Glencore will cap coal production, but some climate groups say that isn't good enough
Posted February 20, 2019 11:12 a.m. EST
CNN — Glencore has been a coal champion for years, scooping up mines when other companies dropped them. Not anymore.
The mining giant said Wednesday that it would cap its coal production at current levels after coming under pressure from investors. It said that doing so would align its strategy with the goals of the Paris climate agreement.
Glencore will also disclose more information about emissions from its activities and products.
The Anglo-Swiss company, which boasts a major commodity trading business, said the dramatic shift in strategy was based on talks with shareholders who signed the Climate Action 100+ initiative.
Climate Action 100+ is backed by 300 investors with over $32 trillion in assets under management. It has been using its influence to push companies to reduce harmful emissions and disclose more climate data.
The group, which includes the Church of England's influential investment fund, previously convinced Shell and BP to set emission reduction targets.
"The simple truth is that in the absence of commercially viable carbon capture and storage, coal has no long-term future in the energy mix," said Carlota Garcia-Manas, an analyst who helps manage the Church of England fund.
Pressure on companies has been building since the UN warned last year that the world has only 12 years to avert a climate disaster. But some environmental groups said Wednesday that Glencore has not gone far enough.
"To truly align with the Paris Agreement, Glencore must go much further in reducing its coal operations," the Dutch branches of Greenpeace, Friends of the Earth and ActionAid International said in a joint statement.
"Halting expansion is not enough, we have to move towards rapid fossil fuel phase out to avert catastrophic climate change," the groups added.
Andrew Grant, senior analyst at the think tank Carbon Tracker, said that because coal is "the most carbon intensive of the of fossil fuels" it must be "eliminated from the energy system as quickly as possible."
A big business
Glencore is one of the world's largest producers and exporters of coal. In recent years, it has sought to expand its coal operations.
The company spent $1.7 billion last year on stakes in two Australian coal mines. The mines came onto the market when its rival Rio Tinto became the first major mining company to exit fossil fuels.
Glencore said that in the future, it will instead focus on investing in commodities that will be essential to the transition away from fossil fuels.
"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," it said.
Yet coal is the source of 25% of Glencore's earnings, according to the company's most recent annual report. That makes it second only to copper.
The company owns stakes in 26 coal mines across Australia, South Africa and Colombia. In 2017, it produced more than 120 million tonnes of coal and employed around 21,000 people in those operations.
Glencore isn't the only European company to come under pressure over their climate impact.
Shell is facing a potential lawsuit in the Netherlands, where activists argue that the company responsible under Dutch law for its contributions to climate change.
Rival oil company BP pledged in February to align its business more closely with global climate goals and link the bonuses of 36,000 employees to greenhouse gas reduction targets.