Evaluating a company's impact (the case of Glencore)

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This week’s read time: 3 minutes

You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

Glencore

This week we dive deep into Glencore’s environmental and social impact.

Glencore is one of the world’s largest globally diversified natural resource companies, with a strong presence in the mining, metals, energy, and agricultural sectors.

Some interesting facts:

• Glencore operates some of the oldest mines in the world. For example, the Mount Isa Mines in Australia, which Glencore owns, have been operational since the early 20th century and are among the largest producers of copper and zinc globally.

• Glencore has been embroiled in numerous controversies over the years, including accusations of environmental degradation, human rights violations, and corruption. The company’s operations are closely watched by regulators and environmental groups due to the significant impact of its mining activities.

COMPANY’S IMPACT

Glencore’s overall impact score

Glencore has a general impact score of -2.59 (on a scale from -5 to +5). Its impact is spread across 12 UN Sustainable Development Goals (SDGs) and 10 topics, split between positive and negative analyses.

In the socio-economic sphere,

Glencore’s operations are crucial to the global supply of essential raw materials. The company’s mining and resource extraction activities provide critical inputs for industries ranging from technology to construction. Glencore’s extensive supply chain supports thousands of jobs, and the company plays a significant role in the economies of the regions where it operates. It is the 2nd largest mining company globally based on brand value, providing 60+ commodities and operating in 35+ countries. Glencore also employs 150,000 people, fostering economic growth and social stability, while offering salaries above the country and industry average. When it comes to gender parity, the company hasn’t achieved it at any level of its workforce.

However, Glencore’s socio-economic impact is not without controversy. The company has faced numerous allegations related to corruption, unethical practices, and human rights abuses, particularly in developing countries. Accusations include exploiting labor, environmental degradation, and complicity in fueling conflicts over resource-rich areas. The company was found guilty of bribery and corruption in Cameroon, Guinea, Ivory Coast, Nigeria, South Sudan, Brazil, Venezuela, and the DRC, spanning approx. from 2007 to 2019, which resulted in billions of dollars in fines. Furthermore, as per a 2023 investigation report, its mines have adversely affected the health of at least 336,000 people in the nearby communities by contaminating their water supply sources.

Environmentally,

Glencore emits over 433 million tonnes of CO₂ equivalent annually, equal to the emissions of 111 coal-fired power plants for a year. The company also uses more than 558 million m³ of water annually, 44% in medium-high, high, or extremely high water-stressed areas. Additionally, it generates approximately 2.31 billion tonnes of waste, while it sustainably manages only 1% of it. Glencore has operations spanning over 2 million hectares of land. Until 2021, only 37,000 hectares of these had been rehabilitated, and 93,000 hectares (about 71%) remain in need of restoration.

_{*The impact score is current as of August 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is Glencore’s ESG rating?

For comparison, Glencore has a BBB rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

Glencore’s impact scores by SDG

Positively (and by weight), the company scores the highest in Industry, Innovation, and Infrastructure SDG (+2.75), and Partnership for the Goals (+2.45).

Negatively, the company scores the worst in Responsible Consumption and Production SDG (-3.15), followed by Peace, Justice, and Strong Institutions (-4.47), and Climate Action (-3.68).

*the analysis takes into account the weight of the SDGs

CONCLUSION

Final words

So, Glencore’s key social and environmental impact lies in …

its critical role in the global supply of essential raw materials that drive industries from technology to construction. As the second-largest mining company globally, Glencore supports economic growth and provides livelihoods for thousands of people across its supply chain in 35+ countries. The company’s extensive operations contribute significantly to regional economies, and its products advance everyday life.

However, Glencore’s operations come with substantial socio-economic and environmental costs. The company has faced serious allegations of corruption, unethical practices, and human rights abuses, particularly in developing countries, resulting in billions of dollars in fines. Furthermore, its mining activities have had devastating effects on local communities, including contaminating water sources, which have negatively impacted the health of hundreds of thousands of people. Environmentally, Glencore is a major GHG emitter, releasing over 433 million tonnes of CO2 annually. The company generates vast amounts of waste, with only a small fraction managed sustainably, and a significant portion of its disturbed land remains unrestored.

Its negative -2.59 score reflects the severe implications of these factors, highlighting the considerable challenges Glencore faces in balancing its essential role in the global economy with the pressing need for ethical practices and environmental stewardship.

If you’d like to delve deeper into Glencore’s impact, you can explore it here.

Next week, we will analyze the impact of the company that revolutionized online payments, PayPal. 🟢

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]