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GLENCORE PLC - GLN - Glencores commitment to the transition to a low-carbon economy

Release Date: 18/02/2020 09:00
Code(s): GLN     PDF:  
 
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GLN - Glencore’s commitment to the transition to a low-carbon economy

Glencore plc
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
ISIN: JE00B4T3BW64

Baar, Switzerland
18 February 2020

                    Glencore’s commitment to the transition to a low-carbon economy
                     Review of 2019 performance and Scope 3 emissions projection

In February 2019, Glencore published its climate change position statement (position statement),
Furthering our commitment to the transition to a low-carbon economy, which is available on our website.

Today we update our performance against our position statement and for the first time disclose a Scope
3 emissions projection for our business.

Key highlights include:

    -   Paris-consistent strategy/capital discipline
            -   We project a c.30% reduction in Absolute Scope 3 emissions by 2035. This includes
                natural depletion of our oil and coal resource base over time.
            -   Our 2019 capital expenditure was weighted towards energy transition materials,
                including African copper and cobalt and nickel in Canada.
    -   New Scope 1 and 2 targets
            -   We are on track to achieve a near doubling our first GHG reduction target of reducing
                emissions intensity by at least 5% by 2020 compared to a 2016 base line. We expect to
                achieve a c.10% reduction.
            -   New longer-term Scope 1 and 2 targets that support the Paris goals will be announced
                during 2020.
    -   Alignment with TCFD
            -   We continue to implement the recommendations of the TCFD in our annual reporting.
                Details of our performance will be published in our Annual Report 2019 in late February
                2020.
            -   We are incorporating climate change into operational planning, most recently in our new
                Tailings Storage Facility protocol.

Update of our performance against our 2019 position statement

1. Paris consistent strategy/capital discipline
Extract from Position Statement
As we rebalance our portfolio towards commodities supporting the transition to a low-carbon
economy, we expect the intensity of our Scope 3 emissions to decrease. Starting in 2020, we will
start disclosing our longer-term projections for the intensity reduction of Scope 3 emissions,
including mitigation efforts.
We recognise the importance of disclosing to investors how we ensure our material capital
expenditure and investments align with the Paris Goals. This includes each material investment in
the exploration, acquisition or development of fossil fuel (including thermal and coking coal)
production, resources and reserves, as well as in resources, reserves and technologies associated
with the transition to a low carbon economy.
Starting in 2020, we intend to report publicly on the extent to which, in the Board’s opinion, this
was achieved in the prior year and the methodology and core assumptions for this assessment.
These disclosures will be made in our Annual Report.

Performance during 2019:

Our portfolio is well positioned to support the transition to a lower carbon economy, while also
meeting the need for universal access to reliable energy. Our business will continue to evolve over
time as we look to deliver on our climate objectives as part of a Paris consistent strategy. At
present, our projection indicates a reduction of our Scope 3 emissions – those arising from the sale
and use of our own products, notably oil and coal - of approximately 30% by 2035 (1).

We expect the depletion of our coal resource base in Colombia, and to a lesser extent, South Africa
and Australia to contribute to this reduction. Our Australian operations are expected to maintain a
longer and flatter production profile and will continue to produce high quality coal, which will be
required to meet expected levels of global steel production and energy demand in Asia.

Our capital expenditure reflects significant current investment towards growth in production of
battery and conductive metals required for the transition to a lower carbon economy. During 2019,
our capital expenditure was predominantly spent on our key metals’ growth projects, including the
development of Katanga (copper/cobalt) in the DRC, Mopani (copper) in Zambia, the Zhairem
project (zinc) in Kazakhstan and new nickel mines in Canada, one of which will be the one of the
first fully electric mines in the world. When complete, Katanga is expected to produce
approximately 30,000 tonnes of cobalt per annum, helping supply a market that is expected to
grow substantially to more than 200,000 tonnes by 2025.

Global energy demand has grown at 1.4% p.a. (2) from 2010 to 2018 and scenarios reflecting
stated policy objectives indicate energy demand shall continue to grow through 2035. W e believe
that coal, as a reliable and cost competitive form of energy, will continue to have a role in meeting
future energy demand, particularly in developing countries, with Carbon Capture Utilisation and
Storage (CCUS) adoption playing an increasingly important role in achieving emissions abatement
(3). In 2019, our capital expenditure on coal-related projects was mainly for maintaining existing
assets, including the required accounting for capitalisation of mine development costs (both
surface and underground operations), where benefits are expected to be realised beyond 12
months.

When identifying, assessing and ranking coal projects for development, we consider a range of
indicators including the financial payback period, based on a range of future coal price
assumptions. We prioritise shorter payback investment periods.

During the year, the New South Wales state government approved brownfield extensions for Mt
Owen and the United Wambo joint venture project.

The Mt Owen and United Wambo approvals will provide continued employment for more than 750
people, additional employment for 370 people, create additional important State and Federal tax
and royalty sources, and increase the Gross Regional Product in the respective regions by an
estimated A$ 2.4 billion and Gross State Product by an estimated A$ 3.3 billion, through supporting
local businesses and employment opportunities.

We remain committed to our coal production cap of approximately 150 million tonnes.

Notes:
1. When assessing the long-term projections for our Scope 3 emissions arising from the use of some of our products, we
found an intensity metric is a less useful measure than absolute emissions. On this basis, and to support greater
transparency, we report a projection of our absolute Scope 3 emissions.
2. IEA WEO 2019
3. See IPCC SR1.5 sect 2.4. In addition, more information about Glencore’s CCUS project is available at
   http://ctsco.com.au/

2. Scope 1 and 2 Targets

   Extract from Position Statement
   In 2017, we announced our first target of reducing our greenhouse gas emissions intensity by 5%
   by 2020 compared to a 2016 baseline. We are currently on track to meet this target.
   Glencore recognises the importance of continued reductions of greenhouse gas emissions from
   our operations. We are developing new, longer-term targets based on policy and technological
   developments that support the Paris Goals, and intend to make these public in our annual report
   in 2020. We will report annually on our progress.

   Performance during 2019

   We are on track to exceed our target. To date, we have reduced our Scope 1 and 2 emissions
   intensity by 9.7% compared to the 2016 baseline, achieved by a range of measures including
   abatement, use of renewable energy sources and production changes at our operations.

   As our 2020 target ends, we have committed to establish a new, longer-term target that supports
   the Paris Goals. During 2019, we furthered our work on developing this target by identifying and
   quantifying our operations’ carbon reduction opportunities through marginal abatement cost curves
   (MACCs).

   Through this work, we are identifying opportunities to deliver substantial emissions reductions by
   sourcing more power from low-carbon sources and delivering operational improvements that
   enhance efficiency.

   We will communicate our longer-term target in 2020.

3. Review of progress

   Extract from Position Statement

   We are committed to transparency and report annually on our progress in meeting our climate
   change objectives. We include this disclosure in our annual report and provide further details in
   our sustainability report. In addition, we publish data on our performance on our website, including
   disclosure of our Scope 3 emissions.

   We will give consideration to how our climate change objectives can be reflected in the design of
   the relevant schemes for executive management.

   Every three years, we review changes to the Nationally Determined Contributions (NDCs) in line
   with the Paris Goals mechanism, and other relevant policy, economic and technology
   developments to assess societal progress in energy transition and to update our scenario-based
   portfolio assessment.

   Performance during 2019

   Details of our approach to climate change are included on our website, in our annual report and in
   our sustainability report. We disclose our performance annually, including data on our Scope 1, 2
   and 3 emissions (4). We were pleased to receive the ranking of 4 by the Transition Pathway
   Initiative for our approach to the management and disclosure of climate-related risks.
 
   We continuously monitor the policy landscapes and steps countries are taking to support
   achievement of the goals of the Paris Agreement. We are expecting the Nationally Determined
   Contributions (NDCs) to be updated in the course of 2020, and will use these to update our own
   scenarios.

   Note 4: Our Scope 3 emissions are disclosed in our annual Sustainability Report.


4. Alignment with the Task force on Climate-related Financial Disclosures (TCFD)
   recommendations

   Extract from Position Statement

   We were an early supporter of the voluntary guidance on consistent climate related financial
   disclosures produced by the TCFD. We are pleased to support the TCFD guidance and have
   started to implement its recommendations in our annual reporting.

   Consistent with TCFD recommendations, as appropriate, Glencore will continue to disclose the
   metrics, targets and scenarios we use to assess and manage relevant climate-related risks and
   opportunities.

   Performance during 2019

   We continue to implement the recommendations of the TCFD in our annual reporting. Details of
   our performance, including our Scope 1 and 2 emissions are in our Annual Report 2019 and we
   will publish our Scope 3 emissions in our Sustainability Report 2019, which we expect to make
   available in April 2020.

   We monitor risks and opportunities related to climate change and, going forward, will be taking
   further steps to roll out site-specific risk assessments. We also continue to incorporate climate
   change into operational planning: for instance, our new tailings storage facilities (TSF) protocol,
   adopted in 2019, requires operations to assess the impact of climate change on the design,
   operation, maintenance and closure of TSFs.

   Further details on the risks we have identified in relation to climate change are included in the
   Principal Risks and Uncertainties section of our Annual Report 2019.

   Our scenarios regarding global responses to climate change were developed in 2017 and took into
   account energy market projections developed by organisations such as the IEA and World Energy
   Council (WEC), leading climate science projections from the IPCC and likely shifts in policy and
   other conditions corresponding to scientific technology and economic changes.

   We believe that national policies play a critical role in shaping the response to climate change.
   National commitments and climate pledges are required to be updated in 2020 and we will use
   these to update our scenarios for achieving the goals of the Paris Agreement and test the resilience
   of our business.

5. Corporate climate change lobbying
   Extract from Position Statement
   We believe that it is appropriate that we take an active and constructive role in public policy
   development and participate in relevant trade associations. We acknowledge the IIGCC Investor
   Expectations on Corporate Climate Lobbying and recognise the importance of ensuring that our
   membership in relevant trade associations does not undermine our support for the Paris Goals.
  
    Performance during 2019
    During 2019, we undertook our first review of our membership in relevant trade associations to
    ensure their activities and statements align with those of Glencore and do not undermine our
    support for the Paris Goals.
    We reported on our approach to the review, and its findings, in our report Review of our industry
    organisations’ positions on climate change. We will review annually the activities and positioning
    of our relevant trade associations on the topic of climate change, acknowledging that trade
    associations represent industry across multiple policy areas.

Stakeholder engagement

We hold regular meetings with our investors, banks, governments and customers on topics related to
climate change. We engage constructively with the Climate Action 100+ initiative and the Transition
Pathway Initiative. These conversations help us continue to update our approach to climate change to
reflect evolving stakeholder expectations, changing policy landscape and developments in low emission
technologies.

ENDS

For further information please contact:

Investors
Martin Fewings              t: +41 41 709 2880 m: +41 79 737 5642 martin.fewings@glencore.com
Maartje Collignon           t: +41 41 709 3269 m: +41 79 197 4202 maartje.collignon@glencore.com
Media
Charles Watenphul           t: +41 41 709 24 62 m: +41 79 904 33 20 charles.watenphul@glencore.com
Sustainability
Anna Krutikov               t: +41 41 709 34 26 m: +41 79 737 55 82 anna.krutikov@glencore.com

www.glencore.com

Glencore LEI: 2138002658CPO9NBH955
Notes for Editors

Glencore is one of the world’s largest global diversified natural resource companies and a major producer
and marketer of more than 60 commodities. The Group's operations comprise around 150 mining and
metallurgical sites and oil production assets.

With a strong footprint in over 35 countries in both established and emerging regions for natural resources,
Glencore's industrial activities are supported by its global marketing network.

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation,
battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers
and consumers of commodities. Glencore's companies employ around 160,000 people, including
contractors.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the
International Council on Mining and Metals. We are an active participant in the Extractive Industries
Transparency Initiative.

Follow us on social media:
        www.facebook.com/Glencore
        www.flickr.com/photos/glencore
        www.instagram.com/glencoreplc
           www.linkedin.com/company/8518
        www.slideshare.net/glencore
        www.twitter.com/glencore
        www.youtube.com/glencorevideos

Disclaimer

The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal
entities. In this document, “Glencore”, “Glencore group” and “Group” are used for convenience only where
references are made to Glencore plc and its subsidiaries in general. These collective expressions are used
for ease of reference only and do not imply any other relationship between the companies. Likewise, the
words “we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work
for them. These expressions are also used where no useful purpose is served by identifying the particular
company or companies.

Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)

Date: 18-02-2020 09:00:00
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