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If Your Investors Are Assessing Your Climate Risk, Shouldn’t You Be?
Enjoy this post from the SSC Archives.
A few summer ago, the World Resources Institute and the UNEP Finance Initiative consulted with more than 100 energy, climate, and finance experts to create a discussion framework for investors to weigh exposure to the risks of climate change.
Essentially, it is a toolkit for investors to evaluate a company based on climate risk factors not directly related to physical risk. Most investors can already pick out obvious physical risks, i.e. investing in coastal property as sea levels rise. But non-physical, climate-change effected risks are also important.
The WRI discussion framework addresses those risks, called carbon-asset risks. They include public policy, regulation, technology, unpredictable market conditions, and shifting public opinion.
This discussion framework is an excellent tool for investors to weigh risks as they choose to make investments, but we argue that companies themselves should be looking at this tool to discover their own carbon asset risks and then engaging in some deeper-level analyses and audits.
For example, the assessment recommends that investors look beyond carbon footprinting and delve deeper into company supply chain audits that may uncover risks. For example:
- Geographic location (are too many of your suppliers in the path of a super-typhoon?),
- Local regulations (are the countries your source your raw materials from looking to legislate and increase your costs?),
- Diversification in operations or production (are your products and services too dependent on fossil fuels?).
This discussion framework, while absolutely useful for investors, can also be used as a cheat sheet for your own business. Next step: Start auditing and taking action now to mitigate your climate risk.
Reducing exposure to risk is crucial, not only to become more attractive to investors, but also to become a more sustainable organization overall!
If you’re ready to start looking more deeply at your carbon asset risk, contact us to learn more about sustainability assessment and supply chain analysis.
Mining Companies Can Care
When it comes to the mining industry, we know that there is a lot at stake for the environment. However, we don’t often think about mining companies as business that care about sustainability.
While fossil fuels and mining companies tend to be dismissed as unable to create sustainable strategies, but many companies in the mining industry are trying to mitigate their impact.
At Strategic Sustainability Consulting we have worked with mining companies, like Teck Resources Limited and a global resource leader in Scandinavia.
Through our work with natural resource companies, we helped to identify emerging sustainability trends and best practices in the mining industry. The result of which has been that Teck has garnered national and international attention for its sustainability performance. In fact, in 2017 they were recognized among the best of their peers for social and environmental responsibility.
Mining companies can care.
And in an industry this big, with heavy materials circling the globe and creating significant environmental impacts, it’s vital that those in the sustainability field continue to push for more companies to embrace changes like Teck.
While the traditional corporate responsibility agenda has required that mining companies work with greater transparency and coordinate with local communities during the life of their projects, the sustainability agenda for mining is getting broader. For example, the industry itself has so much to lose if they do not try to understand and manage global trends, including the intense pressure their business is putting on the world’s very limited natural resources.
With alternative energy solutions taking off, we might think there is less need for mining, but as the population continues to increase (we are closing in on 9 or 10 billion) — and more and more of us have disposable income, our demands on these resources just keep growing. Unfortunately at the same time the demand is rising, the richness of ores (the “ore grade”) has been in long-run decline for most elements. Copper ore grade is down from 4% a century ago to well under 1% now (and falling). Copper mining isn’t just affected by natural resource pressures; it embodies natural resource constraints.
With all this information available, we must continue to monitor mining companies and encouraging them to engage in more mindful practices that can lessen their negative impact on the world around us all.