Commodities trader Trafigura sets first emissions reduction target

Trafigura has announced its first emissions reduction target in a sign that even the mostly privately owned commodity trading industry is under growing pressure to take action on global warming. 

The Geneva-based commodities trader aims to cut carbon dioxide emissions produced by its own operations by at least 30 per cent over the next three years, according to its annual sustainability report published on Wednesday.

Although public companies are subject to growing calls from shareholders to help tackle climate change, Trafigura’s decision shows how even those that are privately owned face pressure from banks and other stakeholders to reduce their carbon footprint and prove their environmental credentials.

“Achieving our target will result in a sustainable reduction of over 1m tonnes of CO2e (carbon dioxide equivalent) from our operations,” said Trafigura chief executive Jeremy Weir.

Trafigura is setting so-called scope 1 and 2 targets, which cover emissions from their own operations, including mines. These are generally seen by the energy and mining industries as easier to manage because they are under their direct control.

Trafigura said it intended to set a “meaningful” target for indirect, or so-called scope 3 emissions, by the end of its 2023 financial year. They are more difficult for commodity traders because they cover emissions generated from the ships used to move metals and millions of barrels of crude each day. 

Like publicly traded rival Glencore, which last month pledged to reduce its greenhouse gas emissions to net zero by 2050, Trafigura’s definition of scope 3 emissions does not include the impact of customers burning the fuel or processing the metals its traders buy and sell. The groups argue they merely act as middlemen. 

For oil producers such as BP and ExxonMobil, scope 3 emissions typically account for more than 80 per cent of their total. For major miners like BHP and Rio Tinto, the figures are even higher.

The targets from Trafigura come as the company, which is owned by its top 850 employees, is set to become a larger oil producer. Last month it surprised some by announcing it was buying a stake in a giant Arctic oil project run by Russia’s state-backed oil company, Rosneft.

Its involvement in Vostok Oil, which Rosneft hopes will eventually produce more than 1m barrels a day — or more than 1 per cent of global crude supplies — stems from the trading house’s longstanding relationship with the Russian energy group.

In its sustainability report, Trafigura said it expected “new, low-cost sources of oil” would be needed “while the shift to alternative energy sources takes place”.

Trafigura’s total greenhouse gas emissions, excluding investments in other companies and joint ventures, were 13.48m tonnes of CO2e in 2020, up 20 per cent from 2019. Its scope 1 and 2 emissions amounted to 3.48m tonnes of CO2e, while it had 10m tonnes of scope 3 emissions.

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