ESG Insights: What does ESG mean for the Mining industry?
ESG – environmental, social and governance – and the issues it embraces will not be new to the Mining industry although the term may be unfamiliar. Miners have long grappled with matters related to the ‘green’ or sustainability agenda, but ESG now brings together all these themes in a comprehensive framework that can help a mining company navigate and balance the benefits to the planet, people and profit successfully.
ESG has come to the forefront primarily through investors demanding increased attention on environmental, social and governance-related matters and data. In short, investors are starting to look beyond financial statements and now want to consider the ethics, competitive advantage and culture of a mining organisation. They’ve also proposed new standards and frameworks against which mining investments should be measured.
Against this background, it can be difficult for mining companies to navigate what is important and how it should be reported. The following issues are covered by the ESG agenda for the mining industry:
- Environment: biodiversity, ecosystem services, water management, mine waste / tailings, air, noise, energy, climate change (carbon footprint, greenhouse gas), hazardous substances, mine closure.
- Social: human rights, land use, resettlement, vulnerable people, gender, labour practices, worker/community health & safety, security, artisanal miners, mine closure / after use.
- Governance: legal compliance, ethics, anti-bribery and corruption (ABC), transparency.
Within this, mining companies need to consider whether there are environmental, social or governance risks that may affect their ability to: raise capital; obtain permits; work with communities, regulators and NGOs; and/or protect their assets from impairments. And then there may be opportunities to: reduce energy and water bills or carbon emissions; improve operational performance; enhance community and regulatory relationships; and manage closure viability.
Many mining and minerals business are already taking active steps on their ESG agenda; identifying their priorities and measuring their performance. But in our experience, the real benefits come when you move beyond measurement and take action to improve.
This is the first in a series of articles on ESG in Mining. The next article will identify the four reasons why the Mining industry should act on ESG.