The world’s biggest mining companies, including Canada’s Barrick Gold Corp. and Teck Resources Ltd., are collectively committing to cut their emissions to net zero by 2050, as they face increasing pressure from investors and environmentalists to mine metals responsibly.
Net zero means companies either emit no greenhouse gases, or offset their emissions by removing a corresponding amount of carbon dioxide from the atmosphere. Many of the current global climate commitments stem from the 2015 United Nations climate conference in Paris, which saw signatory countries vow to keep a rise in global temperatures to 1.5 C above preindustrial levels.
The climate-change commitments made on Tuesday by the 28-member London-based International Council on Mining and Metals (ICMM) comprise Scope 1 and Scope 2 emissions only, and don’t extend to Scope 3.
Scope 1 and Scope 2 are the carbon generated by miners when they extract ore from the ground, and emissions generated on site to process metals. Scope 3 emissions are those generated by the end customer, such as refineries that process iron ore, nickel and metallurgical coal. Scope 3 emissions are considered the toughest to get a handle on, as miners have little direct control over the process. Still, ICMM said the group will set Scope 3 emission targets by the end of 2023.
Doug Pollitt, an analyst with Toronto-based institutional research firm Pollitt and Co., said he’s encouraged that miners are taking their environmental, social and governance (ESG) commitments seriously, because it influences how people invest.
“It makes a difference. People buy things because they feel good about them,” he said. “You obviously want to make money, but it’s not the only reason why people buy [shares in mining companies]. ESG sells.”
Over the past few years, several large global intuitional investors have eliminated or reduced their holdings in companies that are considered the worst environmental offenders. Norway’s trillion-dollar sovereign wealth fund jettisoned much of its thermal coal holdings last year. The Caisse de dépôt et placement du Québec said it intends to sell all of its oil investments by the end of next year.
Mining companies are also reducing their dependence on their most polluting commodities to guard against possible future backlash from investors. The Globe and Mail reported last month that Teck Resources is actively trying to sell its metallurgical coal division, as it already increases its exposure to copper. Copper has a much cleaner energy profile than coal, given its growing use in electric-car batteries.
As mining companies attempt to lower their carbon footprints, Mr. Pollitt says he also expects an increase in independent oversight to ensure the industry is living up to its commitments. ESG, for the most part, is self-regulated. Some companies have already been called out for being overly lax in their definitions around their climate-change initiatives. Last month, proxy advisory firm Glass Lewis said it was concerned that BHP Group Ltd.’s emissions targets did not appear to be science-based. Glass Lewis also found a lack of specificity pertaining to the miner’s disclosure around some of its emissions targets, particularly related to steel-making.
Toronto-based Barrick said on Tuesday that it welcomes ICMM’s push to move collectively on climate change. The world’s second-biggest gold miner said that it is transitioning away from coal to natural gas and solar power at its massive gold complex in Nevada, in an effort to reduce emissions.
“Barrick already has a clear scientifically based emission-reduction roadmap, which targets a 30 per cent cut by 2030 against our 2018 baseline and a net-zero outcome by 2050,” chief executive officer Mark Bristow said in a statement.
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