PwC‘s Climate Risks to Nine Key Commodities: Protecting People and Prosperity report analysed nine commodities across critical minerals (copper, cobalt, lithium), key crops (wheat, rice, maize) and vital metals (zinc, iron, aluminium), and found that while reducing emissions will decrease heat and drought risks, key commodities will still face significant stress, even under a low emissions scenario modelled by PwC.
The report explained that even if global carbon emissions rapidly decrease as per the low emissions scenario, the situation will see the following at risk by 2050:
- Eighty-seven per cent of the world’s rice production,
- More than 70 per cent of cobalt and lithium production and
- Around 60 per cent of the world’s bauxite and iron production
Further, the report outlined that the world relies on just a few countries to produce each of the nine key commodities.
For each commodity, at least 40 per cent of its global supply is produced from a distinct set of no more than three countries.
It noted that concentration is particularly pronounced for lithium, cobalt, iron, and bauxite, with more than 70 per cent of global supplies sourced from no more than three countries per commodity. Within countries, production is concentrated even further.
More than half the world’s cobalt comes from just five mines in the Democratic Republic of Congo, for example. PwC noted that this geographic concentration may heighten risks to the global supply because the more concentrated the sources of a commodity, the greater the impact that disruption in any one locale could have on global supplies.
Moreover, even in an “optimistic low emissions scenario,” unless adaptive measures are taken or production is moved elsewhere, more of the world’s capacity to produce essential commodities is likely to be exposed to climate-driven disruption, it shared.
Regarding the ways in which companies can take action to protect their operations, people, and supply chains from the effects of climate change, the report highlighted three pillars:
- 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.
Read the full report here.