By timofeev @ Adobe Stock
Is the decision by Glencore to continue mining and selling coal a signal that so-called “sustainable” investing has peaked? Joe Wallace reports for The Wall Street Journal:
Glencore GLEN 2.73%increase; green up pointing triangle abandoned a plan to spin off its coal business after shareholders encouraged it to keep mining the fossil fuel, in the latest signal that the finance world’s sustainable-investing craze is fizzling out.
London-listed Glencore, one of the world’s biggest producers of electricity-generating thermal coal, said Wednesday it asked investors with two-thirds of voting shares for their views on the spin off. Of those who expressed a preference, more than 95% wanted Glencore to retain coal, the company said.
It didn’t disclose how many shareholders that represented or whether they included former Chief Executive Ivan Glasenberg, the company’s biggest shareholder and a longtime, unapologetic proponent of coal.
Shares of Glencore, which also reported a net loss of $233 million in the first half of 2024, rose 2.4%. The company’s preferred measure of earnings, which strips out impairments and other one-off factors, showed profits of $6.3 billion, down by a third from the same period in 2023, reflecting a drop in commodity prices.
Coal has long been a pillar of Glencore’s business, but the company had signaled it would eventually get rid of its mines and double down on supplying metals and minerals needed for electric vehicles.
The U-turn shows how environmental, social, and governance investing has lost momentum since it took off in the early days of the Covid-19 pandemic, when billions of dollars poured into funds that directed money based on sustainability credentials and chief executives flaunted their ethical bona fides.
Just last fall, Glencore shareholders backed the plan to split the company’s coal unit and list its shares in New York. Explaining their change of heart Wednesday, CEO Gary Nagle pointed to the politicization of ESG investing in the U.S. as well as shifting attitudes about the pace of move from fossil fuels to cleaner sources of energy.
The “ESG pendulum has swung back over the last nine or 12 months,” Nagle said. “You’ve seen how some of the U.S. states have reacted to some of the ESG narrative.” Meantime, he said, there has been a growing realization that fossil fuels will keep powering the world during the energy transition.
Plus, he added, shareholders “do still recognize that cash is king…and the fact that these businesses generate huge amounts of cash.”
A political backlash against ESG, led by Republicans such as Florida Gov. Ron DeSantis, who branded the movement “woke capital,” prompted a rethink on Wall Street and in boardrooms. It didn’t help that high interest rates slammed shares of clean-energy companies dependent on cheap funding, whereas fossil fuels churned out cash when the invasion of Ukraine jacked up oil, natural-gas and coal prices.
Read more here.
If you’re willing to fight for Main Street America, click here to sign up for the Richardcyoung.com free weekly email.
