New research from the Transition Pathway Initiative (TPI) reveals that just two of the ten largest mining companies are aligned with limiting climate change to 2°C. These 10 companies have a market capitalisation of over $350bn and contribute to annual carbon emissions of over 1.5 billion tonnes either directly or indirectly via their products.Freeport and Grupo Mexico have such a low emissions intensity that they are already aligned with the 2050 benchmarks, including Below 2C. But their strong climate performance is in stark contrast to others in the sector. Adam Matthews, co-chair of the TPI and director of ethics and engagement for the Church of England Pensions Board, said, “The sector has made significant progress over the last six months.” TPI’s research shows that Glencore and Anglo American are currently within the 2°C benchmark, but their emissions pathways are too flat to keep them in alignment by 2050. Glencore’s plans to cut Scope 3 emissions by c. 30% by 2035 are promising, but do not include its marketing activities. Stated net zero ambitions from BHP, Rio Tinto and Vale only cover operational emissions, typically just 6% of the emissions TPI assess. As a result, these companies are actually further away from alignment in 2050 than they are today. Fortescue and South32 have yet to set credible long-term targets and need to cut their overall carbon intensity by nearly 80% by 2050 to claim alignment with 2C, while MMC Norilsk provided insufficient disclosure for assessment to be possible. “Several companies, including. Rio Tinto, Vale and Glencore, have announced new, more ambitious emissions targets and BHP have acknowledged the role of scope 3 emissions in their future approach,” Matthews said. He added that Anglo American are currently below the benchmark but without further action could become unaligned with the goals of the Paris Climate Agreement. “TPI’s analysis shows that not all commitments cover all activities and companies will need to go significantly further to meet investor expectations from initiatives such as Climate Action 100+”. The results are published in a discussion paper intended to refine TPI’s methodology in advance of a full assessment of the sector later in 2020 – an expansion that will bring TPI’s carbon performance coverage to 10 sectors and 261 companies. To assess the diversified mining sector’s Carbon Performance, TPI calculates the emissions intensity of each firm and compares these against sector benchmarks which reflect international climate targets. Benchmarks are generated from an absolute emissions budget allocated to the sector using the Sectoral Decarbonization Approach. Applying the methodology reveals to investors which companies are aligned with the Paris Agreement climate goals and those that are not.
“Many assessed companies mine materials that both support the transition and those that do not. It is essential that investors have a complete picture of their carbon performance, which includes public targets for scope 3 emissions.”To calculate emissions intensity, TPI’s proposed methodology adds disclosed Scope 1 and 2 emissions with estimates of Scope 3 emissions. Many mining products, like coal and iron ore, generate significant downstream emissions. The TPI calculates Scope 3 by applying emission factors product by product. For a denominator, TPI proposes converting all mining production (including energy products) into a single Copper Equivalent (Cu Eq.) metric. TPI is seeking feedback from investors, companies and civil society on several aspects of its methodology including the choice of emissions factors for different forms of production across the sector and the degree to which trading/marketing activities should be included in companies’ lifecycle emissions, with the aim of improving the methodology further.