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Glencore under fire from banking giants

Alan Neuhauser
Jan 6, 2023
Illustration of a tug of war rope looped around a piece of coal with hands pulling on either end.

Illustration: Gabriella Turrisi/Axios

Banking giants HSBC Asset Management and Legal and General Investment Management are leaning on Glencore to clean up its mining operations.

Why it matters: These aren't some rogue climate activists. The investors here represent $2.2 trillion AUM.

What's happening: HSBC and LGIM were among a group of investors that filed a shareholder resolution calling on Glencore to improve transparency around its production of thermal coal.

  • The resolution would push Glencore to elaborate on how its thermal coal operations align with the Paris climate agreement's goal of limiting global warming to 1.5° Celsius. (Short answer: They don't.)
  • The resolution will come up for vote at Glencore’s general meeting on May 26.

Be smart: The shareholders want Glencore to reallocate what it spends on coal mining to expanding its role in low-carbon energy.

  • "More value will be created for shareholders by allocating fossil fuel capex to the energy transition instead," the resolution says.

Yes, but: Glencore is the most profitable listed coal miner, per FT.

  • The company reaped huge profits from its coal division last year: $8.9 billion in H1 alone.

State of play: Coal is the largest source of carbon emissions.

💭 Thought bubble: That upward trend will make the shareholder resolution a tougher sell come May.

  • Then again, if there's one thing the energy transition will need, it's companies with the know-how, capital and infrastructure for large-scale mining.
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