The world’s largest mining companies, including Canadian companies Barrick Gold Corp. and Teck Resources Ltd., collectively pledge to reduce their emissions to net zero by 2050, as they face increasing pressure from investors and environmentalists to responsibly mine metals.
Net zero means that 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 pledge to keep global temperatures rising 1.5 Â° C above pre-industrial levels. .
The climate change commitments made on Tuesday by the 28 members of the London-based International Council on Mining and Metals (ICMM) only include Scopes 1 and 2 emissions, and do not extend to Scope 3.
Scope 1 and Scope 2 are the carbon generated by miners when they extract the ore from the ground, and the emissions generated on site to process the metals. Scope 3 emissions are those generated by the end customer, such as refineries that process iron ore, nickel and metallurgical coal. Scope 3 shows are considered the most difficult to master, as miners have little direct control over the process. Still, the ICMM said the group will set Scope 3 emission targets by the end of 2023.
Doug Pollitt, analyst for Toronto-based institutional research firm Pollitt and Co., said he was encouraged that miners are taking their environmental, social and governance (ESG) commitments seriously, as it influences the the way people invest.
âIt makes a difference. People buy things because they feel good with them, âhe said. “You obviously want to make money, but that’s not the only reason people buy [shares in mining companies]. ESG sells.
In recent years, several large, savvy global investors have eliminated or reduced their holdings in companies considered to be the worst offenders of the environment. Norway’s trillion-dollar sovereign wealth fund gave up much of its thermal coal holdings last year. The Caisse de dÃ©pÃ´t et placement du QuÃ©bec has announced its intention 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 investor reactions. The Globe and Mail reported last month that Teck Resources is actively trying to sell its metallurgical coal division as it is already increasing its exposure to copper. Copper has a much cleaner energy profile than coal, given its increasing use in electric car batteries.
As mining companies try to reduce their carbon footprint, Pollitt says he also expects an increase in independent oversight to ensure the industry meets its commitments. ESG, for the most part, is self-regulated. Some companies have already been criticized for being too lax in their definitions of their climate change initiatives. Last month, proxy advisory firm Glass Lewis expressed concern that the issuance targets for BHP Group Ltd. did not appear to be science-based. Glass Lewis also found a lack of specificity regarding the miner’s disclosure of some of its emissions targets, particularly related to steelmaking.
Toronto-based Barrick said on Tuesday it welcomed ICMM’s willingness to act collectively on climate change. The world’s second-largest gold miner has said it is switching from coal to natural gas and solar power at its massive Nevada gold complex, in a bid to cut emissions.
“Barrick already has a clear, scientifically-based roadmap for reducing emissions, which targets a 30% reduction by 2030 from our 2018 benchmark and zero net income by 2050,” said the chief executive Mark Bristow in a statement.
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