ESG and Mining
“ESG”, or measuring Environmental, Social, and Governance factors, has entered the lexicon of many industries, including mining, and given rise to a burgeoning taxonomy of frameworks and structures. This includes reporting standards (mostly currently voluntary) that may imply future regulatory control. As ESG is commonly used to measure the sustainability, environmental and societal impact of a mine or project, poor ESG performance can generate pressure from outside entities such as NGOs, civil society, and governments to hold mining companies accountable for impacts stemming from their operations – and demanding better performance and standards. Criticism is now much more rapid and vocal, and powerful shifts are motivated by social movements against unpopular projects. But to date, the most direct impact on mining companies is a rising expectation from investors to ensure their mining investments are viewed as responsible and sustainable – with a reduced “ESG risk” profile making investing more attractive (and vice-versa). SRI, or socially responsible investing, has progressed from a “negative screening” of stocks to exclude those thought to be unsuitable, to a more direct investor engagement with companies to review practices or policies (an example being the Investor Mining and Tailings Safety Initiative of 2019). Impact investing takes ESG further by demanding that projects generate positive social and environmental returns. The trade-off for higher positive impacts may be lower financial returns. Mining Footprint has created a table of Mining ESG Scales. We are keen to understand from the industry how management can drive change towards more positive ESG outcomes, perhaps even “Impact Mining”, whilst keeping project dynamics and finances on an even keel. Feel free to contact us to explore these, and other, aspects of mining in 2021.