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Glencore, Gunvor, Mercuria, Trafigura and Vitol, five of the largest commodities traders in the world, have disputed claims they are underreporting the impact of their CO2 emissions and defended their investments into carbon offset projects.

A report from Swiss NGO Public Eye claims the five are responsible for over 4 billion tonnes of CO2 emissions annually – more than 100 times the yearly emissions of Switzerland, the country in which the traders are based. However, the traders publicly reported emissions only reached 1 billion tonnes due to what the NGO describes as a “dubious and deficient calculation method”.

In response, the traders maintain that their reporting practices adhere to internationally recognised standards and express disappointment in what they consider to be misleading calculations and conclusions in the report.

Indirect emissions – otherwise known as scope 3 – are those generated both upstream and downstream of a company’s supply chain. For traders, the bulk of these emissions is the CO2 produced by the burning of the coal, oil and/or gas they sell. Many of the traders mentioned in the report either do not calculate these specific emissions or only include a fraction of them in their reporting.

Traders are not legally required to calculate or publish their scope 3 emissions data, a notoriously difficult task. Whilst the EU’s Corporate Sustainability Reporting Directive (CSRD) is compelling companies in many industries to address this problem, it is unclear if the regulation will mandate the five traders to disclose their scope 3 emissions – a requirement currently under consultation in Switzerland.

Manuel Abebe, commodities researcher at Public Eye, tells GTR that “given the high turnover and asset value of the companies in the EU, we expect most of them to fall under CSRD. But for commodity traders it can be challenging to assess from the outside due to the often opaque company structures.”

Even if the five traders are beholden to the CSRD, it may not force them to disclose the full effects of their downstream emissions.

Traders are currently “cherry-picking methodologies that make their scope 3 emissions appear smaller than they really are and that obscure their true greenhouse gas emissions”, Abebe says.

Whilst this is allowed under current disclosure rules, Public Eye argues in its report that the downstream emissions from traders are an “integral, material part of the commodity trading business model”, as the ultimate end use of fossil fuels they sell is to generate electricity.

Abebe adds that “given the use-phase of the sold coal, oil, and gas accounts for [more than] 95% of their total GHG [greenhouse gas] emissions, we believe it is essential that commodity traders fully disclose their scope 3 emissions”.

All five companies have plans to reduce carbon emissions, but Public Eye claims those plans remain vague. All but Glencore received a “very poor” rating in the NGO’s assessment of their “integrity of [climate] targets and solutions”, with Glencore receiving a slightly higher “poor” rank.

The methodology used by Public Eye is disputed by the traders themselves.

A Trafigura spokesperson tells GTR: “The Public Eye report is neither an accurate nor a particularly fair assessment of Trafigura’s sustainability reporting, transparency, and carbon trading activities.

“We fully disclose the basis for our GHG emissions reporting and engage openly on our climate approach with external stakeholders. We are also working on future reporting needs under CSRD and CSDDD [Corporate Sustainability Due Diligence]. To claim that scope 1, 2 and 3 emissions from a global industry are equivalent to scope 1 and 2 emissions from one nation is misleading and does not help to foster a constructive discussion about how best to decarbonise global supply chains.”

Vitol says “the Public Eye approach to measuring emissions is not aligned with internationally recognised and agreed standards”.

“Vitol’s greenhouse gas inventory is prepared using methodologies consistent with the appropriate international standards; that is: GHG Protocol, the IPIECA guidelines, as well as additional guidance from the IPCC [Intergovernmental Panel on Climate Change], the IMO [International Maritime Organization], the GLEC [Global Logistics Emissions Council], the ISO [International Organization for Standardization] and the SASB [Sustainability Accounting Standards Board] standards,” a Vitol spokesperson says. “In the interests of transparency, we publish our methodology on our website.”

A Gunvor spokesperson tells GTR it is “very confident in our emissions reporting numbers, which are validated by independent, third parties”.

The spokesperson says the Public Eye report “grudgingly” gave the company credit, pointing to a passage in the report that reads: “Only the figures reported by Gunvor appear more complete, thus more credible […] only Gunvor’s climate report, which has been fundamentally revised for 2023, comes reasonably close to Public Eye’s conservative estimates.”

Mercuria and Glencore had not replied to a request for comment by the time of publication.

 

Carbon offsets

The report also takes aim at traders’ increasing intervention in the carbon credits market. Carbon credits are a commodity nominally equivalent to a CO2 offset of one tonne; each credit is created through projects that either prevent carbon from entering the atmosphere or – theoretically – pull it back out.

This means that a company wishing to continue polluting can do so whilst remaining carbon neutral on paper if they buy an equivalent amount of credits. The price of these credits ranges from under US$10 to over US$50 depending on the project, country and verifier, but also on when the credits are sold. Public Eye says in its report that “offset prices are extremely volatile, and can double or triple within a short period of time”.

Carbon offset projects commonly take the form of investment into developing countries for projects like tree planting, clean heating and, in some cases, renewable energy. However, the market has been rocked by scandal in recent years, including a January study that found cookstove projects were overvalued by nine times – effectively making each credit purchased equivalent to only 0.1 tonnes of CO2.

Traders are increasing their investments into carbon credit-generating projects. Vitol announced a US$550mn investment into African clean cooking infrastructure in May, of which “a significant part” would be into carbon credit-generating cookstove projects, Public Eye says.

A Vitol spokesperson tells GTR: “Vitol is surprised and disappointed at Public Eye’s criticism of Vitol’s investing in clean cooking solutions. Investment in clean cooking is supported by the UN, through the Clean Cooking Alliance and the World Bank. According to these organisations, traditional cooking methods contribute to between 3-4 million deaths a year, with pregnant women and children particularly vulnerable.”

Trafigura, announced on November 11 that it is committing a further US$100mn to a forest planting scheme in Colombia, which it says will double the size of the project and provide high-integrity carbon credits.

Whilst Public Eye notes that it appears to be a more credible scheme than cookstoves, the NGO warns that it could “quickly backfire”, as the eucalyptus trees planted are highly flammable.

“Within a two-month dry spell last year, the project had to manage close to 200 fires,” Public Eye says. “Trafigura says that it has ‘invested significantly in rigorous fire management measures’ and that these fires had no impact on the planted area. But whether the trees will actually survive the expected 30 years, which is still too short for an effective climate project, is a completely open question.”

In response, a Trafigura spokesperson says to GTR that “the project has invested significantly in rigorous fire management and control measures, including firebreaks, equipment, and trained teams.

“During a dry period in 2023-2024, the project managed 90 fires in December 2023 and 96 fires in January 2024 without any impact to the planted area, unlike the unmanaged natural and degraded savannah.”