LONDON- The world's biggest climate action investor group will back a shareholder challenge to Glencore's slow progress in scaling back coal production at the miner and trader's annual general meeting on April 28, two sources familiar with the matter said.
Climate Action 100+ (CA100+) will flag to members - who manage $68 trillion in assets and can put pressure on the company to change its strategy - its concern that Glencore's emissions targets and coal production are not consistent with the world's climate goal, the sources said.
While there is no obligation on shareholders to vote in a certain way based on the CA100+ view, the public move by the group is an important one as it reverses previous support for Glencore's strategy.
Glencore last year said it planned to run down its thermal coal mines by the mid-2040s and hit net-zero carbon emissions by 2050, as part of efforts to help the world reach its 2015 Paris Agreement goal of capping global warming at 1.5-degrees Celsius.
The company's first climate action plan, published in December 2020, had received 94% of votes in Glencore's favour from shareholders at its 2021 annual general meeting. The non-binding management vote at its upcoming AGM seeks support for its efforts so far.
Thermal coal is the most polluting fossil fuel and Glencore has taken a diverging path from its competitors, which have sold or spun off their assets, vowing to remain the responsible owner of the mines until depletion.
A member alert from the Institutional Investors Group on Climate Change (IIGCC), part of CA100+, seen by Reuters, said that "Glencore needs to cut coal production much faster over the next decade to be consistent with a 1.5-degree scenario."
While the company's long-term plan was aligned with the climate target, its short- and medium-term plans were not, the report said.
The lack of clarity over a coal-related increase in capital expenditure in 2021 and the timeline to close down specific mines and for Glencore to exit the coal business led the group to reverse their initial support, one of the sources said.
The report said talks with the company had been constructive and Glencore was investing strongly in metals needed in the transition to a low-carbon economy, but it flagged concern about the company's membership of trade groups lobbying against some climate action.
Activist investor Bluebell Capital Partners last year urged the miner to separate its thermal coal business, but Chief Executive Gary Nagle said the company would only review its coal strategy if major shareholders became less supportive.
Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis, which provide voting recommendations for shareholders, recommended shareholders reject the progress report next week, on concerns around thermal coal, which accounts for the majority of its emissions.
The Australasian Centre for Corporate Responsibility (ACCR) in its recommendation last week cited several reasons why the progress report should be rejected, including that Glencore is expanding coal activities in Australia, which "is directly at odds with its stated policy to 'run-down' coal mines and coal production over time".
(Reporting by Clara Denina and Simon Jessop; Editing by Elaine Hardcastle)