In the run up to COP21 in Paris, a new report has found that the “largest metal and mining companies” are not managing carbon and water risks adequately, and that most are “unsupportive of new climate regulation[s]”.
According to CPD, an environmental disclosure system, the companies – who have a combined market value of $329 billion – account for 85% of emissions among “large, listed miners.”
“This research is a canary in the coal mine for investors,” says James Magness, CDP Head of Investor Research.
“It shows that the world’s biggest mining companies, currently worth over US$329 billion, are unprepared for the transition to a low carbon economy.”
The reports findings highlight that only six of the relevant mining companies have disclosed meaningful reduction targets for greenhouse gas emission and that nine out of the 11 oppose new climate regulations. Additionally, 50% of the companies on the list have facilities in medium or high water stress regions.
Of the companies listed, Glencore and First Quantum Minerals “were the worst ‘across the board’ performers.” Glencore particularly is listed as lagging on carbon regulation readiness, as the company is opposed to carbon pricing and has dismissed the concept of stranded assets.
The research indicates that $10 billion in earnings could be at risk if carbon pricing of $50 per tonne is introduced, a figure already accounted for by some companies.
Magness continues that, while some companies are making progress in areas such as energy efficiency and water resilience, the sector as a whole needs to ‘up its game’.
“As a first step, all the large miners should be reporting meaningful GHG emission reduction targets and doing more to back new climate regulation,” he believes.
Says Paul Simpson, CEO of CDP: “As the world prepares for a binding climate deal in Paris, this research highlights both risks and opportunities for extractive sector investors.
“As shown by the recent growth of initiatives such as the Montreal Pledge and the Portfolio Decarbonization Coalition, major investors now appreciate the impact of environmental factors on the bottom line, and they need reliable environmental data to accurately assess these financial risks and opportunities.”
The mining companies were categorised and measured across five key areas namely energy efficiency, water resilience, coal exposure, carbon cost exposure and carbon regulation readiness.