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.
- Governments and even Glencore have pledged to reduce their reliance on coal.
- However, coal consumption and emissions soared to record levels in 2021 and 2022, especially as European nations halted imports of Russian natural gas.
💭 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.