Ferrexpo: Refining a decarbonisation strategy amid global challenges
Customer challenge
Driven by its commitment to net zero carbon targets, Ferrexpo, a major iron ore producer and exporter with its operational base in Ukraine, faced the challenge of updating and adapting its decarbonisation strategy amid geopolitical and economic instability. The Russia-Ukraine conflict has intensified these challenges, requiring the company to navigate climate risks and opportunities while maintaining resilience in an unpredictable landscape.
Ferrexpo is committed to transparency with its stakeholders and continuously improving climate change reporting. As part of this effort, the company is focused on updating and report its decarbonisation strategy to address evolving challenges and opportunities.
Ricardo solution
Ricardo worked with Ferrexpo to lead and develop their Second Edition Climate Change Report. We structured the report according to Ferrexpo’s target audience and key messages, including resilience in pursuing net zero carbon targets while managing climate risks and opportunities. The report also addressed regulatory developments and the impact of Russia’s war on Ferrexpo’s net zero pathway.
Ricardo’s ESG, policy and net zero experts focused on the following workstreams to support Ferrexpo Climate Change Report:
- Gap analysis against the Transition Plan Taskforce Metal and Mining Guidance
The report framework used was the TPT Metal and Mining guidance. - Climate policy and regulatory analysis
Ricardo’s experts analysed 69 environmental and climate-focused policies across 12 geographical locations, including 11 countries and the European Union.
Identifying and analysing climate-related risks and opportunities
We supported Ferrexpo to update their TCFD analysis. This resulted in a shortlist of 35 risks and 28 opportunities, including transition and physical risks from climate change. Of the 63 risks and opportunities analysed, 15 risks and 15 opportunities were deemed material, with additional considerations for the war in Ukraine and evolving legislation. - Conducting climate scenario analysis in line with internationally recognised scenarios
Ricardo modelled four climate scenarios from the IEA and IPCC, addressing both transition and physical risks across short-term (2024-2030), medium-term (2030-2040), and long-term (2040-2050) timeframes. Additionally, Ricardo reviewed Ferrexpo business resilience strategies and adaptive capability measures against the identified material risks and opportunities. - Updating Ferrexpo’s net zero road map for resilience in uncertain times
Due to global uncertainty, Ricardo’s experts worked with three potential war-related scenarios: “Continued War,” “Post-war Rapid Adoption,” and “Post-war Slow Adoption.
Pathways for absolute emissions reduction were mapped against the three scenarios providing insight into the necessary measures for each. Notably, the “Continued War” (93% reduction) and “Post-war Rapid Adoption” (91% reduction) scenarios exceed both SBTi requirements and Ferrexpo’s targets. In contrast, the “Post-war Slow Adoption” scenario achieves an 89% reduction by 2050, falling short of the SBTi target but surpassing Ferrexpo’s internal goal.
Our experts identified a group of key projects that will drive the majority of Ferrexpo’s emissions reductions. The top five initiatives account for 90% of the potential savings.
Customer benefit
Ricardo's expert guidance in refining Ferrexpo’s decarbonisation strategy not only strengthens its resilience but also ensures that Ferrexpo can confidently remain on track towards a sustainable future despite uncertainty. As the global landscape continues to evolve, Ferrexpo’s proactive approach and transparency with stakeholders will play a crucial role in its long-term success.
“My thanks, and congratulations, on completing the report. This has been a stellar effort by Ricardo. The report is an intellectual blend, of empiricism and narrative for a business that is in a unique and challenging situation, this is an impressive achievement”
Nick Bias, Group Head of Investor Relations and Corporate Communications, Ferrexpo