‘Cat and mouse’: Australia’s biggest coal miner faces investor revolt over climate stance

Large fund managers are increasingly demanding big polluters better align their businesses with the goals of the Paris Agreement as they seek to minimise their financial and ethical exposure to risks caused by contributing to global warming, creating significant financial headaches for companies like Glencore that are heavily invested in extracting the world’s most carbon polluting fossil fuel.

Campioni said the time has come for Glencore to give up coal expansion projects “once and for all”, as the sustainable profile of the fund’s investments depends on the mining company’s willingness to align with the Paris Agreement in a tangible and documented way.

‘Glencore has been playing cat-and-mouse with its stakeholders on environmental issues for several years.’

EFG’s senior analyst Simona Campioni

Fulcrum partner and head of equities Fawaz A Chaudhry said the miner was on the fund’s priority list of climate engagements because of the potential upside from strengthening sustainability.

“We think a cleaner portfolio, with declining exposure to coal, would help improve Glencore’s cost of capital, reduce reputational risk and allow the company to invest further in the metals and minerals needed in the energy transition, a view that also seems to underpin the company’s planned demerger,” Chaudhry said.

Glencore is trying to stitch up a $US22.5 billion ($33.4 billion) merger with Canadian miner Teck Resources and spin off its combined thermal and steel-making coal businesses.

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The miner has pledged to run down its thermal coal mines by the mid-2040s and achieve net-zero emissions by 2050. But at the same time it has been proposing several projects to increase coal production in Australia, including expanding its Glendell coal mine in NSW, and possibly building a new mine in Queensland’s Surat Basin.

The $114.7 billion UK-listed company said it is reviewing the shareholder resolution and engaging with the investors who are backing it. “Following the shareholder vote on our climate progress report in April 2022, we undertook an extensive engagement program with our shareholders to understand the issues and opportunities that they have identified for Glencore on climate,” the company said in response to questions.

“Our engagement with stakeholders is ongoing and will continue to inform our climate strategy,” it said.

The investor-backed resolution was prepared by the Australasian Centre for Corporate Responsibility (ACCR) and responsible investing group ShareAction. ACCR’s strategic projects lead Naomi Hogan said Glencore’s thermal coal business is exposed to significant risk in the energy transition and investors expect the company to be upfront about the level of exposure. The miner’s prospective coal demerger highlights the need for current and potential future shareholders to have clear disclosures, she said.

“In its proposed Teck merger and coal demerger Glencore said it remains committed to the Paris Agreement and the responsible decline of its thermal coal production – if this is the case, then now is the time for Glencore to demonstrate it.”

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