As one of the world’s largest globally diversified natural resource companies, we have a key role to play in the global transition to a low carbon economy.
As the world moves towards a low-carbon economy, we are focused on supporting the energy needs of today whilst investing in our transition metals portfolio. The metals we produce, source and market will support the global ambition to decarbonise.
Our position on climate change1
We recognise climate change science as set out by the United Nations Intergovernmental Panel on Climate Change. We support the global climate change goals outlined in the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, the ultimate objective of which is to stabilise GHG concentrations at a level that would significantly reduce the risks and impacts of climate change. Under the Paris Agreement (Article 2, UNFCCC), this is described as keeping the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.
We believe that only through collective global action can the world achieve the goals of the Paris Agreement and limit the impact of climate change. The UNFCCC and the Paris Agreement (Articles 2, 3(3) and 3(4), UNFCCC) provide that efforts to stabilise GHG concentrations should also enable economic development to proceed in a sustainable manner.
We support the UNFCCC’s recognition of the critical importance of sustainable economic development and its acknowledgement that measures to protect the climate system against human-induced change should be appropriate for the specific conditions of each country and integrated with national development programmes.
We support the principle of equity set out in the Paris Agreement and acknowledge the common but differentiated responsibilities and capabilities of domestic economies (particularly those of emerging markets and developing economies) in the pursuit of climate objectives. We draw from this principle that the global response to climate change should pursue twin objectives: limiting temperatures in line with the goals of the Paris Agreement (Article 2(1)(a)), and supporting the United Nations Sustainable Development Goals, including sustained, inclusive and sustainable economic growth, and universal access to clean, affordable energy.
1 To assist the reader’s understanding of climate-related terms used here, reference can be made to the glossary included in our 2022 Climate Report. The Climate Report and our Basis of reporting on selected ESG KPIs 2022, which provides information about the definitions and underlying processes applied for the collection and verification of specific Environmental, Social and Governance (ESG) metrics (Basis of Reporting 2022) are available at glencore.com/publications.
Supporting the transition to a low-carbon economy
The world requires a global transformation of energy, industrial and land-use systems to achieve these goals. We believe this transition is a key part of the global response to managing energy security and the increasing risks posed by climate change.
In response to the ongoing decarbonisation of energy and the electrification of key sectors, including mobility and its associated infrastructure, we expect demand to grow exponentially for renewable energy technologies, and the metals and minerals required to build them.
Our business enables us to support the delivery of these goals by producing, recycling, marketing and supplying transition metals and minerals that are essential to the shift to a low-carbon economy and to meeting the needs of everyday life.
Our climate change commitments
We are committed to responsibly managing the decline of this portfolio in line with our Scope 1, 2 and 3 emissions reduction targets, a 15% reduction by the end of 2026 and a 50% reduction by the end of 2035 against a 2019 baseline, with a longer-term ambition of achieving net zero emissions by the end of 20502. We are working actively towards achieving our targets and ambition, and have established seven actions with which we are aiming to do so:
2 ‘Glencore’s emissions’ or ‘our emissions’ means CO2e emissions from our industrial assets (including Scope 1, 2, and 3) which is defined by reference to operational control save for certain emissions relating to our equity share in certain independently managed joint ventures, as set out in the Climate Report 2022 and in the Basis of Reporting 2022. Where we refer to our aim and/or efforts to achieve ‘net zero emissions’ we are referring to a net zero ambition in relation to our emissions. The basis for our approach is set out in the Climate Report. Where ‘industrial’ is used before ‘emissions’, this is for additional clarity, and the underlying meaning is the same irrespective of whether this is included. Our 2020 climate strategy focuses on our industrial emissions because we consider these emissions to be the most relevant emissions for the diversified mining sector, given that they arise from (or are direct consequences of) our own natural resources production. Scope 3 emissions associated with third-party volumes traded by our marketing business are not included in our emissions reporting and targets because, in our view, those trading activities do not result in the generation of additional Scope 3 emissions associated with the transformation or consumption of the product. The trading of these volumes may give rise to additional emissions associated with the transportation and handling of these products and these emissions have been included in our strategy. We continue to strengthen the accuracy of our reporting of these emissions.
Climate change governance
Our Board is responsible for oversight of overall performance and strategic direction, including with respect to climate change and considers climate-related issues when reviewing and guiding major acquisitions and disposals, overall risk management, capital expenditure and budgeting, setting the Group’s performance objectives and other strategic matters.
The Board is responsible for overseeing the Group’s climate strategy and progress against Glencore’s climate commitments. Implementation of our climate strategy is led by the management team via our Climate Change Taskforce (CCT). Progress on this topic is a standing item on the Board agenda and is discussed in Board meetings at least twice yearly.
The Climate Change Taskforce (CCT) is accountable to the Board and is led by our Chief Executive. The CCT has responsibility for, and oversight of, the work streams and coordination of workflow for the delivery of Glencore’s climate strategy and commitments, including activities relating to:
- Decarbonisation of industrial activities;
- Internal reporting standard development and data quality and consistency review;
- Capital allocation and portfolio management;
- Macroeconomic assessments including Group carbon pricing; and
- External engagement, communication and advocacy.
The CCT has four working groups (Industrial, Marketing, Data and External) to drive the delivery of our emissions reduction targets and net zero ambition. These working groups support the assessment of initiatives to reduce our emissions, identify and leverage carbon marketing opportunities, design and implement systems to support complete, accurate and attestable reporting and monitor external trends, while coordinating and overseeing advocacy and communication efforts. These working groups also play an important role in helping management to be informed about and monitor climate-related issues through their upwards reporting.
The CEO is the named executive for driving the climate strategy within the Board and has responsibility for implementing the decisions of the Board and its Committees, as well as leading Glencore’s operating performance and day-to-day management. The CEO’s scorecard for annual variable compensation includes 30% relating to HSEC matters, of which half is for safety performance and half for progress towards our short- and medium-term absolute emission reduction targets.
Climate change disclosure
Through regular, clear and accurate disclosure of our actions to reduce emissions, we can support the understanding of our performance and progress, as well as set out how policy and technology developments create opportunities and risks for our portfolio.
We engage with a broad range of stakeholders on climate-related topics, recognising their interest in our contribution to climate change mitigation and the exposure of our business to various climate-related risks and opportunities.
We believe that it is appropriate that we take an active and constructive role in public policy development, either directly or indirectly through our membership of industry organisations. Evolving regulatory developments and scrutiny of our advocacy activities require that we hold consistent positions on policy, these are available in our 2022 Climate Report.
We communicate these positions both directly through our engagement with government representatives and policy makers, as well as through the industry organisations in which we hold membership. We participate directly in public consultations, as well as through our memberships in industry organisations’ working groups that provided submissions as part of public policy development processes. Where available, our responses are at Glencore.com/publications.
We monitor both our direct and indirect lobbying on climate-related topics and evaluate any statements, both internally generated and/or made by an external organisation in which Glencore is a member, against alignment with our support for the goals of the Paris Agreement (Article 2). We report on our assessment in an annual review of our industry organisations, which is available in our 2022 Climate Report.
We recognise the importance that many of our shareholders attach to climate change and their desire to have the opportunity to advise us on our efforts. Since 2021, in response to this interest, we have provided our shareholders with an advisory vote on our three-yearly climate action transition plan and its annual progress updates, which detail our progress in delivering our three-year plan in relation to our emission reduction targets and longer-term ambition of net-zero.
Supporting a Just Transition
As set out in our 2020 Pathway to net zero, the transition to a low carbon economy will affect our operations in different ways. Looking ahead, this may include:
- In some areas there will be a ‘transition out’ as we close energy industrial assets that are uneconomic or reach the end of their economic life; and
- In other areas there will be a ‘transition in’ as we focus on our operations producing the commodities required for the transition, such as copper and nickel, and ramp-up activities as our metals and recycling businesses expand to meet the demands of a low-carbon society.
We believe that this transition is unlikely to be linear through time and geography and may create significant challenges for our workers and others in our value chain and for wider communities.
Through starting to prepare for a Just Transition now, we can be better positioned to leverage new business opportunities, a reskilled workforce and greater demand for transition commodities, while working with national government Just Transition programmes.
We believe that a Just Transition will be a highly complex process; it must be dynamic with the flexibility to respond to evolving policies and socio-economic developments. Society must address the social risks and opportunities from both closure of fossil fuel assets and the corresponding expansion of production of transition metals. We are developing our approach to the Just Transition to take account of this complexity and our interdependence with other companies and the public sector.
We have commenced developing Just Transition principles that are aligned with our company Values and a risk and opportunity assessment to help us design a framework with the flexibility for locally appropriate action. We are also developing guidance to support our industrial assets in planning and identifying potential levers to mitigate risks or enhance the benefits of the energy transition for our affected stakeholders.
Metrics and targets
Our portfolio profile provides the flexibility to decarbonise our emissions footprint. We currently focus on our emissions as our key metric to measure and manage our climate-related risks and opportunities.
During 2022, our operational footprint, or our Scope 1 and Scope 2 market-based emissions, were 28.0 million tonnes CO2e. This represents a 2% increase from the 27.4 million tonnes recorded in 2021 (restated) and is largely attributable to increased production from our Koniambo nickel and ferroalloys smelters. Our 2022 Scope 1 and Scope 2 market-based emissions represent a reduction of 10% compared to the restated 2019 baseline year (31.2 million tonnes CO2e).
Our Scope 1 emissions (direct emissions) were 16.6 million tonnes CO2e in 2022. This figure includes emissions from reductants used in our metallurgical smelters along with emissions from the combustion of diesel and other fossil fuels directly by our industrial assets. It also includes the CO2e of methane emissions from the coal and oil operations under our operational control, which accounts for around 18% of our Scope 1 emissions. Our 2022 Scope 1 emissions represent a 4% increase on the 15.9 million tonnes recorded in 2021 (restated) and are mainly the result of on-site coal fired power generation linked to increased nickel production at Koniambo. Our 2022 Scope 1 reported emissions represent a reduction of 13% compared to the restated 2019 baseline year (19.0 million tonnes).
Our Scope 2 market-based emissions (indirect emissions from the generation of electricity purchased and consumed by our industrial assets) were 11.4 million tonnes CO2e in 2022. This is unchanged from our 2021 Scope 2 market-based emissions; however, the 2022 figure includes an increase in emissions from purchased electricity linked to higher production at our ferroalloys’ smelters in South Africa, which was offset by the delivery of purchased electricity emissions abatement initiatives at other industrial assets within the portfolio. Our 2022 Scope 2 market-based emissions represent a reduction of 6% compared to the restated 2019 baseline year (12.2 million tonnes).
Our Scope 3 emissions in 2022 were 342 million tonnes CO2e, compared to 365 million tonnes CO2e in 2021, restated from 254 million tonnes. The decrease was principally due to a 6% reduction in Glencore’s operationally controlled saleable coal volumes, the result of severe weather impacting production at our Australian coal assets and community blockades at Cerrejón. As per guidance provided in our 2022 results presentation, consolidated coal production included in our production reporting in 2022, was 110 million tonnes and is guided at 110 +/-5 million tonnes for 2023.
In 2022, emissions resulting from our customers’ usage of the fossil fuels produced by our industrial assets totalled 303 million tonnes CO2e (2021: 322 million tonnes CO2e, restated). This represents around 90% of our Scope 3 emissions, while excluding emissions related to production from independently managed Hunter Valley Operations, Hlagisa and Wonderfontein, which are reported in category 15 (investments).
Principles we follow
businesses should support a precautionary approach to environmental challenges