Glencore Chairman Defends Firm from Greenhouse Gas Criticism

The chairman of Glencore (GLNCY) has defended his firm’s current strategy to reduce greenhouse gas emissions following intense criticism from climate activists.

Tony Hayward, who served as the CEO of British Petroleum (BP) during the Deepwater Horizon oil spill, rebuffed criticism that miners such as Glencore are not doing enough to reduce emissions. “The projection we have made is a direct consequence of the capital allocation we are making and I think it’s much more robust than the so-called targets that other people have out there,” said Hayward.

At the beginning of May, Norway’s $1trn wealth fund blacklisted Glencore, along with several smaller miners, citing their continued role in the production and use of coal.

Though coal power still supplies nearly a quarter of the world’s primary energy and two-fifths of global electricity, pressure from the green lobby has mounted on miners to gradually end their coal operations.

With Glencore’s annual meeting set for June 2, the company’s senior leaders are currently attempting to calm the fracas triggered by the Norwegian Government Pension Fund Global’s divestiture announcement.

As Norway’s wealth fund holds around 1.5% of globally listed shares, it is closely followed by institutional and retail investors, and there are fears that its decision could be the start of a longer-term turn away from mining companies.

Hayward himself is under pressure ahead of the meeting, with shareholders advisor Pensions & Investment Research Consultants actively opposing his re-election as chairman due to his leadership of BP during the Deepwater Horizon crisis of 2010.

Glencore stock is down over 40% year to date, bringing its market cap down to $24.4 billion. Even so, TipRanks data show that Glencore has an average price target of $2.75 and that analysts rate it a Hold. This represents an additional 25% downside over the next 12 months.

In a recent note to clients, Credit Suisse analyst Conor Rowley said that in such an uncertain market, he favors quality names with greater geographic diversification, such as Anglo American (AAUKF). Rowley downgraded Glencore from Buy to Hold.

Glencore currently trades for $3.70 per share. (See Glencore’s stock analysis on TipRanks).

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