National Post

Barrick’s Bristow, Blackrock’s Hambro debate the impact of environmen­tal, social and governance investing.

FLOWS OF MONEY

- Gabriel Friedman

The ESG movement has brought about a “fundamenta­l shift” in the equity markets, says Evy Hambro, global head of sector-based investing for Blackrock Inc., the world’s largest asset manager with US$6.5 trillion under management.

Hambro, considered among the most influentia­l investors in mining because of the size of his investment portfolio, was speaking about the number of investors whose decisions are increasing­ly guided or affected by a company’s environmen­tal, social and governance record.

“I think this is just an evolution that we’re going through ... (and) I don’t think we’re anywhere near the end of it,” Hambro said. “I think we’re just starting and the scale of the flows that Blackrock is seeing in terms of the money that’s coming in this direction is just extraordin­ary.”

The comments were made at the Prospector­s and Developers Associatio­n of Canada’s annual conference on Tuesday, held virtually for the first time, where he fielded questions about the future of mining and the impact of ESG on a panel alongside Mark Bristow, CEO of Barrick Gold Corp.

Moderated by Aline Cote, Glencore Internatio­nal AG’S global head of mining technical services, the panel provided a top-level view of the trends affecting mining.

Hambro said growing investor preference for companies that are perceived to have a positive ESG record — a category still largely subjective due to the lack of clear scoring criteria, the panellists agreed — has real business consequenc­es, including a lower cost of capital. “If you are a beneficiar­y of that declining cost of capital, that’s a significan­t advantage because you’re able to reinvest with a lower cost to it and extract a higher return,” he said.

Bristow, 62, acknowledg­ed that while “Evy’s the expert by a long shot,” he candidly expressed his skepticism that the ESG trend represents anything new. Instead, he maintained all public company executives are focused on ESG, but not everyone has figured out a way to communicat­e the positive impacts of their business.

Responsibl­e investing is not new either, Bristow said, though “People want to make a statement in this very confused environmen­t.”

Still, he said younger generation­s are different in some ways and noted Barrick had commission­ed research because “people have a view that Gen X aren’t ambitious,” referring to the generation born in the late 1970s through the early 1980s.

“They are equally ambitious, as Evy and I were when we were 18-year-olds,” said Bristow. “But they do it differentl­y, they want to be part of a positive world, they want to make a contributi­on and they want free time.”

He said research he saw suggested Gen X and younger people are able to create free time for themselves, because they are far more efficient than older people.

But on specific issues related to ESG, Bristow said many investors are too focused on the environmen­t ‘mantra’, and not looking closely at the social and governance records of companies, which are harder to judge.

Bristow, a passionate advocate that mining projects are the best means for impoverish­ed countries to raise the skills of their workforces as it can create high-paying jobs for engineers and geologists, told the panel many investors are ignoring the issue of world poverty.

In an interview with Financial Post earlier in the day, Bristow said one of the less-discussed impacts of the pandemic was the tens of millions of people that have been pushed below the poverty line.

“There’s so many more poor people than there are wealthy people,” he said. “You know poor people, very poor people, impoverish­ed people, they spend their entire day working to just survive the next day.”

Back at the PDAC panel, Cote asked him how he implements Barrick’s ESG standards that “are in direct clash with … the local government,” and reconcile what Barrick wants with the local country.

“The key is it’s got to be a relationsh­ip,” he said. “It’s a genuine engagement.”

 ?? MIKE HUTCHINGS / REUTERS FILES WALDO SWIEGERS / BLOOMBERG FILES ?? Barrick Gold chief executive Mark Bristow, left, and Evy Hambro, chief executive of Blackrock Inc.’s natural resources equity team, spoke at the Prospector­s and Developers Associatio­n of Canada’s annual conference on Tuesday.
MIKE HUTCHINGS / REUTERS FILES WALDO SWIEGERS / BLOOMBERG FILES Barrick Gold chief executive Mark Bristow, left, and Evy Hambro, chief executive of Blackrock Inc.’s natural resources equity team, spoke at the Prospector­s and Developers Associatio­n of Canada’s annual conference on Tuesday.

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