Legal & General Investment Management Ditches Glencore from ESG Funds over Net Zero Emissions Concerns

Legal & General Investment Management (LGIM) has decided to divest shares in Glencore from its ESG funds due to concerns about the mining giant’s lack of plans to achieve net zero emissions while continuing thermal coal production. This decision follows 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, a multinational mining and commodities company, has been under fire for its continued use of thermal coal, which is seen as a significant contributor to global greenhouse gas emissions. Despite Glencore’s aim to reach net zero emissions by 2050, concerns persist over its coal output and coking coal assets, leading to exclusion from some investment portfolios like Norway’s sovereign wealth fund.

In response to the growing calls for divestment from coal, some pension and investment funds have removed coal companies from their portfolios. However, Michael Wyrsch, Chief Investment Officer at Australia’s Vision Super Pty, expressed skepticism about the impact of divestment on global efforts to achieve net zero emissions. He emphasized the need for broader changes beyond individual investment decisions to address climate change effectively.

The decision by LGIM marks a significant blow for Glencore, which has struggled in recent years to reduce its reliance on thermal coal. The company has faced increasing pressure from investors and activists who argue that it must take more aggressive action to transition away from fossil fuels if it is to meet its net-zero target.

LGIM currently holds a 0.44% stake in Glencore, valued at around $325 million. The investment company has engaged extensively with Glencore over the years, seeking information on how it plans to reduce its carbon footprint and transition away from fossil fuels.

Despite this engagement, concerns about Glencore’s lack of concrete plans for achieving net-zero emissions have led LGIM to divest its shares in the company.

The decision is likely to be seen as a victory by environmental groups and other investors who have been calling for greater transparency and accountability from companies when it comes to their environmental impact.

However, it also highlights the challenges facing companies that rely heavily on fossil fuels in reducing their carbon footprint and meeting ambitious climate targets.

Overall, LGIM’s decision marks an important step forward in holding companies accountable for their environmental impact and pushing them towards a more sustainable future.