The world’s biggest mining companies face a combined US$10 billion risk to their earnings if carbon pricing tightens in the wake of crucial global climate talks in Paris starting next week, according to a report from UK non-profit organization CDP.
CDP, which says it advises institutional investors with assets of US$95 trillion, ranked 11 companies on climate change-related metrics including disclosure of emission-reduction targets, conducting water stress-test studies and preparing for an expected tightening of carbon regulation to emerge from the UN climate summit.
The estimate of earnings at risk, representing about 15 percent of the total for the group, assumes the introduction of a carbon price of US$50 per tonne, a level already accounted for by some companies, it said.
Glencore Plc, the world’s biggest exporter of power-station coal, scored the worst among the companies that participated in the study, according to CDP, formerly known as the Carbon Disclosure Project.
A growing number of investors and regulators are studying the possibility that untapped deposits of oil, gas and coal — valued at trillions of US dollars globally and controlled by some of the biggest resource companies in the world — might become stranded assets as governments adopt stricter climate change policies.
“This research is a canary in the coal mine for investors” and shows that the biggest miners are “unprepared for the transition to a low-carbon economy,” James Magness, CDP’s head of investor research, said in a statement.
The miners assessed in CDP’s study were ranked A to E, with A being the highest and E the lowest, on metrics including energy efficiency, water resilience, coal exposure, carbon-cost exposure and carbon-regulation readiness.
The scores were generated by responses received from the companies that participated in the study.
Vale SA and BHP Billiton Ltd scored best in the study.
“Glencore is the clear laggard on carbon-regulation readiness, due to its opposition to carbon pricing and dismissal of the concept of stranded assets,” CDP wrote in the statement. It scored poorly across all metrics except for water resilience, CDP said.
The International Council on Mining and Metals said in a statement before the release of the CDP study that some of its members had expressed concern over the methodology used, adding it would respond more fully when it had a copy of the report. Glencore officials were not immediately able to comment on the study, while a spokesman for the World Coal Association declined to comment.
“We work to mitigate and manage any physical impacts of climate change that we can affect,” Glencore wrote in its 2014 Sustainability Report published in April. “We openly and transparently disclose our carbon and energy footprints and participate in the CDP Climate Change program.”
BHP, the world’s biggest mining company, in September published its own research on the impact of climate change on its assets. It said it might lose almost 2 percent of the value of its assets by 2030 because of the spread of measures that put a price on pollution.
Governments might put a price of US$24 to US$50 a tonne on emissions of carbon dioxide within the next 15 years.
Source: http://www.taipeitimes.com/News/biz/archives/2015/11/24/2003633182
