ESG in Mining - The World is Watching
ESG used to be no more than a page on a mining company's webiste. Fast-forward to today and environmental and social governance has become a major component for any mining company strategy.
During the commodity super cycle, when China’s urbanisation was in full swing, and all commodity prices were on the rise, the concept of CSR was of little to no real importance to much of the investor community. The CSR section on mining websites was more of a necessity with a hope of doing the right thing, rather than a vital requirement to be actually doing the right thing.
Fast forward to today and the topic has become a major component for any mining company strategy. How times have changed in just a decade!
Environmental issues have been hitting headlines of the mainstream media more and more in recent years. Most recently fires and deforestation in the Amazon, where 1330 square miles has been burnt or felled since January 2019. There has also been the anti-plastic movement to protect the oceans.
These causes are supported strongly by millennials, the oldest of which is now not far off 40 years old (born in 1981). Their outlook on lifestyle, morality, and investment perspective relate more and more with ESG policy than earnings before interest, tax, depreciation and amortization (EBITDA)!
The rise of ESG, Sustainable, Green, and Ethics investment funds is no coincidence. An opportunity is now becoming more evident that a new investor group is ‘eyeing up’ investment opportunities in the mining sector. Mining corporates are starting to realise that new investors are looking at the mining sector, as long as they have a ‘water tight’ ESG programme?
The rebalancing act for an extractive company, is to change its strategy to become more ESG friendly, or at least communicate an existing programme, takes some time.
Safeguarding the environment is the most topical around the world, and the mining sector, understands this especially with the tailings damn disaster at Vale’s Corrego Do Feijao mine in Brazil earlier this year. Since then comprehensive environment management systems, mine planning, and even interactive mine closures are now in place. But the secret is that this has to be enforced via international, national, and regional administration. So this will become a severe test, as the demand for hard commodities increases with a rising global population and increased urbanisation.
As more information and news flow is now obtained faster across all stakeholders and employees in the mining sector; due to the advent of the mobile and digital communications. Corporates now realise that local employment, outside mining operations has an important impact on the wider engagement reputation of a mining operation locally, nationally and internationally. The times of building the odd classroom, without a teacher, have now transitioned to, local business (non-mining) financial support, the promotion of women empowerment, and wider investment in education via students with scholarships, rather than bricks and mortar!
The key areas of the Governance include, management structure, employee relations, executive compensation, and employee compensation; and even in some instances; the importance of Human Rights!
The G of the ESG, in my view is the easiest and fastest ‘letter’ of the acronym to positively make a difference within a mining company’s ESG programme. A good starting point would be; pay equity for all employees of all genders.
Overall, ESG is a requirement; yes. But also, a requirement that mining companies can ill afford not to have, nor to take seriously. Mining companies are now not just mining companies but need to look inwards and be seen outwards in a very different image than back in the day.
Tavistock are proud to be the official PR partner of this year’s Mines and Money London. At Mines and Money London ESG will be covered in detail including the following speakers:
- Elaine Dorward-King, Executive Vice President, Sustainability and External Relations, Newmont
- Adam Matthews, Director of Ethics and Engagement, Church of England Pensions Board, Co-Chair, Transition Pathway Initiative
- John Howchin, Secretary General, Council on Ethics, Swedish Pension Funds
- Tal Lomnitzer, Senior Investment Manager, Natural Resources, Janus Henderson
- Sharon Flynn, Executive Vice President of External Affairs & Social Performance, Oceana Gold
- Jon Samuel, Group Head of Social Performance & Engagement, Anglo American
- Tom Butler, CEO, ICMM