The rapid expansion of ESG standards for the mining industry is being driven by a growing pressure from stakeholders to raise the bar on ESG performance and promote transparency of information. At the start of 2020, the Responsible Mining Foundation identified 50 ESG-related initiatives relevant to the mining industry, and the number of initiatives continues to grow at pace.
To support our clients in understanding and selecting the appropriate ESG initiatives to follow or report against, SRK has developed a matrix. While it’s recognised there are many ways to group these standards, the SRK matrix facilitates effective conversations about the purpose of standards for companies to prioritise those of interest to them and their stakeholders.
Talking to business stakeholders, particularly financiers and downstream customers, is a critical step in identifying appropriate standards to align with, as these stakeholders may require adherence to a specific initiative. The selection of standards will also be influenced by the salient issues and material risks faced by a company at a corporate or asset level. Where multiple standards are applicable, benchmarks are increasingly emerging to demonstrate the extent to which requirements are equivalent across standards and initiatives to simplify reporting and performance validation.
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The first group of overarching standards are wide-reaching and form the basis of many subsequent standards and initiatives. Companies are likely to align with these simply by implementing standards in other groups.
The disclosure standards relate to requirements for reporting of information and are often used to determine the structure and content of sustainability reports or public-facing ESG reports. These standards cover multiple topics, such as Global Reporting Initiative, or single topics, such as Taskforce on Climate-related Financial Disclosures (TCFD), but they are focussed on information transparency and tend not to contain specific performance-related targets.
Lender standards are probably most long-standing in the matrix. The leading lender standards are the Equator Principles (updated in 2020), which not only require compliance with host country legislation but also with the IFC Performance Standards (updated in 2012) when there are gaps in legislation. Many other standards cross reference to the IFC Performance Standards 3, 5, 6, and 7 – on resource efficiency, biodiversity and ecosystems, resettlement and indigenous people. This reflects high respect for these standards.
The responsible mining and responsible sourcing standards are a group showing rapid growth in response to the pressures of the downstream supply chain to demonstrate the credentials of mineral products. These are further separated into:
- industry-led initiatives, such as the International Council on Mining and Metals (ICMM) Principles and Towards Sustainable Mining (TSM) Initiative,
- commodity-specific initiatives developed by industry in collaboration with downstream consumers, such as the Responsible Gold Mining Principles and Aluminium Stewardship Initiative, and
- third-party initiatives developed by multi-stakeholder groups outside of the mining industry, such as Initiative for Responsible Mining Assurance (IRMA).
The relevance of issue-specific standards will depend on the type of issues and risks faced by a company and its assets, for example International Cyanide Management Code for gold operations.
Regional initiatives are not for Companies to necessarily report against but provide important context regarding the direction of legislative change and industry trends in a particular region.As the alphabet soup of ESG initiatives and standards continues to grow and change, SRK can work with clients to customise this matrix for specific Company needs so that it informs effective planning of ESG strategy and disclosure reporting.
