Ukwazi Views

Mining and ESG
Launches full project development and delivery (PDD) offering
In June 2020, Rio Tinto in Australia blasted a 46 000-year-old Aboriginal cultural heritage site in the Juukan Gorge cave, to expand its iron ore operation in the Pilbara in Western Australia. Although it had ministerial consent to do so, the local community was opposed to it. The controversy leads shareholders to pressurise the CEO, Jean-Sébastien Jacques to resign and to sanction several other executives. What this case illustrates is the tension between mining and commercial imperatives and environment, sustainability, and governance (“ESG”) principles.
In September 2020, the four major accounting firms: Deloitte, EY, KPMG, and PwC submitted a paper to the World Economic Forum in Davos to set out metrics that would allow companies to measure their Environment, Sustainability, and Governance (ESG) performance. The metrics which were formulated were based on consultation and input from the 200 plus members of the International Business Council as well as some 120 CEOs. The metrics developed to help measure and monitor “stakeholder capitalism” and are also aligned to the United Nation’s Sustainability Development Goals.
There are 21 core metrics (and 34 expanded metrics and disclosures) and they fall into 4 main categories. The categories based on 4 pillars: governance, people, planet, and prosperity. The metrics selected were chosen because they are capable of verification and risk assurance. They enhance transparency and alignment among companies, investors, and relevant stakeholders and are capable of forming part of triple bottom-line reporting, regardless of the specifics of the sector or industry.
The four pillars are focused on the following:
- Governance: focuses on a company’s purpose, strategy, and accountability. This pillar includes risk and ethical behavior including anti-corruption.
- People: focuses on a company’s social eco-system and its treatment of employees, particularly in regard to diversity and inclusion reporting, wage inequality, and health and safety.
- Planet: focuses a company’s impacts on the environment particularly climate change via greenhouse gas emissions, land protection, and water conservation.
- Prosperity: focuses on how a company affects the financial wellbeing of its (host) community. Metrics include employment and wealth generation, taxes paid, and research and development expenses.
Although these metrics may be generic it’s patently clear they are easily applicable to the mining sector.
The value of these metrics is that it allows companies to report to stakeholders (not just shareholders) regarding their business activities and their impacts on people, the economy and environment in a manner that is consistent and comparable to other companies in the same sector. The reporting frameworks also adopt the disclosure or explain rule used in King III Code on Governance (and IV) and focus on materiality as the principle which guides disclosure.
No doubt there will be further debate regarding the actual framing of these metrics and their implementation. What is clear is that more and more capital and investment decisions will be made based on how and when mining companies implement their ESC systems and processes.
Consultants can help country navigate energy minerals demand
Article written by Cameron Mackay at Mining Weekly Owing to the increasing amount of mining activity expected in Botswana –…
Read MoreCompany benefits from PGMs demand
Article written by Sabrina Jardim at Mining Weekly With the increase in demand for platinum-group metals (PGMs), specialist mining services…
Read MoreClean Coal Technologies (CCT) – quo vadis?
By Alan M. Clegg Pr.Eng Pr.CPM PMP FSAIMM – Chairman, Shumba Energy Ltd and Spencer Eckstein – Director, Business Development,…
Read MoreThree key ways to empower SA’s mining SMMEs
Despite obvious challenges, including energy insecurity and policy uncertainty, South Africa’s immense natural resources, coupled with current macro factors, provide…
Read MoreRefining Climate Resilience
South Africa recently experienced flash floods in KwaZulu-Natal, causing loss of life and property, damage to homes, roads and railway…
Read MoreSA poised to benefit from PGMs growth
South Africa is strategically poised to benefit from the growth trajectory of the platinum-group metals (PGMs) sector, as it holds about 80% of the world’s PGM resources.
Read MoreGreen economy will require more commodities
Article written by Nadine Ramdass at Mining Weekly Rather than requiring fewer commodities, the green economy, and its resulting technological…
Read MoreMining and the circular economy – debunking the myths
First things first, while “circular” and “green” are often used interchangeably, it is important to distinguish between them. The UN…
Read MoreJust transition – A preliminary perspective
Eskom and the coal industry are at the core of the just transition. Approximately, 75% of our electricity is coal…
Read MoreA close shave…or too close to call?
The United Nation’s Intergovernmental Panel on Climate Change’s Sixth Assessment Report entitled, Climate Change 2021, states that the earth’s surface…
Read More