Legal & General unit to sell Glencore stake over thermal coal plans

FILE PHOTO: The logo of commodities trader Glencore is pictured in front of the company's headquarters in the Swiss town of Baar November 20, 2012. REUTERS/Arnd Wiegmann//File Photo

(Reuters) -Legal & General's investment management unit said on Wednesday that it is selling its stake in global commodities trader Glencore this year on concerns over its production of thermal coal.

Legal & General Investment Management (LGIM) is also selling its stake in New York-listed retailer TJX, it said, raising the number of divestments under its Climate Impact Pledge to 16, applying across funds covering around 176 billion pounds ($223 billion) in assets under management.

"While divestment is one of the many stewardship tools we use as a mechanism for driving change, we see it as a last resort and by no means the last stage of engagement," Stephen Beer, LGIM Senior Manager Sustainability and Responsible Investment said.

LGIM said that its decision on Glencore followed a shareholder resolution last year, requesting the miner to disclose how its thermal coal production aligns with the Paris Agreement's objective to limit the global temperature increase to 1.5 degrees Celsius.

UK-based LGIM has a 0.44% stake in Glencore, according to LSEG data.

"We remain concerned that Glencore does not meet our red line asking mining companies to disclose whether they plan to increase thermal coal capacity," LGIM said.

Glencore declined to comment on the news, while TJX did not immediately respond to a request for comment.

Environmental, social and governance (ESG) investing boomed in 2020 and 2021 during the COVID-19 pandemic as low oil prices spurred more investors to diversify beyond fossil fuels, and as fund managers sought to be more climate-conscious.

Through its Climate Impact Pledge, LGIM assesses over 5,000 companies across 20 'climate-critical' sectors. It has also highlighted concerns about climate risk management with Woodside Energy and Nippon Steel in the past.

Glencore mines and trades thermal coal, which is a major contributor to greenhouse gas emissions. The company also has coking coal assets.

It plans to run down its thermal coal mines by the mid-2040s, closing at least 12 by 2035.

($1 = 0.7907 pounds)

(Reporting by Echha Jain and Yadarisa Shabong in Bengaluru; Editing by Savio D'Souza, Sonia Cheema and Emelia Sithole-Matarise)