Ivan Glasenberg, Glencore’s chief executive, has the sentimental softness of a pickaxe. So the resources group’s announcement last week that it would cap coal production to support the fight against climate change shows how the sustainable business push has won round some of the world’s flintiest bosses. We should not overdo Glencore’s move. It will remain one of the world’s leading coal producers. And capping production at this year’s level will limit supply and help boost coal’s price, which will support Glencore’s profits. It was also only last year that the company bought a 49 per cent stake in a large Australian mine producing thermal coal, which is burnt in power stations. But Glencore’s language last week was striking. “We recognise climate change science as set out by the United Nations Intergovernmental Panel on Climate Change,” its statement said. It supported the temperature-limiting goals of the Paris climate agreement. But, above all, there was a recognition of how many investors now cared about these issues. “To deliver a strong investment case to our shareholders, we must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change,” Glencore said. With its copper, cobalt and nickel businesses, used in electric vehicles and battery storage, Glencore said it was in a strong position to support the move to a lower-carbon economy. Today, it is mainstream investors who are demanding that companies account for their use of fossil fuels and their carbon emissions. They are alert to the public mood and worried that companies they invest in might be too tied up with what will eventually become “stranded assets”. In 2017, McKinsey reported that more than a quarter of global assets under management were being invested with environmental, social and governance criteria in mind. Sustainable investing, McKinsey said, had become the “new normal”. Initiatives like Glencore’s show the increased muscle of large investor groups. The company referred to the discussions it had had with the Climate Action 100+ initiative. Launched in 2017, Climate Action 100+ has the support of more than 300 large investors, including Calpers, the California state employees’ retirement fund, the Church Commissioners for England and HSBC Global Asset Management.
FT 26th Feb 2019 read more »
