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Centre for Environmental Rights

Anglo AmericanMining

Anglo American is the world’s largest producer of platinum. It is the fifth highest contributor of greenhouse gas emissions in South Africa. It is the second-best performer of the emitters assessed in this report.

Summary

Anglo American has good governance structures in place to manage climate-related risks. It is a supporter of the Task Force on Climate-related Financial Disclosures (TCFD), and the board has oversight of climate-related risks and opportunities with a long-term incentive plan in place to encourage executives to meet the emissions reduction target.

Anglo American recognises climate change as a material risk, although it does not disclose its risks to its shareholders (reported in CDP submission only). Nonetheless, the company does disclose its strategy for addressing its climate-related risks, which are based on a 2°C or lower climate scenario with enough information provided to assess the validity and strength of the strategy. The use of climate scenario analysis is notable as only two major greenhouse gas emitters assessed use scenario analysis to inform their strategy and targets in line with the TCFD Recommendations. This can assist shareholders in assessing the effectiveness of Anglo American’s strategy and reduction targets and provides transparency in reporting.

The company reports on its direct and indirect (including scope 3) emissions and has a long-term target to reduce those emissions by 30%. Anglo American bases its internal carbon price on the South African government’s price and reports that it intends to take a carbon price into account for all jurisdictions in which it operates.

Emissions Score Card

7.36 MtCO2e
Total Scope 1 and 2 Emissions (South Africa, 2018)
1.4%
Contribution to South Africa’s total emissions (estimated)
5
Ranking out of 10 emitters assessed (1 = highest)
17.95 MtCO2e
Total Scope 1 and 2 Emissions (Worldwide)

Findings

Governance

Is the company a supporter of the TCFD?
Yes

Sep 18

Who has oversight of climate-related risks and opportunities?
Board

Disclosure explicitly mentions that the board is responsible for overseeing climate risk. Board responsibility for “sustainability”, “environmental issues”, or “ESG” is not sufficient.

“At Anglo American, the Sustainability Committee of the Board is responsible for addressing climate change related topics.” – CC 2019, p 12

Does the remuneration policy include performance metrics used to measure and manage climate-related risks?
Yes

Remuneration policy includes climate-related performance metrics.

“Achieving the GHG target is linked directly to executive remuneration through the Long Term Incentive Plan.” – CC 2019, p 10

“The Anglo American chief executive and business unit CEOs’ scorecards include performance on energy and carbon. The 2020 GHG target is included in the 2017 long term incentive plan (LTIP).” – SR 2018, p 49

Strategy

Does the company identify climate change as a material business risk?
Yes

Climate risks are explicitly mentioned as a material or principal risk in the annual or integrated report.

“Environmental impacts and climate change” is a material matter for 2018 – AR 2018, p 17

“Understanding the effects of climate change on our business and how they may impact our value chain is important as we strive to maximise the opportunities associated with the transition to a low-carbon future.” – AR 2018, p 17

Has the company outlined the risks and opportunities from climate change?
CDP only

Detailed disclosure, including timeframes and impacts, with timeframes in CDP only.

Does the company describe how its strategy might change to address climate change risks and opportunities?
Yes

Disclosure of how climate risks and opportunities are incorporated into strategy through efforts such as mitigation, adaptation, resource efficiency, pollution reduction  and transition plans.

“In addition to demonstrating Anglo American’s resilience to the impacts of climate change, the scenario analysis also forms part of the detailed approach we have developed to building climate change into our strategic planning.” – CC2019, p 20

Does the company describe the climate change scenarios used to inform strategy and financial planning?
Yes

Disclosure of scenario analysis describes the range of scenarios used (including a 2°C or lower scenario), critical inputs and assumptions, timeframes, and potential implications. – CC 2019, p 12

Risk Management

Does the company have a process to manage climate-related risks?
Yes

Climate-related risks form part of company-wide risk management programme or specific climate-related risk management process.

“Two key processes guide how we manage climate change risks: the Operational Risk Management (ORM) programme for operations, and the Investment Development Model (IDM) for projects” – CC 2019, p 23

Metrics and Targets

Has the company set GHG emission reduction targets?
Absolute

The company has set an absolute emission reduction target.

“Our GHG emission reduction target for 2020 is 22% against projected emissions in a BAU scenario.” – SR 2018, p 50

Is there a long-term GHG emission reduction target?
Yes

There is an absolute or intensity reduction target over five years in duration.

“By 2030, we aim to – Reduce greenhouse gas (GHG) emissions by 30% and improve energy efficiency by 30% against a 2016 baseline” – AR 2018, p 30

It also aims to develop a carbon-neutral mine by 2030.

Does the company disclose its GHG emissions?
Scope 1, 2 and 3

Companies report on their Scope 1, 2 and 3 emissions for the current year and at least the previous year.

“Our most significant source of Scope 3 emissions is the combustion of coal by customers for power generation and metallurgical processes. In 2017, our Scope 3 emissions associated with product downstream end-use of thermal and metallurgical coal were estimated at 225 Mt CO2e (2016: 99 Mt CO2e).” – SR 2018, p 50

Does the company provide their internal carbon price?
No

While Anglo American does disclose its internal carbon price in its CDP submission, it does not do so in its mainstream annual financial reports and we did not award the company “yes” for this element.

“In regions where carbon pricing is an emerging government policy, we already include carbon pricing in our budget guidance and project evaluations. Going forward, we will take into account a carbon price for our pricing and forecasting in all jurisdictions” – CC 2019, p 7

“financial implications will only become evident as countries develop and implement domestic policies that will impact our different operations.  The estimated upper range is based on Anglo’s internal carbon price (R120 or USD 9.06 / direct CO2e), based on the South African carbon price.”

Additional Information

Does the company disclose the extent of liability under the carbon tax?
CDP only

Liability is only disclosed in CDP submissions.

Anglo American’s CDP 2018 disclosure estimates its exposure to the carbon tax to be USD5.7m or R70m. This assumes that there is no pass-through in the electricity price.

Does the company disclose its participation in the DEA's voluntary carbon budget programme?
No

Not disclosed.

Disclosures Considered

  • Integrated Annual Report 2018
  • Sustainability Report 2018
  • Climate Change: Our plans, policies and progress 2019
  • Carbon Disclosure Project (CDP) 2018 Climate Change submission

This report is accurate as of 03 August 2019.

AngloAmerican has responded to our request for comment and the comments have been incorporated into these findings.

Company Profile

Locations

South Africa, Zimbabwe

Key Shareholders

  • Anglo American plc (77.3%)
  • Public Investment Corporation (3.45%)
  • Lefa La Rona Trust (2.33%)
  • Investec Asset Management Pty Ltd (0.94%)
  • BlackRock Investment Management (UK) Ltd (0.68%)
  • Allan Gray (Pty) Ltd (0.43%)