Glencore, a mining giant, has faced criticism from Legal & General Investment Management (LGIM) for its lack of plans to achieve net zero emissions while continuing thermal coal production. LGIM, a subsidiary of Legal & General (L&G), has decided to divest shares in Glencore from its ESG funds due to these concerns. This decision comes after extensive engagement with Glencore since the first Climate Impact Pledge in 2016 and a shareholder resolution filed by LGIM last year requesting information on thermal coal production alignment with the Paris Agreement.
Glencore has been under pressure to reduce its carbon footprint as calls for divestment from coal grow louder. Some pension and investment funds have already removed coal companies from their portfolios, but Michael Wyrsch, Chief Investment Officer at Australia’s Vision Super Pty, expressed skepticism about the impact of such moves. He emphasized that broader changes beyond individual investment decisions are needed to address climate change effectively. Despite this criticism, LGIM believes that Glencore’s failure to disclose plans for thermal coal production in line with a net zero pathway is unacceptable and has led them to divest their stake in the company.
LGIM currently holds a 0.44% stake in Glencore, valued at around $325 million. The decision to divest follows concerns over Glencore’s continued reliance on thermal coal production despite its aim to reach net zero emissions by 2050. These concerns are shared by many investors who are looking for companies that can adapt quickly to changing market conditions and remain competitive while reducing their carbon footprint.
The move by LGIM is significant as it sets an example for other investors who may be hesitant to divest from companies that rely heavily on fossil fuels. It also sends a clear message to companies like Glencore that they need to take more significant steps towards achieving net zero emissions if they want to remain attractive investments for socially responsible investors.
In conclusion, LGIM’s decision to divest shares in Glencore from its ESG funds is an important step towards promoting sustainable investing practices. While some investors may be hesitant to divest from companies that rely heavily on fossil fuels, LGIM’s move sets an example for others who want to invest responsibly while promoting environmental sustainability.