"Pendulum has swung back" on ESG, mining CEO says
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The CEO of mining giant Glencore said out loud what plenty of C-suite execs doubtless think: the "ESG pendulum has swung back over the last nine or 12 months," Gary Nagle said, per several outlets.
State of play: Nagle's remarks Wednesday on the lessening pressure from investors on environmental, social and governance issues came as he discussed Glencore's reversing plans to spin off its lucrative coal business.
- The "overwhelming" majority of shareholders wanted to keep the coal unit, Glencore said.
- The company said this would help steer money to shareholders and bring in cash for projects around "transition metals" like copper.
Why it matters: It's part of a wider recalibration — both tonal and substantive — among fossil fuel companies as demand for carbon-emitting sources remains resilient.
- Shell in March slightly eased one 2030 emissions target and scrapped a 2035 goal. BP last year scaled back its 2030 fossil reduction aim.
- Both oil giants are still boosting low-carbon investments but have become more selective and are emphasizing they must be competitive.
Yes, but: Glencore said the move wasn't a retreat on climate, noting that shareholders "did not see separation as [an] ESG positive."
- That's partly due to their "responsible thermal coal decline strategy" and the "important role" that steelmaking coal will play in "supporting the infrastructure needed for the energy transition."
- And ESG is hardly vanishing from the landscape, even amid some investors' changing appetites and U.S. political blowback.
The bottom line: There's a "conundrum facing fossil fuel companies and the shareholders that own them," Bloomberg's Thomas Biesheuvel writes in his detailed look at Glencore's decision.
- "From coal to oil, producers have come under pressure to cut their emissions — but that would mean missing out on the bumper profits they're still pumping out," he writes.
