Climate action is high on the priority list of many mining companies and is of increasing interest to their stakeholders, particularly investors. Water stewardship and climate action are inextricably linked for responsible miners. A high proportion of the physical risks associated with climate action are water related.
The primary framework for discourse on climate action between companies and their investors is currently the recommendations of the Taskforce for Climate-Related Financial Disclosures (TCFD). Miners need to make disclosures in accordance with these recommendations. Demonstrating adaptation strategies to manage changes in water risk is a significant element of many disclosures.
Risks from climate change and adaptation solutions are generally not getting the same level of attention as decarbonization. Perhaps this can be attributed to the site-level and multi-disciplinary input required to define the physical risks, to engineer climate adaptation solutions and to assess the adequacy and effectiveness of such actions.
For mining companies, it is not just about adaptation strategies to manage the physical risks associated with water (flood management, measures to combat water scarcity etc.), it is about the wider social aspects, particularly with communities and other stakeholders who share the same resource. It is gaining and maintaining the social licence to operate which underpins the good stewardship that is increasingly expected from the mine owner.
In SRK’s experience the TCFD recommendations are driving a positive force through the industry, encouraging a more inclusive, mature approach steered by the four pillars of financial disclosure: governance, strategy, risk management, and metrics and targets. Addressing the challenges of water stewardship though this model is both effective for the operator and positive for investors.
When assessing water risks at mining operations and mine sites through climate-change related adaptation strategies, SRK addresses the wider catchment issues. Storm floods of increasing magnitude can lead to unexpected contamination migration from mine facilities that impacts downstream users, for example. Resilience measures to counter such risks requires not just the obvious considerations around upgrading of physical infrastructure, but improved monitoring, better awareness-raising and communication with downstream communities and more transparent reporting of risks.
Also, climate change adaptation is an ongoing challenge which is wrapped in uncertainty. Climate change models which support our predictions to the end of the century, and sometimes beyond, are based on multiple scenarios and are constantly evolving. Mining companies increasingly recognise the need for their board and senior management teams to embrace and continuously review climate change adaptation measures, and how these measures support their water stewardship framework.
