Gold to remain robust despite climate change concerns

Climate-related risks and opportunities could impact the future prospects of the gold industry, according to World Gold Council (WGC) analysis.

The WGC report shows the biggest source of greenhouse gas emissions (GHG) in the gold supply chain comes from energy and fuel use in mine production.

WGC chief financial officer Terry Heymann recognises that climate change imposes very substantial risks to the global economy.

“Gold … both through decarbonisation efforts and as a compelling investment … are less likely to be negatively impacted by the physical and transition risks associated with climate change,” Heymann said.

“This new research demonstrates that gold has an important role to play in supporting the transition to a lower-carbon economy.”

Several decarbonisation opportunities are available to gold producers as early as next year. These include electrification, process re-invention and negative emissions technologies.

Gold’s downstream uses, such as gold in bullion, jewellery and electronic products, also have little material impact on gold’s overall carbon footprint and GHG emissions.

In comparison to the “vulnerability” of many other mainstream assets, gold as an asset looks relatively robust in the context of climate-related physical and transition risks, the report states.

“Investors all over the world, from large institutional investors to small millennial retail savers, have become increasingly aware of their portfolios’ environmental footprints,” the Oxford Sustainable Finance Program director at the University of Oxford, Ben Caldecott, said.

“The global challenge of transitioning to a negative carbon footprint poses a massive challenge but also opportunity and will reshape the value of assets and companies across sectors of the global economy. … I look forward to seeing the gold industry’s progress over the coming years.”

Further investment demand for gold will come from heightened market volatility and uncertainty from climate-related risks.

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