JOHANNESBURG (miningweekly.com) – Gold can be at the forefront of supporting the global decarbonisation transition, as the precious metal is expected to be more resilient to global economic changes caused by climate change, World Gold Council (WGC) CFO Terry Heymann told Mining Weekly Online this week.

He explained that gold itself had an emissions profile that was consistent with leading mainstream investment assets and should be “an interesting investor option” for those interested in reducing the impact of emissions within their portfolios.

According to Heymann, the gold industry is “at the forefront” of setting out what emissions in the gold value chain look like, while simultaneously setting a path to decarbonisation, with opportunities for gold to play a supporting role in technologies that are aimed at improving energy efficiency.

For example, the move towards fuel cells and alternative fuel uses, or even the move to the hydrogen economy, is what experts and technologies are looking for, Heymann explained, adding that “there is a lot of … evidence that gold may play a role in supporting the transition to a low-carbon economy”.

The WGC on Wednesday launched its 'Gold and Climate Change: Current and Future Impacts' report, which aims to provide investors and industry stakeholders with greater clarity around gold’s emissions profile and the role that gold can play as a climate risk mitigation asset in long-term investment strategies.

Building on the WGC’s initial work in 2018, the new report offers a more comprehensive overview of the current status of gold’s climate impact and how the sector, and gold mining in particular, might decarbonise, in line with the objectives of the Paris Agreement.

“We wanted to look at what potential pathways could lead to net zero, which is critically important in terms of being able to meet the objectives of the Paris Climate Accord, and we wanted to understand the role that gold can play in a portfolio given these climate-related risks, both physical and transition,” Heyman explained to Mining Weekly Online.

Referring to the document as the “most comprehensive data that’s ever been put forward from the gold industry around emissions”, he mentioned that the report reviewed Scope 1, 2 and 3 emissions, considering that industries were “struggling to get their heads around how to measure and assess other indirect emissions”, such as those that occur as a consequence of what is up- and downstream in the value chain.

In particular, Heymann suggested that the gold industry was seeing an increasing trend in electrification and the use of renewables in efforts to decarbonise.

“As renewable technology becomes resilient and it becomes more cost efficient, it really creates a big opportunity to move away from importing diesel and other fossil fuels to provide energy to gold mines – and I think that’s very exciting for the gold industry,” he enthused.

In addition, the WGC’s report also examines how gold’s role as an investment asset might be affected by climate-related physical and transition risks in comparison to other mainstream investments.

Heymann noted that the WGC considered asset sensitivity to climate scenarios and how returns may be impacted on in a world that is seeing a rise in temperatures.

Gold would not only demonstrate itself to be resilient against mainstream assets – like US bonds and stocks, other commodities, emerging market stocks or even real estate – but would also continue to play a traditional supporting role in underpinning investment portfolios over the long term, while simultaneously reducing volatility in investment portfolios, Heymann elaborated.

Other key findings of the report include revised estimates of the emissions associated with the production and consumption of gold, which is said to represent a “more accurate and comprehensive understanding” of gold’s greenhouse gas intensity and carbon footprint, while broadly validating the WGC’s work last year.

In addition, the findings confirm that gold’s downstream uses – as jewellery, bullion and in electronic products – have little material impact on gold’s overall carbon footprint.

The report also touches on where there are substantial opportunities for gold mining to decarbonise. Specifically, there are compelling reasons to believe that energy and fuel use in gold mine production can transition towards a net zero pathway in a practical and cost-effective manner, the report states.

Meanwhile, according to Oxford Sustainable Finance Programme director Dr Bel Caldecott, investors from all over the world have “become increasingly aware of their portfolio’s environmental footprints”.

The global challenge of transitioning to a negative carbon footprint poses a challenge but also an opportunity that could reshape the value of assets and companies across sectors of the global economy, he said in a separate statement on Wednesday.

According to Caldecott, the new report by the WGC “maps out the key questions the gold industry needs to address now in order to achieve net zero, but it also looks at gold as playing a part of the solution”.