STATE OF CLIMATE CHANGE DISCLOSURE FOR SOUTHERN AFRICA’S MINING HOUSES

The Southern African mining industry is particularly vulnerable to climate change-related impacts. Local mining companies that actively consider climate-related risks and opportunities stand to benefit in various ways.

However, a scoping review of publicly available reports of 29 JSE-listed South African and 12 Southern African mining operations was recently conducted by Brundtland Consulting. It revealed that concerning numbers of mining companies do not report in alignment with leading international climate disclosure frameworks and are not considering climate change in operational risk management.

Due to its geographical location and socioeconomic development state, Southern Africa is significantly vulnerable to the impacts of climate change. Already classified as arid, future climate projections indicate that the region will become drier and warmer, and simultaneously more prone to irregular and extreme rainfall, increasing the potential for floods.

Mining Companies Face Multiple Risks

Mining companies in the region face a multitude of risks – from physical and transition climate-related risks to supply chain disruptions and stringent regulatory requirements linked to sustainability.

Additionally, shi s in consumer and investor preferences can significantly impact the demand and pricing for certain minerals and metals, and how these are mined and processed. The mining industry is facing growing pressure from civil society organisations, local communities, and other stakeholders to operate in a socially responsible and sustainable manner.

Furthermore, the mining industry forms part of a global supply chain that is vulnerable to climate-related disruptions, and should work with suppliers and customers to build more resilient and sustainable supply chains. This will reduce the risk of disruptions and create new business opportunities.

Current State Of Climate Change Disclosure

From a governance perspective, good climate change disclosure performance includes transparent, accurate and timely identification and reporting of climate risks, e ective management of these risks, and active engagement with stakeholders to inform climate-related decisions.

To determine the current state of climate change disclosure in the Southern African mining sector, Brundtland Consulting recently conducted a scoping review. It focused on reporting in line with international climate disclosure frameworks, which is increasingly important to investors and other stakeholders, and on climate change risk assessments that are essential for risk identification and mitigation.

Pascal Snyman Sustainability and Climate Consultant Lodewijk Nell Partner and ESG Specialist

Publicly available reports of 29 JSE-listed South African mining companies were compared to 12 Southern African mining operations in Namibia, Botswana, Zimbabwe and Mozambique. This review aimed to determine alignment with the Task Force on Climate-related Financial Disclosures (TCFD) and the Carbon Disclosure Project (CDP). These are both leading international climate disclosure frameworks that govern the assessment and disclosure of climate-related risks and opportunities. Additionally, the review aimed to determine the extent to which climate risk assessments with detailed scenario analysis are conducted.

Although this high-level assessment did not cover the entire mining sector in Southern Africa, some interesting observations could be made.

CLIMATE-RELATED REPORTING PERFORMANCE

Due to the range of risks faced, the need for companies to understand, consider and publicly report climate-related risks and opportunities is increasing. Failure to do so means that mines are not fully aware of their climate-related risks and opportunities, and that climate change is not considered in operational management and strategic planning.

On the other hand, mining companies that actively consider climate-related risks and opportunities stand to benefit in various ways. These include improved ability to navigate physical and transition risks of climate change; improved sustainability and endurance of mining operations; improved business resilience, financial performance and stakeholder relationships; and, of course, contributing to a more sustainable future.

The data collected shows that a higher percentage of South African mining companies (59%) are reporting in alignment with TCFD recommendations, compared to Southern African mining operations (25%). Similarly, a higher percentage of South African mining companies (28%) completed CDP climate change responses compared to Southern African mining operations (8%).

South African mining companies have also conducted climate change risk assessments at a higher rate (62%) than those in Southern Africa (25%).

The JSE-listed South African mining companies – guided by the JSE’s Sustainability and Climate Disclosure requirements – are expected to perform better on climate change disclosure. However it is imperative that more mining companies, both in South Africa and the wider Southern African region, measure and manage their climate change-related risks, to proactively mitigate potential impacts and seize opportunities for long-term value creation. As the saying goes, “You cannot manage what you do not measure.”