New research shows specialist coal mining companies falling short in their ability to manage carbon emissions


11 July 2017

Many of the world’s leading coal mining companies are failing to
manage effectively the business risks arising from climate change,
according to a new report from the Transition Pathway Initiative
(TPI).

The TPI is backed by asset owners and investors with over £4
trillion ($5.2 trillion) of assets under management. The
assessment of companies’ carbon emissions management
 is
carried out by the London School of Economics’ Grantham Research
Institute on Climate Change and the Environment and supported by
data from FTSE Russell.

The latest assessment, which follows earlier ones on electricity
utilities and oil and gas companies, evaluated the management
policies and processes of the world’s 20 largest coal mining
companies. It found that:

  • Small to mid-cap pure play coal mining companies lag behind the
    large, diversified mining companies.
  • The large, diversified mining companies, such as Anglo
    American, BHP Billiton, Glencore and Rio Tinto, perform well
    relative to other sectors.
  • Some pure play coal mining companies – DMCI Holdings, Inner
    Mongolia Yitai Coal and Shougang Fushan Resources Group – do not
    appear to publicly acknowledge climate change as a business issue
    at all.
  • Less than half of companies measure their lifecycle carbon
    emissions, despite the overwhelming importance of downstream
    emissions from burning coal to the overall carbon footprint of coal
    mining.
  • The sector as a whole lags behind the electricity utilities
    sector.

TPI assessments, which are used by investors to gauge the carbon
risk in their portfolios, looks at both management quality and the
extent to which companies’ carbon performance and policies are
consistent with international targets on the transition to a low
carbon economy under the Paris Agreement.

The assessment of mining companies covers only management
quality at this stage because many mining companies do not yet
publish adequate data on carbon emissions to evaluate
performance.

Management quality of the world’s top 20 coal mining
companies

TPI-Mining -Management -Quality -13-July -updated -10 

Commenting on the study, Professor Simon Dietz, Co-Director of
the London School of Economics Grantham Research Institute
said:

“There is plenty of room for improvement in the quality of
management of carbon emissions for virtually all of the companies
assessed in this report. Many companies in this sector are poorly
prepared for the inevitable regulatory risks that they face.”

Adam Matthews, Co-Chair Transition Pathway Initiative and Head
of Engagement for the Church Commissioners and Church of England
Pension Board said:

“As investors we are pleased to see some of the largest general
mining companies addressing the risks to their business posed by
climate change. They are clearly engaging at a strategic level with
the transition to a low carbon economy. However, we still need to
be able to assess the future carbon reductions of these companies
against the globally agreed 2 degree pathway. As of today there is
still insufficient data disclosure to be able to assess this.

“It is also extremely concerning that a significant group of
mining companies do not even seem to be acknowledging the
fundamental risk to their businesses posed by climate change.”

Emma Howard Boyd, Chair of the Environment Agency said:

 “Climate change is obviously challenging to the business
model of the mining industry, but there is demonstrable evidence
some companies are making progress in managing the risk of
transition to a low carbon economy, even in the most challenging of
sectors.”

ENDS

Read further analysis of the new assessment in
 Management quality of coal mining companies: a
commentary

 

CONTACT

Peter Wilson-Smith, Meritus Consultants pws@meritusconsultants.com
020 7043 4604 | Mob: 07979 526152

Chris Le Marquand, Communications Office, Church House chris.lemarquand@churchofengland.org
020 7898 1682 | Mob: 07464 548157