Glencore shareholders reject climate strategy

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Glencore faced shareholder pushback over its climate plans at its annual meeting, in a sign of growing concerns about the coal mining giant’s environmental strategy.

30% of shareholders voted against the company’s 2022 Climate Report – a drop in support from last year and a show of dissent that will force the company through a mandatory consultation process under UK law.

A separate resolution calling for greater disclosure of the company’s coal plans won 29% of the vote, having failed to pass, but enough to force a consultation.

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

That resolution – which asks Glencore to explain how its coal plans are compatible with its climate goals – 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 largest producer of thermal coal, which is used for power and heat, outside China and India.

While the coal division has been hugely profitable — generating 53% of profits 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 to ensure their views are fully understood and to better understand the reasons behind these results,” Glencore said in a statement.

During the shareholders’ meeting held in Zug, Switzerland, Chairman Kalidas Madhavpeddi was faced with repeated questions about Glencore’s environmental performance, labor relations and impact on local communities, particularly in Colombia, where it operates two giant mines of coal.

Although the meeting missed the high-profile environmental protests of some other annual meetings this week, the protests at Shell delayed his AGM by almost three hours – the discontent was clear.

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

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

The company is also expected to consult with shareholders this year about its upcoming climate plan, which is updated on a three-year cycle. Its current climate goals include reducing its emissions (both direct and indirect) by 15% by 2026 and by 50% by 2035.

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

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