Mines in bid to be clean
RANKING: GOLD INDUSTRY DOING BETTER THAN THE REST OF THE SECTOR Increase in stakeholder focus on ESG exacerbates need for mining companies to assess risks and opportunities.
Moneyweb
Mining is traditionally a dirty and dangerous business. Mining operations have a huge impact on the environment, often affect the health of their workers and are regularly accused of not doing what they should in the communities in which they operate.
Things are improving. In the case of formal mining companies, mines admit their shortcomings and strive to improve their environmental, social and governance (ESG) performance.
All the mining groups in South Africa have set goals with respect to their ESG metrics and report on them extensively, giving stakeholders and critics the opportunity to measure their compliance and progress.
Regarding reporting on ESG issues, gold mines seem to be better than other mining companies in SA, according to research published by Risk Insights and Instinctif Partners.
An increase in stakeholder focus on ESG has exacerbated the need for mining companies to assess ESG risks and opportunities as a critical component of their disclosure, said Anashrin Pillay, CEO of Risk Insights.
“Many mining companies in South Africa have implemented voluntary ESG reporting standards
over the last few years.
“Our research shows that governance disclosure still makes up more than 60% of total disclosure on average for the mining sector in 2019. Social factors [are] at 18.7% and environmental disclosure is [at] 21.1%,” said Pillay.
The research was conducted across the 36 listed mining companies. The research has shown that SA mining companies have good disclosure overall, especially gold mines, according to researchers.
The ESG ranking of SA mining companies sees Harmony Gold, Gold Fields and Sibanye-Stillwater occupying the top three positions in terms of overall ESG disclosure, with other gold mines on the list of the top 10 too.
Kim Polley, managing partner of Instinctif Partners, said it isn’t surprising that the gold miners rank so well.
“The industry has been robustly regulated for a number of years and has sustainability goals globally.”
Environment impact
In a sector where environmental factors are top of mind, Harmony Gold, Gold Fields and Sibanye-Stillwater are the top ranked companies in terms of environmental disclosure.
“Mining companies are facing sharper scrutiny of the way they handle various environmental issues, including pollution, waste-water management, habitat protection and site rehabilitation,” said Polley.
“This growing emphasis on ethics and sustainability is being driven by customers, investors, regulators and industry initiatives, as well as a genuine desire among companies to operate in a sustainable way.”
She noted that environment issues are important in terms of impact investing, which is growing in popularity.
The gold miners again come out as the top ranked companies in terms of social disclosure, where measures like employee health and wellness are considered.
A big focus is the upliftment of communities in which the miners operate and the securing of a social licence to operate.
Polley said that a licence to operate has evolved beyond the narrow focus of societal and environmental issues.
“There are now increasing expectations of shared value outcomes from mining projects,” she said.
Governance
The research has found that regulatory compliance, whether with regards to the mining charter or carbon tax legislation, remains the core disclosure for mining companies.
“Governance disclosures, especially about health and safety protocols, dominate all mining companies ESG risk registers,” said Pillay.
“But it is interesting that the South African mining sector appears balanced when comparing governance, social and environmental disclosure.”