As the industry is facing increasing global pressure to minimise its climate impacts, we have seen a gradual shift away from mining fossil towards more renewable energy sources.
With the changing social attitudes of investors and increasing pressure from governments, the mining industry is under strain to change to more sustainable operations.
To facilitate this switch in mining operations, ESG strategies have emerged at an executive level to help establish and build a company’s sustainable practices.
ESG, or Environmental Social Governance Standards, are becoming a new theme in mining industries throughout the world.
ESG includes factors that are not traditionally considered part of financial analysis or company valuation, but play a significant role in how successful they will become.
They focus on sustainability issues such as climate change, social justice, governance and environmental issues.
ESG factors are beginning to be implemented in the mining industry because they have been proven to improve company value over time by increasing profitability while also reducing risk.
Here are some ESG strategies that mining companies are currently adopting.
1. Environmental Management Systems (EMS)
Environmental management systems are environmental protection initiatives that have been created to help mining companies comply with environmental laws. The environmental responsibility of the mining company is not just for their own employees, but also for society and people living in surrounding areas. EMS is being implemented to reduce the environmental impact caused by the mining industry through various strategies such as water treatment, waste disposal, energy conservation or recycling.
2. Risk Management Assessment
Risk management helps to reduce risks related to accidents or natural disasters by implementing safety measures before they happen. It forces mining companies to think more critically about their impacts on both the environment and surrounding communities before taking action. This strategy can be applied at any stage of mining operations from exploration until closure, here is a sample risk management sheet for reference. Risk management is important to ensure safety both for workers and the environment.
If you’re curious about company profiles across the word and what stages they are in, this mining companies list provides detailed and relevant information.
3. Community Engagement Programs
Community engagement programs work to develop relationships between miners and their communities through local initiatives, partnerships with nonprofits, donations, volunteering opportunities and more.
For example, mining companies create outreach projects and events in order to connect with people who live around where they mine, as well as those who might be concerned about how things are being handled at a certain site or company in general. These outreach programs can really help diffuse tensions and increase understanding between mining companies and communities that surround them, which in turn helps to reduce the risk of something negative happening at a site or when there is an environmental disaster such as water contamination by heavy metals such as mercury.
4. Ethics and Compliance Programs
Ethics and compliance programs help companies to maintain a code of ethics that they can follow throughout the entire company, from their policy making stages down to how each employee is expected to behave on site.
An example of this could be to provide guidance on how employees should behave so as not to affect the environment in a negative way such as by littering or polluting water sources near mines.
Benefits of Implementing ESG Strategies
Analysts have noticed a range of beneficial impacts for mining companies following the adoption and incorporation of ESG strategies. Such benefits include:
- Lower costs and risks: for example, with better management of water resources you can avoid having to close down operations in an area because the river is drying up or polluted due to bad practices used by a company there. This would prevent any potential damage and lawsuits that could jeopardise your business even more.
- Increased productivity and profits: for example, if you implement better practices and technologies that reduce costs or improve production then this will directly impact your bottom line positively by increasing cash flow from operations
- Improved community relations: when a mining company is more sustainable in its operations it means they are reducing the number of employees needed to run their business, which will have a positive impact on the community by reducing unemployment levels.
