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Big investors ask Glencore to justify thermal coal development

An employee of a private security company stands in front of the logo of commodities trader Glencore in Cham

By Melanie Burton

MELBOURNE (Reuters) - International investors with $2.2 trillion in assets will ask commodity giant Glencore Plc to show how its development of thermal coal mines meets the goals of the Paris climate accord to keep global warming to 1.5 degrees.

Glencore is one of the world's largest producers and traders of the fossil fuel used in power generation and record prices of the commodity helped add some $10 billion to its earnings in the six months to June.

Major institutional investors including Europe's Legal and General Investment Management (LGIM) said in a joint statement they have cofiled a shareholder resolution that asks Glencore to reveal how its production and capital expenditure plans align with the Paris goals and the International Energy Agency Net Zero Emissions pathway.

"Having both invested in and engaged with Glencore over many years, a higher degree of transparency is necessary in order to clarify how the company’s exposure to thermal coal is aligned with the 1.5C pathway and corresponds to its net zero commitment,” said Dror Elkayam, an analyst in investment stewardship at LGIM.

Other investors include the Swiss based Ethos Foundation, Australian pension fund Vision Super and HSBC Asset Management.

The resolution is to be presented for a vote at Glencore's annual shareholder meeting in 2023.

“Glencore will publish its next Climate Progress Report in March, which will provide an update on our progress against our 2020 climate strategy,” the miner said in a statement.

Glencore has pledged to hit net-zero carbon emissions by 2050 and responsibly run down its mines producing thermal coal, the most polluting fossil fuel, by the mid-2040s.

However, at its April annual general meeting, almost a quarter of investors voted against its climate progress report, some citing slow progress in scaling back coal production.

A member alert from the Institutional Investors Group on Climate Change (IIGCC), at the time, said that "Glencore needs to cut coal production much faster over the next decade to be consistent with a 1.5-degree scenario."

Glencore produced 103.3 million tonnes in 2021 from mines in Australia, South Africa and Columbia.

(This story has been corrected after an official clarification to say that the annual shareholder meeting is in 2023, not 2024, in paragraph 6)

(Reporting by Melanie Burton; Editing by Kim Coghill)