Mining companies have been addressing Environmental, Social and Governance (ESG) risks for some time and are delivering good results, but the pace and breadth of change is no longer sufficient to satisfy stakeholder and investor expectations. This is according to Mark Dickson, Head of Energy Transition and Decarbonisation at dss⁺, speaking ahead of the Investing In African Mining Indaba taking place from 9 – 12 May in Cape Town. Dickson is moderating a panel about the role of technology in ESG-centred mining operations.
“The commitment is there: an increasing number of mining companies have made pledges to operate with zero harm, achieve net zero scope one and two emissions, or to increase benefit for the communities in which they operate,” said Dickson. “But few have specific and measurable plans – cascaded at an individual asset level – on how to achieve these targets.”
The sentiments were echoed by Minister Gwede Mantashe, South African Minister of Mineral Resources & Energy, at the opening plenary at the Mining Indaba on Monday morning. Mantashe emphasised the need for mining companies to better define what the actual impact of their commitment to a “Just Energy Transition” means.
Roadmaps and actions addressing business risks have become even more important as companies seek to address the volatile environment that climate change and global market disruptions present. Research conducted by dss⁺ with more than 200 senior executives showed that before the pandemic, 81% of leaders believed they were ready to address unexpected business disruptions, yet after the pandemic, 50% of executives said they had overestimated their ability to manage external risks.
Given the challenge faced by mining organisations, including delivery of net-zero targets while maintaining production output, a new vision of the organisation and operating model must be carefully crafted.
Rhyno Jacobs, Director of dss⁺ in Sub-Saharan Africa, added, “Embarking on programmes to achieve net-zero emissions, achieve zero harm and address volatility will be unsustainable without solid organisational culture and the right mindsets, from the executive to the frontline supervisor. Mining companies are especially complex organisations, and must focus on ensuring that operating models, capabilities and action plans are relevant and effectively coordinated to deliver on these commitments.”
For example, many South African mines and metals companies are looking to integrate renewable energy to take advantage of South Africa’s abundant wind and solar resources, increase reliability of supply and save costs. This integration will present both new risk management processes, additional reporting and performance management, alongside new opportunities such as partnering with renewable energy developers or the local distribution grid. “These changes need to be integrated into organisational structures and processes without hindering the agility of the business to change in times of crisis,” Jacobs added.
Dickson agreed. “Addressing volatility whilst meeting the need to include additional business structures is a challenge that mining companies can underestimate. Tools and reporting standards, such as those developed by the Task Force on Climate-Related Financial Disclosures, compel companies to quantify the risks that they encounter, which help to show the opportunities and allow action plans to be more clearly developed,” he said.
According to Dickson and Jacobs, to see tangible returns on ESG investments, mining companies should focus on both levers to achieve longer-term commitments, and short-term actions and targets that can enable positive change whilst addressing risks that arise throughout the transformation process.
The Mining Indaba, the largest gathering of mining and metals professionals on the continent, will be meeting for the first time in person, after two years of virtual conferences. dss⁺ is the official safety awareness sponsor for the event.
