A global network of more than 270 institutional investors representing assets worth over €20 trillion ($21.3 trillion) is pushing mining companies to recognise and better manage the risks climate change and the move towards a low-carbon economy pose to their operations and bottom lines.
The Institutional Investors Group on Climate Change (IGCC) on Wednesday launched a guide to drive closer collaboration between investors and the global mining sector to attempt to curb the threat of so-called stranded assets torpedoing the value of investment portfolios.
“With mining companies featuring in many portfolios, investors need to know that these companies are prepared for the likely changing market dynamics arising from policies and actions to curb climate change and the risks they pose to profits,” said Stephanie Maier, head of responsible investment strategy & research at Aviva Investors.
“To protect their long term interests, investors want assurances that the capital allocation decisions made by the boards of major mining companies give clear consideration to climate change, and to the associated energy transition, in ways that will ensure the future sustainability and profitability of the entire sector.”
The guide warns that the current assumptions underpinning many of the demand and price projections used by mining firms may be questionable due to the impact of an accelerating transition to low-carbon economies worldwide, and the subsequent effect it will have on demand, commodity prices, and the use of technology.
“Investors recognise that the global economy is now pivoting around the need to limit global warming to two degrees. Diversified mining companies have already begun to shift away from carbon intensive thermal coal and look at the potential for new technologies to achieve net zero carbon operations,” said Emma Herd, chief executive of IGCC Australia and New Zealand.
OECD countries agreed on Tuesday to end export credits for inefficient coal plant technologies, in a deal that is due to take effect in 2017 and be reviewed in 2019.
By Mike Szabo – mike@carbon-pulse.com
