Introduction

Our approach to climate change

Gem Diamonds remains dedicated to responsible, safe, and sustainable mining. As part of this commitment, the Board adopted the Task Force on Climate-related Financial Disclosures (TCFD) framework in 2021, supported by a three-year adoption roadmap to guide implementation.

To ensure a robust approach to implementing the TCFD recommendations, the Group engaged independent experts across key areas, including insurance, decarbonisation, energy, risk management, corporate reporting and materiality assessment. In alignment with the TCFD recommendations, the Group conducted several external and internal studies during the three-year implementation period. These included climate change scenario analysis, physical and transition risk assessments, carbon footprint reduction opportunities, a carbon pricing model, and energy and water footprint assessments.

The three-year TCFD adoption roadmap was successfully completed in 2023, with regular progress updates provided to stakeholders. Further details on our TCFD adoption roadmap and associated studies can be found on our website, www.gemdiamonds.com, as well as in our Sustainability and Climate Change Reports.

In 2023, the Group committed to a 30% reduction of its Scope 1 and 2 emissions by 2030, using 2021 as a baseline. This commitment followed the Board’s adoption of our decarbonisation strategy, which sets out our ambitions to reduce energy consumption, improve our energy-use efficiency and transition to appropriate renewable energy sources.

Governance

How we govern climate-related risks and opportunities

Board

The Group has adopted a comprehensive governance framework to oversee climate-related risks and opportunities, integrating both bottom-up and top-down approaches. The Board, supported by its Committees, holds ultimate responsibility for climate governance, ensuring that our decarbonisation strategy is implemented in alignment with the Group’s best interests. It sets the risk appetite, strategic objectives, and accountability framework for managing climate-related risks and opportunities.

The Sustainability and Audit Committees receive regular updates on climate change matters, including risk exposure, progress against decarbonisation targets, and overall performance. The Audit Committee oversees climate-related strategy and governance, while the Sustainability Committee reports on operational performance, targets and metrics. Insights from climate-related data and performance reports informed the 2025 reviews of the Group’s strategy, risk management framework and annual budgets.

Management

The Group COO holds overall executive accountability for sustainability, including climate-related issues, decarbonisation, and energy management. Acting on the most material risks and opportunities identified through management forums, the COO drives business model transitions that enhance energy efficiency, reduce costs, and support decarbonisation. The Group CFO is responsible for integrating climate-related considerations into annual budgets, business plans, financial disclosures and risk management.

Climate-related risks and opportunities are embedded across key internal functions, including enterprise risk management, financial planning, reporting, insurance, project management, internal audit, and operations. This integration strengthens the Group’s approach to climate change, energy management, and decarbonisation. Management provides regular reports to the Gem Diamonds and Letšeng Boards and their respective Audit and Sustainability Committees, on the identification and response to climate-related risks and opportunities.

Strategy

The impacts of climate-related risks and opportunities on our businesses, strategy and financial planning

Our Group strategy to sustainably maximise stakeholder value is inseparable from our commitment to responsible stewardship of natural resources. Climate action and decarbonisation are central to our drive for operational efficiency and cost reduction. By implementing targeted initiatives to reduce energy consumption and improve efficiency, we expect to achieve further reductions in our carbon footprint while also realising cost savings. The Group focuses on three strategic priorities that guide how we create value for stakeholders. The first is maximising value from our operations, ensuring efficiency and optimisation across all aspects of our business. The second is operating responsibly while maintaining our social licence, reinforcing our commitment to environmental and community stewardship. The third is preparing for the future, integrating sustainability into long-term planning to enhance resilience and competitiveness.

Effective management of climate-related risks and opportunities is integral to delivering on these priorities and strengthening Group performance. We continuously review our science-based physical and transition risk exposure assessments to evaluate the materiality of potential financial and operational impacts. This ongoing review helps us to identify emerging climate-related risks and opportunities while reassessing existing ones, enabling us to proactively plan for mitigation, adaptation and financial resilience.

Climate-related physical and transition risks are incorporated into our risk management framework. Our resilience to physical climate-related risks across our operations is strong – operating in remote and extreme environments, we have established robust strategies to withstand physical climate risks, including snowstorms, extreme temperatures, excessive rainfall, flash floods and drought. In addition, we closely monitor and model transition risks – such as regulatory changes, carbon taxes and global fossil fuel trends – to ensure these factors are integrated into our short, medium and long-term strategic planning. We continuously evaluate the materiality of potential physical risks under different future scenarios, enhancing our understanding of future risks and opportunities.

For more information on our key climate-related risks and opportunities identified by the Group click here


Decarbonisation strategy

Gem Diamonds is committed to setting practical, enforceable, and achievable science-based decarbonisation targets. The Group has pledged to reduce Scope 1 and 2 emissions by 30% by 2030, using 2021 as the baseline. Our decarbonisation strategy is designed to balance environmental responsibility with the socio-economic realities of our host countries, prioritising the well-being of our workforce and surrounding communities. Recognising the need for a just transition away from fossil fuel reliance, we focus on decarbonisation initiatives that account for economic, social and climate considerations.

Our decarbonisation strategy is driven by two core principles: enhancing process and equipment efficiency to reduce energy consumption and associated carbon emissions, and transitioning from fossil fuel-based energy to lower-carbon and renewable alternatives. To support this, Gem Diamonds actively collaborates with independent energy and carbon experts to enhance energy efficiency and mitigate emissions from our Scope 1 and 2 activities. We have adopted a bottom-up approach to identifying decarbonisation risks and opportunities, ensuring that resource-use efficiency and carbon reduction initiatives are implemented effectively. Progress against these commitments is systematically tracked and reported, with key performance indicators and remuneration frameworks ensuring accountability and long-term success.

We have embedded energy efficiency, alternative energy solutions, and decarbonisation into our broader business strategy, prioritising them as critical workstreams. As of 2025, limited renewable or alternative electricity sources are available to Letšeng to replace the existing grid-supplied electricity. Continuous assessment and implementation of energy-reduction initiatives remain a priority, enabling us to progressively lower overall demand while integrating lower-carbon and renewable energy sources where feasible. By focusing on reducing our energy consumption first, we can optimise the efficiency and cost-effectiveness of renewable energy adoption and residual emissions offsetting.


Risk management

How we identify, assess and manage climate-related risks

Gem Diamonds has a robust risk management framework that integrates top-down governance with bottom-up risk identification, ensuring comprehensive oversight and accountability. Climate-related risks and opportunities are systematically identified, assessed, and managed across short and medium to long-term horizons to support proactive mitigation and informed decision-making.

We employ structured internal and external processes to assess climate-related risks, including energy and decarbonisation challenges. Quarterly risk workshops with department heads inform updates to the Group risk register and guide the development of targeted mitigation measures. These are reviewed by the Audit and Sustainability Committees before being presented to the Board for approval. Once approved, risk management plans are implemented at both Group and operational levels, with effectiveness monitored through quarterly technical reviews, management risk workshops, and risk review meetings.

The Board holds ultimate responsibility for climate-related risk management, ensuring robust oversight of strategic, financial and operational impacts. The Audit Committee monitors climate-related risks, strategy, and governance, regularly reviewing financial disclosures and regulatory developments. The Sustainability Committee oversees energy and decarbonisation risks and opportunities, tracking performance against carbon and water footprint targets while ensuring effective HSSE risk management.

To strengthen our risk management approach, we collaborate with experts in insurance, decarbonisation, energy, and climate change to identify emerging risks and opportunities. This engagement enhances our organisational readiness, ensuring we anticipate future challenges and implement effective mitigation strategies that safeguard business continuity.

For further details on how Gem Diamonds identifies, evaluates, and manages risks including climate-related risks refer to the Risk management section on page 18 of our Annual Report and Accounts 2025.

Physical and transitional risk exposure assessments

The table below provides a high-level overview of some of the Group’s climate-related risks and opportunities.

Timeframes

01

Short term: 1 to 3 years

02

Medium term: 3 to 5
years; long term:
5 to 10 years

Short term: 1 to 3 years

Short-term processes include annual business and financial planning, performance reporting, short-term capital allocation and contract negotiations.

Climate-related risks
• Increase in occurrence of moderate precipitation
• Enhanced emissions reporting obligations
• Enhanced ESG obligations
Potential financial impact
• Increased operating costs
• Increased capital investment

Climate-related opportunities
• Increased resource efficiencies and reducing our reliance on fossil fuels
• Enhanced water use strategies
• Waste reduction and recycling initiatives
Potential financial impact
• Reduced operating costs
• Increased capital investment

Medium term: 3 to 5 years; long term: 5 to 10 years

Medium to long-term processes include strategy development, social and environmental management plans, rehabilitation planning, capital management plans, financing and capital investments and operational planning, including contract negotiations and future-focused projects.

Climate-related risks
• Increase in occurrence and severity of precipitation
• Rising mean temperature
• Strong winds
• Increased frequency and duration of droughts
• Failure of electricity providers to move to a low-carbon economy
• Substitution of technology with lower-emission alternatives
• Social risks due to resource constraints, particularly in developing countries
• Evolving regulatory context regarding carbon tax
• Increased costs of carbon-intensive products (such as diesel)
• Reputational risk
Potential financial impact
• Increased capital investment
• Increased operating cost
• Reduced revenue from decreased production capacity
• Increased insurance premium or insurance unavailability
• Research, development and implementation costs of new technology
• Inappropriate investment decisions

Climate-related opportunities
• Identify opportunities to transition to renewable energy sources
• Position Gem Diamonds as an ethical and responsible producer of low-carbon-footprint diamonds
• Use of new technologies
• Reputational benefits
Potential financial impact
• Reduced exposure to carbon and fossil fuel pricing
• Increased capital availability
• Decreased operating costs
• Increased capital investment

Timeframes


Short-term processes include annual business and financial planning, performance reporting, short-term capital allocation and contract negotiations.

Climate related risks

  • Increase in occurrence of moderate precipitation
  • Enhanced emissions reporting obligations
  • Enhanced ESG obligations
Potential financial impact
  • Increased operating costs
  • Increased capital investment

Climate-related opportunities

  • Increased resource efficiencies and reducing our reliance on fossil fuels
  • Enhanced water use strategies
  • Waste reduction and recycling initiatives/li>
Potential financial impact
  • Reduced operating costs
  • Increased capital investment

Medium to long-term processes include strategy development, social and environmental management plans, rehabilitation planning, capital management plans, financing and capital investments and operational planning, including contract negotiations and future-focused projects.

Climate related risks

  • Increase in occurrence and severity of precipitation
  • Rising mean temperature
  • Strong winds
  • Increased frequency and duration of droughts
  • Failure of electricity providers to move to a low-carbon economy
  • Substitution of technology with lower-emission alternatives
  • Social risks due to resource constraints, particularly in developing countries
  • Evolving regulatory context regarding carbon tax
  • Increased costs of carbon-intensive products (such as diesel)
  • Reputational risk
Potential financial impact
  • Increased capital investment
  • Increased operating cost
  • Reduced revenue from decreased production capacity
  • Increased insurance premium or insurance unavailability
  • Research, development and implementation costs of new technology
  • Inappropriate investment decisions

Climate-related opportunities

  • Identify opportunities to transition to renewable energy sources
  • Position Gem Diamonds as an ethical and responsible producer of low-carbon-footprint diamonds
  • Use of new technologies
  • Reputational benefits
Potential financial impact
  • Reduced exposure to carbon and fossil fuel pricing
  • Increased capital availability
  • Decreased operating costs
  • Increased capital investment

 

Unpacking our climate change scenario analysis

Understanding climate-related risks and opportunities allows us to align our business strategy with stakeholder demands of the industry, enhance sustainability efforts throughout the organisation, create resilience to climate change-related impacts and maximise value for all stakeholders.

 

Putting a price on
carbon

Internal carbon pricing is a globally recognised tool to guide decision-making when assessing climate change impacts, risks and opportunities, by forecasting a future world under various climate-change scenarios.


Targets and metrics

The targets and metrics used to assess and manage relevant climate-related risks and opportunities

The Group continuously monitors key metrics to assess climate-related risks and opportunities, ensuring a data-driven approach to sustainability. Semi-annual carbon and water footprint assessments provide shorter-term insights into progress against set goals, enabling a proactive response to immediate risks and opportunities. This monitoring allows for swift action on climate and energy-related matters, including consumption rates, carbon emission trends, and efficiency improvements. As part of regular operations, the Group measures and tracks various environmental factors, including carbon and water footprints, freshwater dam levels, precipitation patterns, energy consumption trends, environmental expenditure, and land use and rehabilitation activities. These insights support informed decision-making and the effective management of resources to enhance long-term sustainability. For more information on our carbon emissions, including Scope 1, 2 and 3 emissions and other climate-related metrics, refer to our Sustainability Report 2025.

Our carbon, energy and water footprints

Carbon emissions Unit 2025 20241 20211 Performance against 2021 baseline (%)
Scope 1 (direct) tCO2e 25 578 32 176 61 039 (58)
Scope 2 (indirect) tCO2e 64 027 61 610 67 159 (5)
Total Scope 1 and 2 tCO2e 89 605 93 786 128 198 (30)
Scope 3 (indirect) tCO2e 7 578 9 429 22 976 (67)
Total Scope 1, 2 and 3 tCO2e 97 183 103 215 151 174 (36)
Total tonnes mined (ore and waste) tonnes 7 113 069 10 472 830 24 395 986 (71)
Ore tonnes treated tonnes 5 188 776 5 018 739 6 172 428 (16)
Carats recovered carats 90 354 105 012 115 336 (22)

1 The 2021 baseline and 2024 comparative figures have been restated to exclude the Ghaghoo mine that was relinquished during the year.

Letšeng carbon emissions related to diesel consumption (tCO2e) 2025 2021 Performance against 2021 baseline (%)
Diesel: Mobile combustion 23 065 52 410 (56)
Diesel: Stationary combustion 2 420 3 587 (33)
Total emissions related to diesel consumption 25 485 55 997 (54)
Carbon intensity indicators Unit 2025 2021 Performance against 2021 baseline (%)
Intensity indicator: Scope 1 and 2 (tCO2e)/Tonnes mined (ore and waste) ratio 0.013 0.005 160
Intensity indicator: Scope 1 and 2 (tCO2e)/Tonnes ore treated ratio 0.017 0.021 (19)
Intensity indicator: Scope 1 and 2 (tCO2e)/Carats recovered ratio 0.992 1.112 (11)
Energy consumption Unit 2025 20241 20211 Performance against 2021 baseline (%)
Scope 1 kWh 89 631 116 108 281 947 225 409 727 (60)
Scope 2 kWh 63 393 101 61 000 690 68 320 176 (7)
Total Scope 1 and 2 kWh 153 024 217 169 282 637 293 729 903 (48)
Total tonnes mined (ore and waste) tonnes 7 113 069 10 472 830 24 395 986 (71)
Ore tonnes treated tonnes 5 188 776 5 018 739 6 172 428 (16)
Carats recovered carats 90 354 105 012 115 336 (22)
Intensity indicator: Scope 1 and 2 (kWh)/Tonnes mined (ore and waste) ratio 21.5 16.2 12.0 79
Intensity indicator: Scope 1 and 2 (kWh)/Tonnes ore treated ratio 29.5 33.7 47.6 (38)
Intensity indicator: Scope 1 and 2 (kWh)/Carats recovered ratio 1 693.6 1 612.0 2 546.7 (33)

1 The 2021 baseline and 2024 comparative figures have been restated to exclude the Ghaghoo mine that was relinquished during the year.

Water consumption Unit 2025 20241 20211 Performance against 2021 baseline (%)
Net water usage million m3 1.5 2.7 6.3 (76)
Water withdrawal and capture million m3 0.5 0.4 0.3 67
Water recycled million m3 3.8 5.0 8.6 (56)
Water loss through evaporation, entrainment, and seepage million m3 1.8 1.8 1.8 –
Total tonnes mined (ore and waste) tonnes 7 113 069 10 472 830 24 395 986 (71)
Ore tonnes treated tonnes 5 188 776 5 018 739 6 172 428 (16)
Net water use (m3)/Tonnes mined (ore and waste) ratio 0.21 0.26 0.26 (19)
Net water use (m3)/Tonnes ore treated ratio 0.29 0.54 1.02 (72)
Recycled water (m3)/Tonnes mined (ore and waste) ratio 0.53 0.48 0.35 51
Recycled water (m3)/Tonnes ore treated ratio 0.73 1.00 1.39 (47)

1 The 2021 baseline and 2024 comparative figures have been restated to exclude the Ghaghoo mine that was relinquished during the year.