Church of England and large Australian superannuation funds among shareholders who pushed for environmental decision

This article is more than 1 year old

This article is more than 1 year old

The commodities trader Glencore has bowed to pressure from shareholders to limit coal production for environmental reasons – days after reporting that it produced nearly 130m tonnes of the fossil fuel last year.

The Switzerland-based firm, whose oil-trading operation is based in London, laid out plans to improve its environmental record, including a review of its membership of trade bodies it fears may be undermining the international Paris climate agreement.

Glencore, which is Australia’s biggest miner of coal, said it was responding to concern within the investment community. The Church of England, which is understood to have a stake worth just under £10m in the group, welcomed the announcement.

Carlota Garcia-Manas of the Church Commissioners, the C of E’s £8.3bn endowment fund, said: “The simple truth is that in the absence of commercially viable carbon capture and storage, coal has no long-term future in the energy mix.

“Glencore’s commitments on capital investment and expenditure start to provide assurance to investors increasingly focused on climate-related risks and opportunities.”

Major Australian superannuation funds with billions of dollars under management including AustralianSuper and Cbus also put pressure on Glencore.

Jeanne Martin, senior campaigns officer at ShareAction, said it was “a good step forward for Glencore – the black sheep of the energy world – which for far too long refused to come out in support of the Paris agreement”.

However, she added: “It’s actions, not words, that matter. Glencore’s south-east Asian coal frenzy will be a true test of the company’s commitment to the Paris goals. ShareAction will watch closely to make sure Glencore stays faithful to today’s commitments.”

In a statement to the stock market, Glencore promised to prioritise investment in commodities that assist with the transition to cleaner energy and transport instead, while limiting coal at current production levels.

An annual production report issued earlier this month showed that Glencore extracted 129.4m tonnes of coal in 2018, a 7% increase on the previous year.

“We recognise climate change science as set out by the United Nations Intergovernmental Panel on Climate Change (IPCC),” the FTSE 100 company said.

“We believe that the global response to climate change should pursue twin objectives: both limiting temperatures in line with the goals of the Paris agreement and supporting the United Nations sustainable development goals, including universal access to affordable energy.”

Glencore set out a plan that it said would help support the transition to a low-carbon world.

The first tranche of the plan, starting in 2020, will mean the company publishing projections illustrating how it will reduce its emissions and set out how its strategy governing fossil fuel exploration and investment is affecting its efforts on climate.

It also claimed to be on track to meet a target of reducing the greenhouse gas emissions of its own operations by 5% by 2020 and promised to publish more stretching long-term targets next year.

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The plan could also result in climate change objectives being attached to executive pay schemes, while the company will review its membership in trade associations whose lobbying might “undermine” climate change goals.

The pledge on climate change came as Glencore undershot profit forecasts for the year, reporting earnings down 41% to $3.41bn (£2.6bn), largely because of impairment costs at mines in DR Congo and Zambia.

The company also offered to buy back $2bn of shares from investors. Last year it launched a $1bn buyback only days after revealing it was subject to an investigation by the US Department of Justice, an announcement that sent its shares tumbling.

Investigators leading Brazil’s vast Car Wash investigation have also named Glencore among firms they allege are linked to bribes.