A DivestUSS Factsheet
1. Glencore and criminal charges
One of the top ten carbon polluters in USS is the mining company Glencore, held by the fund for at least ten years and with £161m of USS’s money as recently as 2022 (the investment as of June 2023 is under £27m). Over that decade Glencore was also heavily involved with corruption on a global scale. Despite trials and convictions in multiple countries over this period, USS repeatedly invested in the company, ignoring any ethical concerns.
Here is just a brief summary:
- Glencore have this year been fined over a billion dollars in the US for bribery and market manipulation. They have pleaded guilty to similar charges in the UK covering five African countries and have paid $50m in fines and reparations in Brazil.
- Glencore will be subject to a three year monitorship by the US Department of Justice, set to begin in 2023.
- In August 2023, 197 funds (together managing £3.7bn) were named as those seeking damages in London’s High Court over allegations Glencore made “numerous untrue and misleading statements” in its 2011 (LSE listing) and 2013 (Xstrata merger) prospectuses. Investor actions were publicised in 2022, but the specific allegations and the participating investors are now known. Dozens of pension funds have joined the action.
- Switzerland launched a prosecution case against Glencore in mid 2020 for alleged crimes in the Democratic Republic of the Congo; Canada had already fined the company over financial disclosures in the DRC.
- The UK’s Serious Fraud Office is investigating former Glencore employees and will decide whether to charge any of them with bribery offences by the end of 2023. Glencore is subject to ongoing investigation by the Office of the Attorney General of Switzerland over its organisational failure to prevent alleged corruption. The Dutch Public Prosecution Service is conducting an investigation ‘of similar scope’.
- The Business and Human Rights Centre’s 2022 Transition Minerals Tracker found, for the second consecutive year, that Glencore had the most recorded allegations of human rights abuses of all tracked companies (70 from 2010-2022, including 5 in 2022).
- In October 2021, Europe’s 2nd largest pension fund, ABP, sold its €57m holding in Glencore after 3 years of engagement with the firm over human rights violations and other sustainability risks produced insufficient results. ABP concluded that the company was not able to reduce significant risks of corruption, conflicts with local communities, pollution and poor working conditions sufficiently in the short term.
2. Glencore and Fossil Fuels
Glencore’s climate policies have been heavily criticised, with two significant votes against management at its last AGM: a 30.25% vote against its Climate Report and a 29.22% vote in favour of a co-filed shareholder resolution asking for enhanced disclosures on its thermal coal business.
CEO Gary Nagle dismissed this extraordinary level of shareholder discontent over its climate planning in June 2023 as the fault of ‘some ESG person in the basement in office number 27‘, and the company has continued to seek approvals for thermal coal extensions and expansions in Australia.
Glencore’s own production data from each of its coal assets shows planned coal production will stay roughly flat for the next 10 years (all Paris-aligned scenarios require thermal coal production to decline significantly over the coming decade). The company’s 2035 and 2050 emissions reduction targets are not aligned with the updated 2022 International Energy Agency Net Zero Emissions (IEA NZE) coal pathway. Their baseline is not aligned with the GHG Protocol guidance. The company has no emission reduction target for 2030 and it has not disclosed its planned capital expenditure allocated to emissions reduction, nor its planned capital expenditure towards new and expanding coal projects over the coming five years [5].
3. Summary
Glencore’s corruption over at least a decade, across numerous countries and continents, has merited over a billion dollars in fines. After extensive engagement with Glencore, Europe’s 2nd largest pension fund decided that the company was not fit for their support. Yet USS’s supposed “ethical investment policy” has done nothing. In tandem with this, Glencore’s climate policies have been comprehensively criticised. How bad does a company actually need to be for USS to decide to divest?
DivestUSS
Factsheet updated 24th October 2023
References:
[1] US Department of Justice report https://www.justice.gov/opa/pr/glencore-entered-guilty-pleas-foreign-bribery-and-market-manipulation-schemes
[2] Guardian 17th August 2021. Controversy surrounds Glencore’s stake in UK battery maker Britishvolt https://www.theguardian.com/business/2021/aug/17/controversy-surrounds-glencore-stake-in-uk-battery-maker-britishvolt
[3] Guardian 21st June 2022 Glencore pleads guilty to bribery related to African oil operations https://www.theguardian.com/business/2022/jun/21/glencore-african-oil-operations
[4] IPE Magazine 18th October 2021 ABP exits Glencore investment over human rights concerns https://www.ipe.com/news/abp-exits-glencore-investment-over-human-rights-concerns/10055740.article
[5] Australasian Centre for Corporate Responsibility, Investor Bulletin: Glencore’s door open for engagement14th September 2023 https://www.accr.org.au/insights/investor-bulletin-glencore’s-door-open-for-engagement/