The world’s biggest mining companies face a combined $10 billion risk to their earnings if carbon pricing tightens in the wake of crucial global climate talks in Paris starting next week, according to a report from U.K. non-profit organization CDP.
CDP, which says it advises institutional investors with assets of $95 trillion, ranked 11 companies on climate change-related metrics including disclosure of emission-reduction targets, conducting water stress-test studies and preparing for an expected tightening of carbon regulation to emerge from the United Nations climate summit.
The estimate of earnings at risk, representing about 15 percent of the total for the group, assumes the introduction of a carbon price of $50 a metric ton, a level already accounted for by some companies, it said.
Glencore Plc, the world’s biggest exporter of power-station coal, scored the worst among the companies that participated in the study, according to CDP, formerly known as the Carbon Disclosure Project.
A growing number of investors and regulators are studying the possibility that untapped deposits of oil, gas and coal — valued at trillions of dollars globally and controlled by some of the biggest resource companies in the world — may become stranded assets as governments adopt stricter climate change policies.
Mine Canary
“This research is a canary in the coal mine for investors” and shows that the biggest miners are “unprepared for the transition to a low-carbon economy,” James Magness, CDP’s head of investor research, said in a statement.
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