By Dana Drugmand
One of the world’s largest mining and natural resource companies announced it will limit coal production to reduce carbon emissions in response to investors who pushed the company to commit to a transition to a low-carbon economy.
Glencore, a multinational mining company based in Switzerland, announced its plans after discussions with institutional investors participating in Climate Action 100+, a group with more than $32 trillion in assets under management. Investors praised Glencore’s commitment to the low-carbon transition and hailed it as a first for the mining industry.
“We are encouraged to see that Glencore has taken the positive steps to align its business strategy with the goals laid out by the Paris Agreement to limit global temperature rise and to achieve net zero emissions,” said Mindy Lubber, vice chair of the global Climate Action 100+ steering committee and chief executive of Ceres, a nonprofit dedicated to sustainable investing. “As the first mining company to make such a commitment, we are hopeful that others in the sector and in other high-emitting sectors across the economy will follow suit.”
Glencore said it plans to “limit its coal production capacity broadly to current levels” while prioritizing commodities like copper, nickel, cobalt, vanadium and zinc that it says are “essential to the energy and mobility transition.” Last year, Glencore produced more than 129 million tons of coal. It operates 26 mines across Australia, Colombia and South Africa.
Sixteen of its mines are in Australia. They remain profitable and Glencore says it plans to continue coal mining in Australia for at least the next 15 years. But a judge in New South Wales recently struck down a proposed coal mine based on its detrimental impacts on climate change and on the surrounding community. That decision could lead to legal challenges for other coal operations and fossil fuel projects in that country.
While investors applauded Glencore’s decision to cap coal production, environmental and human rights organizations said the move doesn’t go 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 toward rapid fossil fuel phase out to avert catastrophic climate change.”
Still, Glencore’s announcement to not expand coal production stands in stark contrast to other fossil fuel companies like Chevron and ExxonMobil, both of which plan to expand oil and gas development despite increasingly urgent warnings from the scientific community on the necessity of transitioning away from fossil fuels. In a recent update to its climate report for investors, Chevron stated: “We believe that compelling select oil and gas producers to unilaterally reduce production or change their portfolios to align with a possible future energy mix does not advance the goals of the Paris Agreement.”
Royal Dutch Shell is facing a lawsuit in the Netherlands directly challenging its business model and refusal to curb production. And ExxonMobil revealed in its latest Energy and Carbon Summary that it anticipates a “gradual shift to lower-carbon energy sources,” and says there is “uncertainty in the pace and breadth of changes in the global energy landscape.”
By contrast, Glencore appears to embrace the low-carbon transition. “We believe this transition is a key part of the global response to the increasing risks posed by climate change,” the company said in a statement.
In addition to limiting coal, Glencore said it will develop new long-term targets for reducing emissions and will report to investors its progress in meeting its targets. It said it will also consider reflecting its climate goals in executive compensation.
The company also announced that it will review its membership in trade associations and lobbying groups to determine if there is any misalignment with its support for the Paris Agreement. It promised to make the results of the review public this year.