We already have the answers we need to move the mining industry forwards. Yet we keep having the same conversation about the need for change without uniting together to agree on a sensible way forward.
This was my overriding thought after last week’s #minesandmoney 5*5 webinar. As usual, there was strong attendance from a wide range of mining sector stakeholders listening to a fascinating panel discussion by great speakers.
The discussion centred around ESG and it was exciting to see how understanding has developed over the past couple of years. Philipa Varris, Head of Sustainability at Golden Star Resources, highlighted the challenge that companies have in order to “jump through the hoops to access capital” and the need to complete a roadshow not just with fund managers but increasingly with the stewardship team of each investment house.
It was the final few comments that struck a nerve for me.
The general consensus was that the mining sector needed to find a way through the confusion of ESG and “find a new narrative”. This is the same debate as three years ago and completely ignores the reality and opportunity available today.
Groundhog day: we’ve been here before
I recall sitting through a conference in October 2019 where the discussion centred on the confusing proliferation of ESG Global Standards. The shared wisdom at that time was there was no silver bullet and we needed to just accept that.
Another ESG roundtable in late 2019, this time at Mines & Money in London. Many leading figures were in attendance who again concluded that there was no prospect of a standardised means to disclose ESG for the sector.
Fast forward to March 2020 and I receive a professional challenge from leading stakeholders in the investment community to develop a solution to address these issues, to remove greenwash and to provide a means for the sector to earn trust.
Carpe diem: opportunities are endless
Trust has never been more important to the mining industry as it is at the wrong stage of its cycle for a simple rebranding. The sector is enjoying a strong bull market with an explosion of companies emerging to find the next big copper, gold or lithium deposit. It must follow the harder yet more long lasting avenue of earning trust.
What is happening at present, disguised by the bull market in commodities, is a very fast squeeze by mainstream investors. Their universe of acceptable investments is becoming increasingly defined by mining parameters ensconced in ESG. The history and legacy of the mining industry makes it easy for most investors to say no to the sector – but a credible means to track ESG provides the opportunity to change this.
This opportunity is open to all, building trust from a near zero position brings benefits far and wide: reputation, community engagement, lower emissions, lower cost of capital, equity value, recruitment, access to new pools of capital and reduced conflict – amongst many others.
Lets not leave open statements with hollow intentions but act on the opportunity that we regard as the only hope.
The time is now: the new narrative is already here
The solution we came up with that specifically addresses the issues raised at those conferences in 2019 is Digbee ESG. It was designed as part of a product range that is “making mining better” and to provide a means for the industry to earn trust from society and capital markets. ESG is the golden gift, excuse the pun, for the mining sector. If embraced effectively it can help mitigate risk and is a powerful form of communication for all companies.
There are other means to disclose ESG but none will provide the means for this sector to lift itself out of its poor perception, to access sustainable funds, to reach into new pools of capital or to strengthen engagement with local communities on a transparent basis.
In designing a solution we:
- Provide a set of right-sized frameworks completely free for all companies to know what to disclose.
- Address greenwash by providing future looking questions and require Boards of Directors to sign off a submission – therefore encouraging future plans and raising the level of responsibility.
- Deliver an independent assessment that gives management the feedback it requires to improve and stakeholders the confidence to track ESG credibly.
- Made it a primary focus to ensure leading financial and other stakeholders such as Blackrock, BMO, Dundee, Gowlings, Orion, Red Fort Fund, Sibanye Stillwater, Tembo etc endorse the solution, therefore giving confidence to miners that their action will be recognised.
This sector doesn’t have another three years to continue the debate for a new narrative.
The mining sector simply does not have the time to keep talking of the same problems without constructive solutions and action. If we are to avoid polarising the sector further, leading to an unacceptably high cost of capital for the majority of companies, then we need to turn the tide of confidence and trust.
