Risk management

We recognise that the effective management of risk across all aspects of our business is vital to ensure our growth and provide greater certainty to all stakeholders.

Glencore integrates risk management into its business through a structured risk management process that establishes a common methodology for identifying, assessing, treating and monitoring risks.

Climate change may pose additional risks to our business if not assessed and managed appropriately. Traditionally our risk management in relation to climate change has focussed mainly on its economic, regulatory and physical impacts.

Going forward we will broaden our existing risk management framework to consider the risks and opportunities from climate-related developments. Accordingly, our risk management framework for climate change considers the risks and opportunities from climate-related developments, with a focus on the factors we consider as having the potential to put our assets, supply chains, markets and investment most at risk.

Examples of risks and opportunities from climate change developments

  • Technology: technology application will have a substantial bearing on the global capacity to adapt and respond to climate change. The levels of investment in, and rate of development and deployment of, a suite of low-emission and renewable energy technologies could change market dynamics for fossil fuels and renewable energies.
  • Adaption: long-term weather patterns, including a potential increase in severe weather events, will likely challenge our ability to access and extract resources. Floods, droughts and severe weather have a potential impact on physical assets and supply chains; they may also disrupt operations and the availability or nature of services on which we rely.
  • Global and domestic policy: following COP21, policymakers have set ambitious nationally determined contributions (NDC) as part of reducing global emissions; there will be further policy development at an international, national and subnational level. This may involve GHG emission targets, and explicit or implicit carbon pricing.
  • Economic impact: these are risks arising from changes in market and economic conditions having the potential to affect the operational viability or financial profile of a physical asset or company. This includes changes in consumer demand for products, technological advancements and government policy.
  • Reputational: these are potential financial or non-financial impacts on our corporate licence to operate. They may be as a result of particular projects or investments, and can be impacted by fast-moving social or activist campaigns.

We have a structured process by which we apply our risk and opportunity management framework to our assets and investments. This will be an ongoing process, ensuring we properly account for changes in the business environment due to climate change.

Risks

Climate change will pose additional risks to our business if not assessed and managed appropriately.

We have incorporated general business risk management into all aspects of our operations through a risk management process that establishes a common methodology for identifying, assessing, treating and monitoring risk. 

Our assets will continue to adapt to material changes in the physical and regulatory environment as a result of climate change. 

We will continue to monitor these changes and ensure that our business approach and processes have the flexibility to manage these risks. 

Our industrial assets are required to regularly report on an extensive number of climate-related metrics, which could contribute to disruption in operations or access to critical infrastructure. 

We require our assets consider these factors as part of normal long-term business planning

Opportunities

As markets change due to the economic and environmental impact of climate change, our business is well placed to respond by virtue of a diverse global portfolio of natural resource assets, supported by an industry-leading global marketing and logistics network. 

As our business does not rely on a single commodity or function, we have greater resilience to the economic impacts of climate change. The breadth of our business also brings economies of scale throughout the supply chain, in finance, freight, logistics, storage and product customisation. 

As we operate in markets that are fragmented and periodically volatile, our breadth and scale also allows us to benefit from the resulting price differentials. 

Glencore’s broad range of products will be required for the transition to a lower-emission economy. Copper, aluminium, steel and cement are required for renewables-based power stations as well as energy efficient infrastructure and the electrification of the transport sector. 

Coal is an essential input for 70% of steel, 90% of cement and 41% of electricity produced around the world.1Nickel and cobalt are required for energy storage and therefore are likely to play an important part in electromobility.

*  International Energy Agency (IEA) 2015 World Energy Outlook