Like the ripples from a pebble cast into a pond, the impacts of mining have always emanated outwards in many ways – both positive and negative. Today, though, every ripple is under greater scrutiny, with environmental, social and governance (ESG) factors in particular focus.
Global mining executives recently confirmed this in the latest EY report on the top business risks for mining and metals. Here, these decision-makers rated environmental, social and governance concerns as the number one risk for the sector – the first time this category has held this ranking. It was followed by decarbonisation in second spot and licence to operate in third.
According to Darryll Kilian, partner and principal environmental consultant at SRK Consulting, a wider universe of stakeholders is now being heard on ESG issues in mining. SRK is an independent, global network of over 45 consulting practices on six continents. Its experienced engineers and scientists work with clients in multi-disciplinary teams to deliver integrated, sustainable technical solutions across a range of sectors – mining, water, environment, infrastructure and energy.
Killian states that beyond the legal frameworks that govern stricter environmental compliance, for instance, are the concerns of financial institutions, NGOs, communities and even consumers. The spotlight is also shone up and down the value chain, with mining companies having to take greater responsibility for the impacts of their suppliers and their customers.
“An early example of this ESG trend was the certification of diamonds, which heralded a new understanding of the risks facing mining – far from the actual mine site,” says Kilian. “Every step in the supply chain now deserves attention by mining companies, as it has the potential to attract reputational damage.”
Investors and lenders
It is clear that the investors of tomorrow are rating ESG performance as a priority. Similarly, the financial sector is looking for in-depth ESG disclosure from mining projects. These concerns have already found their way into mineral resource and reserve reporting codes, as these codes contain a range of ‘modifying factors’ that could affect the conversion of an ore resource into a realistically mineable reserve.
