We had a great first day of Mines and Money – Resourcing Tomorrow in London!
Our CEO Dr Sarah Gordon hosted a lively dialogue table on “Optimising Accountability in ESG - How to spot greenwashing and what to do about it”, bringing together investors, regulators and standard-setters, legal experts, sustainability advisers, and a variety of mining and minerals professionals. This initiative builds on our practice of cross-functional collaboration to enable informed decision-making, valuing every perspective and contribution to help organisations to navigate uncertainty and achieve objectives.
Whilst all participants agreed on the strong imprint of ESG on the mining sector to date, its uses, consequences and outlook were debated. This current transition, along with the emergence of innumerable standards, and a global context of anti-mining sentiment and geostrategic tensions, may be characterised by a certain degree of confusion as the ‘rules of the game’ evolve faster than some actors and paradigms are tested across minerals value chains. Despite seemingly unfair competition from actors not bound to the same practices and expectations as Western companies, there is a clear direction of travel towards more transparency, improved operational efficiency and environmental performance, and increasing engagement with all stakeholders to design more socially acceptable business models for mining.
As the foundation of the trust equation, accountability comprises three elements which emerged from the discussion:
Clarity of commitments and expectations, or ‘establishing the rules of the game’: in this regard the emergence of consensus standards and guidelines is essential, such as those set by leading financial markets and reporting codes;
Effective enforcement, or ‘refereeing the game’, where the requirements are not met: this is not only through judiciary processes, but also by opening avenues for stakeholders to constructively engage on their queries and concerns; and
Transparent disclosure of actions and outcomes: this must include acknowledgment of gaps and fails as well as positive effects, with the most credible operators openly detailing their intentions, potential, and struggles.
Widening the scope of accountability is key to driving more sustainable outcomes, by redefining performance to benefit all stakeholders. This is increasingly determining operators’ access to finance, talent, and projects, leading to the conclusion that there is little alternative for operators in order to adapt to new expectations of regulators, investors, buyers and consumers, employees, communities, activists, and the myriad stakeholders connecting to mineral value chains.
So how does greenwashing feature? Despite increasing transparency and interested parties (including investors) calling out operators on inadequate action or disclosure, greenwashing is widespread. In a context of rapidly evolving expectations, there are ‘grey areas’ where complexities occur beyond (current) legal requirements. Intention is key to defining where operators cross a line: participants generally agreed that greenwashing entails deliberate creation of an image disconnected from reality, through selective disclosure, overly positive conclusions about simple compliance with applicable regulation, or even untruthful statements.
We picked up some interesting, challenging or inspirational snippets (quoted from notes, not verbatim):
“If you don’t have to demonstrate realisation of a commitment, there’s every chance that it remain a statement of positive intent, with little to no substance: mining can’t get away with that”
“We make ESG complex but, if we step back, it is all about managing and pricing risk: we need to see this not as cost but factor it into our models as value creation resulting from a reduction of friction between stakeholder interests”
“Improving sustainability metrics, from water and energy consumption to emissions and footprint, is an operational imperative: operators not able to achieve this will see their choices and future opportunities radically affected”
“Despite unfair competition and bad practices, we can’t engage in a race to the bottom: there is a drive to improve mining’s performance from all stakeholders, including producing countries and downstream actors in mineral value chains”
“As societies we need to make complex decisions for our future; it’s important for mining to enable these conversations by saying to stakeholders ‘we’re going to level with you’, be transparent about our actions and impact so we know what each choice really entails”
“As an industry we need to start defining success as ‘what great looks like’ rather than ‘less bad’ if we want to attract the investment, talent and social acceptance necessary to deliver the minerals society needs”
Thanks to Michael White, Tanya Rowntree, Christian Spano, Quinton John Newcomb, Richard Lloyd, Ed Sides, Grace Yungwirth, Joseph Lamberti and Ludivine Wouters for their contribution. Be sure to read our insights as we continued these discussions, focusing on day 2 on “The move from tick-box to impact – How to ensure tangible value is gained from ESG”.