Glencore, BHP Billiton, Anglo American: Failing to plan for climate change could cost mining companies $10 billion

Jessica Morris
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More climate change regulation is expected at the COP21 (Source: Getty)

Mining companies who fail to adequately prepare for climate change could collectively face costs of $10bn (£6.6bn), or 15 per cent of their earnings, if a carbon price is introduced, according to a new report.

The report by environmental NGO CDP, analysing metal and mining companies with a total market capitalisation of $329bn, said the companies accounted for about 85 per cent of the emissions of large listed miners.

It comes as next week's Paris Climate Change Conference (COP21) is expected to result in, or pave the way for, more climate change legislation, and this could include a carbon price. Carbon pricing discourages pollution by charging producers for it.

Troubled commodity trader and miner Glencore was singled out as the "clear laggard" on carbon regulation readiness, due to its opposition to carbon pricing and dismissal of the concept of stranded assets.

Read more: Why action on climate change has become an economic imperative

"The world’s biggest mining companies, currently worth over US$329 billion, are unprepared for the transition to a low carbon economy," James Magness, head of investor research at CDP, said.

"Although there are clear signs of progress by some companies in areas such as energy efficiency and water resilience, the sector as a whole needs to up its game."

The report looked at whether companies are setting meaningful emissions reduction targets, conducting water stress evaluation or preparing for the expected tightening and expansion of carbon regulation set to emerge from next week's COP21 in Paris.

Paul Simpson, chief executive officer of CDP, added: "As shown by the recent growth of initiatives such as the Montreal pledge and the portfolio decarbonization coalition, major investors now appreciate the impact of environmental factors on the bottom line, and they need reliable environmental data to accurately assess these financial risks and opportunities."

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