INSIGHT •
ESG COMPLIANCE KEY TO MITIGATING RISK
By Janine Espin , managing director at Economic Development Solutions ( EDS )
Against a backdrop of uncertainty and unprecedented change in 2020 , the mining industry is now under increasing pressure to be more cognisant of their Environment , Social and Governance ( ESG ) compliance requirements , writes Janine Espin .
As overwhelming as these obligations may seem , given our current pandemic situation , the industry should attempt to understand the benefits of ESG adoption . When integrated into strategic decision-making processes , ESG can present many opportunities such as building resilience and creating certainty within the organisation and the surrounding communities .
Ultimately , as a business approach , ESG generates long-term value for mining companies by controlling risks and capitalising on opportunities created by environmental and socio-economic factors .
A guiding framework with real benefits ESG brings together all the environmental , social and governance compliance themes into a comprehensive framework that can help mining companies to successfully find the balance between people , planet and profit .
By incorporating ESG into long-term strategic planning and communicating this to all investors and stakeholders , mining businesses can gain a more holistic understanding of their performance and the impact of their operations on the world around them .
In a report that analysed the results of more than 200 studies into the impact of sustainable corporate practices on investment returns , it was clear that operational and stock price performance can be positively influenced by solid sustainability initiatives and commitment to ESG practices .
According to one report , consistent compliance with ESG commitments resulted in enhanced operational performance in 88 % of companies , with the stock price performance of 80 % of companies being positively influenced by dedication to sustainability .
The cost of capital was lowered for 90 % of companies , because strong sustainability scores evidenced reliable operational performance , which in turn lessened investor risk .
Holistic approach required At the Mining Indaba Virtual 2021 , it was highlighted that companies must now move away from seeing ESG as a tick-box reporting or data gathering initiative , and instead work toward achieving value under its frameworks .
Leaders in the mining sector need to push heavily to bring ESG awareness and integration into corporate strategy , which will have an impact on every facet of the business .
This includes organisational culture , risk management , stakeholder engagement and portfolio planning . Commitment to ESG compliance is no longer optional .
It is critical to address the breakdown of trust between mining companies , workers and the surrounding communities , as well as to guarantee the responsible sourcing of metals and minerals from the earth . Furthermore , it will only be possible to drive policy reform and ultimately decarbonise the economy if approached through the lens of ESG compliance .
Considering the impact How mining companies achieve these goals will depend on how well equipped they are to navigate , appreciate , report on , and identify opportunities within these frameworks to affect positive change .
In respect of mining operations , compliance is multi-faceted and the associated obligations under environmental , social , and business governance pillars are inextricably intertwined . As a result , issues of sustainability , labour and environmental impact can no longer be considered in isolation .
Operationally speaking , compliance efforts in a mine are dictated by a variety of environmental and social development obligations and duties towards the wellbeing of their employees while they are at work .
This requires clear social and labour plans that ensure fair labour practices and safe working conditions . There are also duties toward the labour-sending and surrounding communities , particularly when it comes to a mine ’ s end of life .
ESG compliance is not something that mining companies need to tackle on their own
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African Mining • September 2021 • 39 |