Climate change

Our decarbonisation plans prioritise avoidance and mitigation over the use of carbon offsets, in accordance with our mitigation hierarchy.

Over 90 per cent of our operational GHG emissions are generated by four operations – Hillside Aluminium, Mozal Aluminium, Worsley Alumina and IMC. Our decarbonisation initiatives are primarily focused on these operations to support a significant reduction in our operational GHG emissions and deliver our medium-term target.

Our operational decarbonisation pathway to support delivery of our medium-term target and long-term goal consists of three elements: efficiency initiatives in the near term, transition to low-carbon energy in the medium-term, and technology solutions in the longer- term.

Just transition

Just transition is the fair, equitable and inclusive social transition towards a low-carbon global economy.

We understand that our decarbonisation initiatives are likely to impact some of the communities and regions where we operate and that a well-planned and just transition can create new and long-term opportunities.

We are committed to supporting a fair and equitable transition for our people, communities and other stakeholders, that is aligned with the objectives of the Paris Agreement.

Physical climate risks are driven or intensified by weather, climate variability or climate change.

They include acute risks, resulting from increased frequency or severity of extreme weather events (e.g., drought or flood events) and chronic risks, resulting from longer-term changes in climate patterns (e.g., sustained higher temperatures, sea level rise).

Physical climate risks have the potential to affect the integrity and performance of our equipment and infrastructure, compromise productivity, and disrupt business continuity (including our supply chain activities). There may also be broader environmental and socio-economic impacts on key stakeholders, including local communities.

We completed our first physical climate risk assessments for our operations in FY18 and FY19, and updated these in FY22. In FY23, we commenced incorporating the outcomes of our FY22 physical impacts of climate change assessment into our material risk reviews, where physical impacts of climate change were identified as a potential influence on the nature, likelihood or impact of the risk event.

Our internal material risk management standard requires that all material risks be reviewed at least every two years. While we have focused our FY23 activities on our most material risks, we continue to investigate additional opportunities to improve how we address physical climate risk in our broader risk management program, for example in the development of guidance documents to support risk practitioners across the business to consider physical climate risk.

In FY23, we set a new goal of net zero Scope 3 GHG emissions by 2050 that includes all categories of Scope 3 GHG emissions relevant to our business.

This goal recognises that we have a critical role to play in contributing to the decarbonisation of the value chain and reflects our commitment to collaborating with our suppliers, customers, joint venture partners, industry peers and other value chain partners to make a meaningful contribution to the actions and innovations required to address Scope 3 GHG emissions.

Technology and innovation are crucial to the low-carbon transition and we actively collaborate with other companies, industry groups and research organisations to complement our innovation and technology programs.

Forging strong relationships with value chain partners is an important part of reducing greenhouse gas (GHG) emissions across the value chain. We work together to reduce GHG emissions by sharing insights, enhancing monitoring and reporting, developing scalable innovation and linking performance to targets.

We continue to identify potential partners for collaboration on Scope 3 GHG emissions reduction, particularly those partners who provide goods and services to South32.