Investors turn up climate heat on Glencore’s coal expansion plans

The $12 billion Australian superannuation fund Vision Super said Glencore’s continued investment in coal “does not reconcile” with its public commitment to the Paris Agreement. Chief investment officer Michael Wyrsch said Glencore was well-placed to benefit from the accelerating shift to clean energy because of its exposure to copper and nickel – two raw materials that will be increasingly needed to build electric cars and renewables.

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“That’s why it is so disappointing to see Glencore continuing to invest in thermal coal, which is a contracting industry,” he said.

The investors’ demands on Glencore are the latest sign of financial institutions seeking to pressure big polluters to better align their businesses with the goals of the Paris Agreement in a bid to minimise their financial and ethical exposure to risks caused by contributing to global warming.

In a statement, a Glencore spokesperson said the company would publish its next climate report in March, which would “provide an update on our progress against our 2020 climate strategy”.

As the fallout from Russia’s invasion of Ukraine drives buyers away from Russian coal, oil and gas and deepens a global energy shortage, coal this year overtook iron ore to become Australia’s single most lucrative export commodity. The fossil fuel is forecast to account for $132 billion in export earnings in 2022-23 as prices remain elevated at near-record levels, driving stunning increases in profits across the sector.

However, the longer-term outlook for Australia’s coal industry remains deeply uncertain and will depend largely on how aggressively countries seek to decarbonise by shifting to cleaner sources of energy.

If the world meets the Paris Agreement’s ultimate aim of 1.5 degrees – the level scientists say is necessary to avoid the most catastrophic effects of climate change – Australia’s coal earnings could collapse by up to 80 per cent by 2050, according to the Reserve Bank.

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Many mining giants other than Glencore are increasingly divesting or announcing closures of their coal assets, while a growing number of banks, insurers and shareholders are pledging not to make new investments in the sector. Glencore, rather, has sought to position itself as a responsible owner of coal mines, promising to manage the assets’ decline instead of “making them someone else’s problem” or selling them to new buyers that may choose to expand output.

Naomi Hogan, strategic projects lead at the Australasian Centre for Corporate Responsibility, said Glencore’s decision late last year to withdraw an application for its large new Valeria coal mine in Queensland showed that the company was “capable of responding to investor concerns and to the global headwinds against new coal”.

Hogan said the climate resolution provided “additional momentum” for Glencore to keep acting and take steps to align its coal production with the goals of the Paris Agreement.

“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,” she said. “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.”

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