- More than 70% of the production of copper, cobalt and lithium –
minerals crucial for the clean energy transition – could face
significant or higher drought risk by 2050 under a high emissions
scenario. Up from less than 10% today.
- Food crops also face significant risk: under a high emissions
scenario, 90% of the world's rice production could face significant
heat stress by 2050 (up from 75% today), and more than 30% and 50%
of maize and wheat, respectively, could face significant drought
risk by 2050.
- CEOs are increasingly taking proactive measures, with 47%
focused on protecting their workforces and physical assets
from climate risk.
LONDON, April 30,
2024 /PRNewswire/ -- CEOs need to accelerate their
action plans to safeguard the production of commodities critical to
the global population and economy as heat stress and drought risk
rise around the world, according to PwC's report, Climate
Risks to Nine Key Commodities: Protecting People and
Prosperity, published today.
The report, which analysed nine commodities across critical
minerals (copper, cobalt, lithium), key crops (wheat, rice, maize)
and vital metals (zinc, iron, aluminium), finds 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 analysis, even if global carbon emissions
rapidly decrease (low emissions scenario), 87% of the world's rice
production, more than 70% of cobalt and lithium production, and
around 60% of the world's bauxite and iron production will be at
risk by 2050.
Importantly, these risks can be managed - and 47% of CEOs say
they are already focused on protecting their workforces and
physical assets from climate risk.
Emma Cox, Global Climate Leader,
PwC UK, said:
"Even if global carbon emissions rapidly decrease, climate
disruption poses a serious and growing threat to the world's
ability to produce essential commodities - including food as well
as materials that are themselves essential to the net zero
transition. 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. This is crucial not only for the ongoing
success of individual businesses, but also for the overall health
and prosperity of the global population."
Essential commodities face heightened exposure to drought and
heat risk
Critical Minerals
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.
Key Crops
All three crops (wheat, rice, maize) face growing risks from
both heat stress and drought. Taken together, these three crops
account for 42% of the calories people eat. The most widespread and
serious risk is to rice, around 90% of which will face significant
or greater heat stress risk by 2050 in a high emissions scenario.
Currently, over 75% of rice is grown in conditions of significant
or greater heat risk, showing that it is not just the level of risk
that matters, but also how well producers are prepared to adapt.
Drought risk is also increasing sharply for key crops. Currently,
around 1% of maize and wheat face significant drought risk, rising
to more than 30% and 50% respectively in a 2050 high emissions
scenario.
Vital Metals
PwC research finds 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 emissions scenario (up from 30-50% currently).
In a high emissions 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.
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:
- Enhance resilience by identifying and managing risks throughout
the supply chain;
- Capitalise on the opportunities to deliver products, services,
or business models that help companies and communities adapt;
and
- Join forces with stakeholders from governments to communities
to shape collaborative outcomes and enhance adaptation at a policy
and systemic level.
Will Jackson-Moore, Global
Sustainability Leader, PwC UK, concludes:
"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."
Notes to Editors:
About the Report
PwC's report – Climate Risks to Nine Key Commodities:
Protecting People and Prosperity – analysed nine commodities
crucial to the global economy and their risk exposure to drought
and heat stress. Risk was categorised as significant, high or
extreme. Heat stress risk is categorised based on durations above
Wet Bulb Globe Temperature (WBGT) limits. WBGT reflects the
combined impact of temperature and humidity. Drought risk is
categorised based on the percentage of time spent in severe drought
over a 20-year period. Exposure of key mines and farms critical to
the production of the nine commodities was assessed relative to
climate-related drought and heat stress at a present-day baseline
and in two future years: 2035 and 2050. For 2050, we examined how
risk exposures vary depending on how effectively the world reduces
its carbon emissions by comparing low vs high emission scenarios.
While our approach provides a useful insight into how different
commodities may become more exposed to different climate perils in
the future, there are a number of limitations. These include that
we do not estimate potential changes in production and we cannot
predict future actions to adapt. You can read the full report, and
learn more about key takeaways for climate risk adaptation on
www.pwc.com
About PwC
© 2024 PwC. All rights reserved. PwC refers to the PwC network
and/or one or more of its member firms, each of which is a separate
legal entity. Please see www.pwc.com/structure for further
details.
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