Disruption and Opportunities: Supporting a Mining Client on the Global Response to Climate Change

Over the last 25 years, the mining industry context was heavily framed by the emergence and growth of China, which triggered dramatic growth in demand for metals and minerals.

While China is likely to remain firmly at the center of the industry context, the broad-based effort to decarbonize and limit further global warming to a maximum of an additional 2°C by 2050 is expected to transform the industry. Global warming is likely to create not only strategic challenges but should open up exciting opportunities. Corporates need to consider both the potential threats and their resilience toward them, as well as opportunities for growth and impact. In general, corporates need to take a more proactive approach to understanding the climate change challenge, their role in it, and pathways of mitigation.

To get a better understanding of the disruptive force of climate change and to proactively drive an ambitious sustainability agenda, a leading mining company partnered with BCG.

Project Objective and Actions Taken

Working with BCG, the client was defining its strategic response to climate change by quantitatively assessing the resilience of its portfolio to the effects of climate change abatement, defining strategic questions and developing best-in-class disclosure on sustainability and the pathway to achieving that.

Together, over the course of nine months, BCG and the mining company:

  • Framed the likely global response to climate change and how it may disrupt the mining industry
  • Identified and addressed the major strategic questions arising from this disruptive dynamic, including the identification of specific opportunity areas
  • Conducted deep dives into key end sectors that would be particularly impacted by climate action (such as transport, steel, buildings, and power generation) and developed several abatement scenarios by analyzing the future makeup into end sectors and major countries until 2050
  • Supported in deriving the impact of abatement scenarios on mid- and long-term commodity demand and price outlook
  • Defined strategic questions of climate action
  • Developed a detailed narrative for external disclosure of climate-change-related risks and opportunities

The impact of this project is increased transparency for management on financial impact of climate change across scenarios, a robust climate-related disclosure narrative for external stakeholders, and a foundation for strategic discussions on specific climate change related risks and opportunities.