Climate change represents a financial risk to mining companies. The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are becoming industry standard for reporting on climate risks and mitigation strategies. Many mining majors have published climate disclosure reports aligned with the TCFD recommendations in the last year and they will continue to update these annually, concurrently with their annual financial reporting.
Climate disclosure is voluntary in most jurisdictions, but there is a trend towards mandatory disclosure. Many stock exchanges are considering enhanced climate disclosure obligations for listed companies according to the Sustainable Stock Exchange Initiative, and several stock exchanges have issued guidance on this. The U.S. Securities and Exchange Commission has proposed rules to enhance existing climate disclosure requirements by certain listed companies. The Canadian Securities Administrators is proposing that public companies make climate disclosures from 2024. Premiumlisted companies on the London Stock Exchange are already obliged to make climate disclosures.
The four pillars within the TCFD recommendations (governance, strategy, risk management, and metrics and targets) provide a robust and consistent structure. These are the preferred reporting frameworks for miners to explain to investors and other stakeholders how they factor climate change into their company strategies, operations and project planning. Many investors now seek climate disclosures and commitments from businesses.
The standards for climate disclosure are rapidly evolving, with the IFRS International
Sustainability Standards Board consulting on its draft standard as of mid-2022. The draft standard is based on the four TCFD pillars, but with increased specificity and clarity on disclosure requirements.
SRK helps clients develop their TCFD disclosures and climate change adaptation solutions. Clients rapidly see the value of the process. Raising climate change awareness to senior management and board of directors puts climate change issues on the strategic planning agenda. Clearly defined financial commitments and tangible stakeholder engagement demonstrate the business responsible governance.
