PwC report warns that climate change threatens key commodities, including iron, copper and cobalt

May 13, 2024

A report published by PwC highlights the climate risks to nine key commodities, stressing that CEOs’ need to accelerate action plans to safeguard production as heat stress and drought risk rise globally (Courtesy PwC)
A report published by PwC highlights the climate risks to nine key commodities, stressing that CEOs’ need to accelerate action plans to safeguard production as heat stress and drought risk rise globally (Courtesy PwC)

A report published by PwC, headquartered in London, UK, titled ‘Climate Risks to Nine Key Commodities: Protecting People and Prosperity,’ has stressed that CEOs’ need to accelerate action plans to safeguard the production of critical commodities, as heat stress and drought risk rise globally.

The report, which analysed nine commodities across critical minerals (copper, cobalt, lithium), key crops (wheat, rice, maize) and vital metals (zinc, iron, aluminium), found that although reducing emissions will decrease heat and drought risks, key commodities will still face significant stress, even under a low emissions scenario modelled by PwC.

According to the report, by 2050, even if the world sharply reduces its carbon emissions, over 70% of cobalt and lithium production could face significant, high, or extreme drought risk – up from near zero today. Less than 10% of copper production faces significant or greater drought risk today, rising to over half in a 2050 low-emissions scenario and over 70% in a high-emissions scenario. Cobalt, copper and lithium are integral to electronics and clean-energy technologies.

PwC research also found that vital metals face increasing amounts of risk. In particular, over 60% of the world’s bauxite and iron production may face significant or greater heat stress risk by 2050, even in a low-emission scenario (up from 30-50% currently). In a high-emission scenario in 2050, 40% of the world’s zinc production may face significant or greater drought risk (up from zero significant drought risk currently). Aluminium (from bauxite), iron and zinc are widely used in manufacturing, transport, and infrastructure.

Production of all nine critical commodities is also concentrated in a limited number of countries – many of which face increasing climate risks. For each resource, at least 40% – and as much as 85% – of its global supply is produced from a distinct set of no more than three countries.

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The sustainability imperative

Companies and CEOs are increasingly recognising the impact of climate disruption and taking action. Already, 47% of CEOs have taken proactive measures to safeguard their workforces and physical assets from climate change, according to PwC’s 2024 Annual Global CEO Survey. However, more needs to be done if the global economy is to adapt to climate risk, the report is keen to stress.

“While CEOs are taking action to both cut emissions and adapt to climate change, more needs to be done. Businesses need to understand their dependencies and impacts, then work with governments and communities to transform their consumption and production patterns,” stated Emma Cox, Global Climate Leader, PwC UK. “This is crucial not only for the ongoing success of individual businesses, but also for the overall health and prosperity of the global population.”

Will Jackson-Moore, Global Sustainability Leader, PwC UK, added, “Many locations that produce essential commodities are likely to experience more frequent spells of intense drought and heat stress by 2050, even in an optimistic low-emissions scenario. To avoid economic losses and protect communities and ecosystems, producers, and the broader business community, should understand the impact of climate disruption on production and engage in multi-stakeholder efforts to adapt. This will also strengthen efforts to more rapidly transition to a net-zero economy.”

www.pwc.com

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