Page 46 - Vol 33 Issue 34 2021

Environmental, Social & Governance (ESG) compliance is key to
mitigating risk and building resilience in mining sector
mining ESG Compliance

Environmental, Social

& Governance (ESG)

compliance is key to mitigating risk and

building resilience in mining sector

By Janine Espin

gainst a backdrop of uncertainty and unprecedented change in 2020, the mining industry is now under
Aincreasing pressure to be more cognisant of their Environment, Social and Governance (ESG) compliance
requirements. As overwhelming as these obligations may seem, given our current pandemic situation, the
industry should attempt to understand the benefits of ESG adoption. When integrated into strategic decision-
making processes, ESG can present many opportunities such as building resilience and creating certainty within
the organisation and the surrounding communities. Ultimately, as a business approach, ESG generates long-
term value for mining companies by controlling risks and capitalising on opportunities created by environmental
and socio-economic factors.

A guiding framework around them. In a report that analysed the re- operational performance, which in turn lessened
sults of more than 200 studies into the impact of
investor risk.
with real benefits sustainable corporate practices on investment
returns, it was clear that operational and stock Holistic approach
ESG brings together all the environmental, social price performance can be positively influenced by
and governance compliance themes into a com- solid sustainability initiatives and commitment to required
prehensive framework that can help mining com- ESG practices. According to one report, consistent
panies to successfully find the balance be tween compliance with ESG commitments resulted in At the Mining Indaba Virtual 2021, it was
people, planet and profit. enhanced operational performance in 88% of highlighted that companies must now move
By incorporating ESG into long-term strategic companies, with the stock price performance of away from seeing ESG as a tick-box reporting
planning and communicating this to all investors 80% of companies being positively influenced by or data gathering initiative, and instead work
and stakeholders, mining businesses can gain a dedication to sustainability. The cost of capital toward achieving value under its frameworks.
more holistic understanding of their performance was lowered for 90% of companies, because Leaders in the mining sector need to push heavily
and the impact of their operations on the world strong sustainability scores evidenced reliable to bring ESG awareness and integration into

46 | AFRICAN POWER Mining & Oil Review Vol33 Issue 34 2021