck’s coal unit is successful, Glencore plans to spin out the merged coal businesses as a separate business.

Glencore is aiming for net zero emissions by 2050, and also plans to cut emissions (both direct and indirect) by 15 per cent by 2026, relative to a 2019 baseline.

The company’s total 2022 emissions were about 370mn tonnes of carbon dioxide equivalent, the majority of which is indirect emissions from customers burning coal.  

In June, chief executive Gary Nagle said the vote on the climate report showed “overwhelming support from our shareholders”. He blamed the increase in dissenting votes on “some ESG person in the basement in office number 27” engaged in a box-ticking exercise.

A shareholder resolution calling for more clarity on Glencore’s coal plans also had high levels of dissent, with 29 per cent of shareholders in favour and 71 per cent against.

That resolution was supported by investors including Legal and General, State Street and HSBC Asset Management, although the recent proxy filings show that none of Glencore’s biggest institutional shareholders including BlackRock supported the measure.

Following the results of the AGM in May, Glencore is undertaking a consultation with major shareholders on both its climate plan and the shareholder resolution.

Glencore’s top shareholders also include current and former directors at the company. However, these private holdings are not reflected in public shareholder registries unless they account for more than 3 per cent of company shares. Former chief executive Ivan Glasenberg is Glencore’s largest shareholder with 9.8 per cent.

Glencore, MFS and BlackRock declined to comment.

Additional reporting by Patrick Temple-West