Scope 3 emissions data; a copy of EY's independent assurance statement can be found in our Annual Report 2020. . Mark Van Baal, founder of Dutch activist shareholder group Follow This, has argued that these companies must be pressured by investors to adopt these green business models earlier to take advantage of shifts in consumer behaviour, such as an increased demand for low-emissions products and services thathich could see the worlds largest companies realise over $2.1tn in value. Do we have the data and capabilities to measure the GhG in our products, in meeting customer needs and in complying with regulatory requirements? These emissions physically occur at the facility where electricity, steam, and cooling or heating are generated. This can be challenging and there are some common pitfalls to avoid with data modeling and extrapolation. Overall, shipments were down 4.2% year on year at 1.19 million mt. Can we automate data collection across the business and with our suppliers and customers? The mining industry's most comprehensive news and information delivered every month. Sign up below to receive the latest updates and news from MSCI. PwC can help you understand what the rule says and what to do next. The goal of the work is thus to capture the potential agency different sectors have over supply chain emissions, rather allocating emissions between production and consumption. Commonwealth Scientific and Industrial Research Organisation, Legal threat halts proposed tailings dam in Tasmanias Tarkine wilderness, Creditors object to Samarcos planned restructuring, Tesla files new patent on lithium extraction method, China to maintain coal price cap in 2023 to avert energy crunch. Even so, its only a start. Non-fuels products are not combusted by the end-user and therefore are not included in these Scope 3 estimates. Top ranked mining companies in the ESG theme, Top Three Lithium Producing Countries (Thousand Tonnes, 2021), Inadequate Spending on Mining Hampers Transition to Green Energy, Scope 3 Greenhouse Gas (GHG) Emissions of Major Metals and Mining Companies in 2021, Nickel Prices Skyrocket Amid Russia-Ukraine Crisis. Other upstream categories include business travel and employee commuting as well as emissions from waste generated and assets leased. Share sensitive information only on official, secure websites. In many businesses, this cross-company understanding and collaboration is only just beginning. In 2020, Vales activities resulted in 491.1MTCO. Despite the ever-improving efficiency of blast furnaces, it is still a carbon-based method that makes achieving total net zero an impossibility if use continues to be high. Translating Scope 3 emissions for the Chemical sector. While miners have plans to reduce scope 1 and 2 emissions, scope 3 targets are lacking. In some cases, you might look to create a lower-carbon, or green, version of a product while also continuing to produce the higher-emissions original. Within mining, scope 1 and 2 emissions account for 4%-7% of global greenhouse gas emissions. However, more organizations are reaching into their value chain to understand the full GHG impact of their operations. | Steel is the most emission-intensive material, accounting for 3,749 million tonnes of carbon dioxide equivalent (MTCO. While Scope 1 and 2 emissions are directly . A $1bn green investment, while laudable, could be funded by a $0.3 a tonne rise in the iron ore price. In the exhibit below, we can see that the total Scope 3 average intensity was almost three times greater than the combined Scope 1 and 2 intensity as of July 2020. As part of the energy transition, the reporting of GHG emissions, including Scope 3 emissions, is therefore developing from being a voluntary reporting . However, some laggards, such as Rustic Norilsk Nickel, Southern Copper Corp, and Freeport-McMoRan, lack any net-zero target. "My first tip for putting Scope 3 on your company's agenda is to link it to how you do business, and the purpose of your company. When applied, the multiplier results in a figure closer to the actual carbon footprint. This rises to 28% of global emissions however when accounting for scope 3, according to January estimates from McKinsey & Co. With businesses, governments and investors increasingly focused on a net-zero transition, Scope 3 investment risks are mounting. Scope 3 is one of three emissions streams defined by the Greenhouse Gas Protocol (GHGP). The world's fourth largest iron ore miner will address the emissions across its entire global value chain, including steel manufacturing. Glencore is another example of a miner taking the initiative on scope 3. Scope 3 emissions, also referred to as value chain emissions, often represent the majority of an organizations total GHG emissions. Scope 1 . Hydraulic Systems and Components for Mining and Drilling Machinery, Blasting and Explosive Services for the Mining Industry, Specialist Vehicle Solutions for Mining Applications, Thank you for subscribing to Mining Technology, Mining news and in-depth feature articles on the latest mining company deals and projects covering trends in mineral exploration with up to date data on the most mined metal and mineral commodities, Receive our newsletter - data, insights and analysis delivered to you. In all, Scope 3 spans 15 different categories. Additionally, the International Sustainability Standards Board (ISSB) and the US Electronic Subcontracting Reporting System (eSRS) have also drafted recommendations requiring some disclosure of Scope 3 emissions with the ISSB also requiring qualitative information to explain how reported emissions were calculated. In order to calculate emissions, estimate the lifetime electricity consumption (kWh) for all products sold in the reporting year. Asset . The Scope 3 Evaluator tool to help organizations screen scope 3 emissions categories to identify focus areas. These risks may come from new regulation of a companys high-emission products and shifts in end-product market demand driven by climate concerns. Source: MSCI ESG Research LLC. Source: MSCI ESG Research LLC. LPG vs gasoil: whats the best alternative to natural gas? In February 2020, BP announced that it aims to be "net zero across its operations on an absolute basis by 2050 or sooner". A business that chooses to consider and resolve its indirect emissions will not only mitigate risk within its value chain and address stakeholder concerns, but will also open itself up to innovation and collaboration with suppliers, business partners, customers and other . But as they fall out of the companys direct control, many companies avoid making direct statements on their reduction. | Kloeckner's emissions under Scope 1 and 2 totaled 100,000 mt of CO2/year. A Scope 3 emission is any indirect emission that results from activities related to a company or organization. For many companies, categories 1 and 11, which are those related to your supply chain and use of your products, are the most significant. Below is a list of emission sources and the location of the factors in the GHG Emission Factors Hub.. Referencing 2018 as its baseline year, Vale registered 586MTCO, e from their value chain. Kloeckner signed a distribution deal with Swedish fossil-free steel venture H2 Green Steel in October this year to distribute up to 250,000 mt/year of green steel from 2025. Discover more about S&P Globals offerings. How do we most cost-effectively decarbonize Scope 3 emissions? Since 2014, Vale has supplied some of the best mixes of high-quality products in the iron ore market, which demand less energy in the steel blast furnace and reduce emissions. Plan your approach. By Madeleine Stephens. How can we improve the quality of our data to better manage our emissions? This type of detailed information may enhance investors view of where carbon-transition risks lie across their portfolios. In the first half of 2021, Chinese steel mills churned out nearly 12% more crude steel compared to the same period in 2020. Scope 1 emissions are direct emissions from owned or controlled sources, such as the combustion of diesel in mining vehicles. The downstream use of sold products (Category 11) may likely be a large source of emissions. Energy companies can help set up carbon capture and storage facilities at steel plants to lower their emissions. 2 These factors are applicable to employee commuting as well as business travel. For example, if an oil and gas company sells all of its fuel to a mining company, and this mining company uses only this companys products to run its mine, the downstream Scope 3 emissions of the oil and gas company should essentially be equivalent to the mining companys Scope 1 emissions. These emissions are usually split into the following categories: In most reporting frameworks, it is not mandatory to report Scope 3 emissions. e, more than 97% of which was attributed to indirect scope 3 emissions. Here are five steps to take as you begin shaping your companys Scope 3 strategy. The real work and business advantages come when focusing on Scope 3 emissions generated beyond your companys walls. Fugitive emissions. Do our Scope 3 activities differentiate us in the market? The state of Scope 3 reporting is poor. Regulators are increasingly focusing on Scope 3. Take the Alliance of CEO Climate Leaders as an example - 80% of the total 4.3Gt emissions footprint from these businesses is produced by their supply chains, otherwise known as Scope 3 emissions. Scope 2 emissions are those that a company makes indirectly, such as the electricity or energy it buys for heating and cooling buildings that is produced on its behalf. Investors concerned about climate change have traditionally focused on Scope 1 and Scope 2 emissions e.g., the direct emissions from an oil- and gas-refining operation (Scope 1) and the emissions from the electricity utility needed to run the refinery (Scope 2). But depending on your industry, other categories may also play a role. Despite the difficulties, Glencore and Vale have set precise scope three goals. The steel sector is one of the biggest polluters in China, producing around 10%-20% of carbon emissions in the country, with production only ramping up. SE, 2018) and industry actors (API, 2016; BHP, 2019),9 as well as commercial data providers (Busch et al, 2018). For companies selling an inherently polluting product, scope 3 emissions are unavoidable. Scope 3 emissions represent all the emissions associated not with a company itself, but the emissions that a company is indirectly responsible for up and down its value chain . For a complete description of all scope 3 categories and quantification methods, see the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Kloeckner continued its margin-over-volume strategy, opting for higher priced sales instead of large bookings, while the uptake from auto was muted. Some foreword thinking . Most diversified miners have focused on the reduction of their scope 1 and 2 emissions through various methods. Blog If you're like most people, you're probably also wondering what exactly. Fuel combustion. Which product portfolio supports decarbonization and increased revenue/margin? from some shareholder campaigners because they fail to include the Asian steel mills that burn its coals and iron ore, which make up the biggest share of its scope 3 emissions. A new SEC rule requires all registrants to disclose information on climate risks. Their inability to influence these affairs has led these companies to make vague commitments towards focusing on technological advancements and energy efficiency, rather than setting specific target reductions for scope 3 emissions. Americas Receive daily email alerts, subscriber notes & personalize your experience. Your customers want verified carbon footprint data for each of your products. Scope 2 emissions are indirect emissions from purchased or acquired electricity, steam, heat, or cooling. For some companies and industries, Scope 3 emissions dominate the overall carbon footprint. According to the GHG Corporate Protocol, all organizations should quantify scope 1 and 2 emissions when reporting and disclosing GHG emissions, while scope 3 emissions quantification is not required. Organisational boundary From FY2020, BHP has developed Scope 1 and Scope 2 . Iron and Steel (7.2%): energy-related emissions from the manufacturing of iron and steel. On this front, "Early evidence indicates as many as two thirds of brands and retailers that have announced Scope 3 targets are not on track to achieve absolute Scope 3 emission reductions." Asset Owners Sempra Energy ensured investors Nov. 3 that hydrogen is "going to play a larger role" in the Premier global deepwater driller Transocean sees "sustained strength" in offshore drilling as demand Steel companies not doing enough to address Scope 3 emissions: Kloeckner CEO. The report lays out a detailed eight-step approach: 1. Coal Supply Woes A Push for Renewables in India? 3 Emission intensity includes scope 1 and 2 emissions; 4 Other energy . Referencing 2018 as its baseline year, Vale registered 586MTCO2e from their value chain. Within the mining industry, there are three scopes of emissions: scope 1 covers direct emissions from operations; scope 2 covers indirect emissions from power generation; and scope 3 covers all other indirect emissions. Here's what each covers: Near-term science-based targets must be met within a 5- to 10-year period and must address 95% of Scope 1 and 2 emissions. But miners can do more, according to Commonwealth Scientific and Industrial Research Organisation research scientist Keith Vining. | PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. However, Julian Kettle, vice-chairman of metals and mining at consultancy WOOD MACKENZIE, said that Rios new emission reduction targets were a step in the right direction, but more was needed. To get there, they are required to set both near-term and long-term targets. 2017 - Thu Nov 03 23:31:04 UTC 2022 PwC. This is primarily because Scope 3 emissions are more difficult to accurately measure, report, and benchmark . Energy use in industry: 24.2%. But they are very much in the minority of miners, especially those invested in iron and steel production. These data points then have to be connected with high-quality emission factors on the material level, such as LCIA databases with annually updated real-industry data selected by . However, BHPs new goals have drawn immediate criticism from some shareholder campaigners because they fail to include the Asian steel mills that burn its coals and iron ore, which make up the biggest share of its scope 3 emissions. Tick the boxes of the newsletters you would like to receive. How can we most effectively align, engage and educate everyone in the C-suite to holistically address Scope 3? The top stories of the day delivered to you every weekday. EPA Center for Corporate Climate Leadership, GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard, WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (pdf), Guidance for Calculating Scope 3 Emissions, Guidance for calculating scope 3 emissions resulting from events (e.g., sporting events, concerts) and conferences (e.g., business meetings, exhibits, conventions). To continue reading you must login or register with us. Company vehicles. ESG Research Each member firm is a separate legal entity. Secure .gov websites use HTTPS One of the major factors in this avoidance is the carbon intensity of the iron ore industry. But miners can do more, according to. The company plans to reach 496MTCO2e in 2035, down 90MTCO2e from 2018, equal to Chiles emissions from energy consumption in the same year. EPA currently provides certain scope 3 emission factors. . Both may require a significant effort on Scope 3 reductions. 1. For example, the Scope 3 emissions of the integrated oil and gas industry (measured by the constituents of the MSCI ACWI Index) are more than six times the level of its Scope 1 and 2 emissions. One of the major factors in this avoidance is the carbon intensity of the iron ore industry. Food waste emissions are large: one-quarter of emissions (3.3 billion tonnes of CO 2 eq) from food production ends up as wastage either from supply chain losses or consumers. Rustic Norilsk Nickel, Southern Copper Corp, and Rio Tinto have all committed to focus on the individual,! Have begun to set both near-term and long-term targets of breakthrough tech and efficacy improvements that any. 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