ESG: Mining Becomes More Responsible, But Needs To Do A Lot More: EgonZehnder
Mining companies must up their ESG game says a report by EgonZehnder.
Miners have accepted that Environmental-Social-Governance (ESG) criteria will measure their commitment to sustainability and the impact of their operations on society. Going a step further, mining companies have also come to realize that ESG compliance leads to the creation of shareholder value and attendant social benefits such as better working conditions.
Moreover, they recognize that investors, employees and host governments will welcome those miners that have a record of credible ESG performance.
That ESG is causing a sea change in miners’ approach to societal obligations is apparent. But, says EgonZehnder, they should be doing more.
Even the best are not good enough
“Despite the compelling business case for ESG and its acceptance as a critical issue by essentially all mining companies, there is no company that stands out as the undisputed leader in ESG performance,” says EgonZehnder. “Even the world’s top mining companies still experience fatalities, spillages, community strife, conflict with NGOs, and public relations disasters.”
What should miners do to improve their ESG performance?
According to the consultants, mining companies need to elevate ESG to the core of their purpose, culture, and strategy.
“While shareholder value creation is a company’s raison d’etre, being a responsible steward who does this in a sustainable way must be at the core of how the company conducts business,” says EgonZehnder.
Further, lip service to ESG is not good enough. The Board, Executive Committee (ExCo), middle management, and managers down the line must all walk the ESG talk.
People for ESG in mining
Moreover, this cohesive and all-encompassing cultural change in favor of ESG must be bolstered by people. It is suggested that an ESG specialist be appointed to the Board.
The CEO, ExCo, and CFO must work together to tackle all aspects of the ESG agenda to ensure its progress. Additionally, the company should also appoint a Chief Sustainability Officer to mastermind and monitor ESG strategies.
Even Investor and Corporate Relations must play a role. They need to manage the interface between the company’s ESG efforts and the external environment.
But the key to long-term, sustainable success on ESG is dependent on the company’s ability to change its culture to adopt the new criteria.
“A company’s culture is perhaps the most important—and elusive—ingredient in creating a high-performance ESG company,” says EgonZehnder.
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