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Leading ESG companies in the mining industry

Environmental, social, and corporate governance has emerged as a major consideration for leading mining companies, defining how and where they incorporate these issues into global and local business structures.  

The mining industry must address environmental, social, and governance (ESG) issues and challenges with collaborative, proactive steps designed to deliver sustainability goals.  

Working towards social goals, and being environmentally aware and proactive are themes that are globally recognised as part of corporate strategies across the mining sector.  

Mitigating actions include developing a quantifiable and timebound ESG strategy, setting renumeration targets based on this, and ensuring updates and progress reports are provided to stakeholders and staff.  

Leaders in ESG in mining 

Our leader and disruptor lists for each theme are based on our analysts’ in-depth knowledge of the theme and the players involved in that theme.  

These are based on subjective opinions supported by research and analysis.  

Leader lists consider global market share, position in the value chain and ability to react to emerging, disruptive trends.  

Disruptor lists consider funding, strategic partnerships, and the track record of the management team.  

Ukraine-Russia conflict impact on ESG mining companies

Concerns over the supply of key commodities such as nickel, palladium, and aluminium have led to sharp price increases, with nickel prices on the LME briefly topping $100,000 per tonne on March 8 before trading was suspended.  

Russia accounts for approximately 8% of global nickel, though 17% of the high-grade nickel used in EV batteries. 

It is also a major producer of palladium, accounting for an estimated 43% of production in 2021.  

While Nornickel has stated operations are continuing and Polymetal reported on March 9 that all its operations in Russia and Kazakhstan continue undisrupted, Canadian miner Kinross first announced that it was suspending all activities in Russia.  

This included the Udinsk development project in Khabarovsk Krai, as well as operations at the Kupol gold mine. It has, more recently, agreed to sell its Russian mine to Highland Gold Mining for $680m in cash.  

Environmental, social and governance (ESG) performance in mining 

Environmental performance measures the energy a company consumes, the waste it generates, the natural resources it uses, and the consequences for ecosystems and habitats.  

Climate change, pollution, net-zero targets, biodiversity, and the use of natural resources are now all part of mining companies’ ESG environmental strategy.  

Mitigating actions taken by mining companies include investments in energy efficiency production projects and processes, renewable energy, and clean energy sources.  

An overarching factor is climate change, which is increasing the frequency and force of adverse weather. Climate change and instability also cause uncertainty that, in turn, increases corporate risk and delays investment. 

Environmental performance measures how corporate activity contributes to climate change, pollution, biodiversity, and the depletion of the world’s natural resources. 

ESG – Social  

Social performance assesses a company’s engagement with its workers, customers, suppliers, and the local community.  

It covers human rights, diversity and inclusion, health and safety, and community impact.  

Inattention to these factors can damage corporate brands and reputations and bring legal and regulatory penalties.  

Implementing a strong social governance and corporate strategy can raise a company profile and make a more attractive investment opportunity.  

For mining companies, this is a particular focus, with the spotlight on the human capital and working conditions in certain areas of the global industry a specific consideration.  

ESG-corporate governance 

Governance assesses how a company uses policies and controls to inform business decisions, comply with the law, and meet obligations to stakeholders.  

Governance failures (for example, aggressive tax avoidance, corruption, excessive executive pay, or relentless lobbying) cause reputational harm and loss of trust. 

When it comes to the three elements of ESG, corporate governance is often the most overlooked.  

According to GlobalData’s ESG Strategy Survey 2021, 57% of ESG executives ranked governance as the least important ESG factor.  

Companies cannot afford to overlook the importance of governance in setting and executing an ESG plan. 

Environmental performance measures how corporate activity contributes to climate change, pollution, biodiversity, and the depletion of the world’s natural resources. 

Social sustainability in ESG mining companies

Social sustainability encompasses Covid-19 and social justice GlobalData, in a report published in January 2020, identified sustainability as the most important theme of 2020.  

Since then, two major events (Covid-19 and the social justice movement) have come to dominate public discussion.  

Both events have highlighted the consequences of unsustainable social practices, as well as the need to adopt more socially sustainable practices.  

Controlling the pandemic and addressing its disproportionate consequences for racial and ethnic minorities, are matters of social sustainability.  

Given the new demands for transparency, companies can expect to be rated, ranked, and reported on with increasing frequency and rigour.  

Companies that want to succeed must embrace this ‘fishbowl’ environment as the new normal and manage accordingly, recognising that their brands are more fragile than ever.  

Fishbowls are no place for greenwashing; news media, reporting, and rating services will be merciless. 

Evolving landscape for ESG companies in mining

Corporate disclosure on ESG issues is more extensive than ever in the mining industry, but it is not uniform. Investors are looking for high-quality ESG datasets to help them make portfolio decisions.  

Over the past decade, there has been a sustained effort to force greater disclosure of climate-related information and persuade companies that disclosure is in their best interest.  

Unfortunately, this has led to multiple disclosure frameworks and fragmented reporting standards.  

The International Financial Reporting Standards (IFRS) Foundation governs how financial reporting is conducted in 166 countries.  

Applying the structure and uniformity of financial reporting has long been hailed as the solution to ESG reporting challenges in the mining industry. 

Global mining sustainability standards

The IFRS oversaw the creation of the International Sustainability Standards Board (ISSB), an independent body that was confirmed at COP26 in November 2021.  

The ISSB aims to deliver a comprehensive global baseline of sustainability-related disclosure standards.  

This is designed to provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities.  

To do this, the ISSB will consolidate the Climate Disclosure Standards Board (CDSB), the International Accounting Standards Board (IASB), and the Value Reporting Foundation (VRF), which houses the Integrated Reporting Framework (IRF) and the Sustainability Accounting Standards Board (SASB). 

Several organisations will advise the ISSB by forming a Sustainability Consultative Committee.  

This committee will include representatives from the World Bank, the UN, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and experts from NGOs and private organisations.  

Ex-Danone CEO Emmanuel Faber will serve as chair of the ISSB, and Sue Lloyd has been appointed as vice-chair. 

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