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ESG to evolve from charity to ‘sustainability’

An image of Accenture's Thandekile Matenga

THANDEKILE MATENGA Mines now understand that ESG means investing in new technologies, decarbonising operations and most importantly, thinking about the future beyond mining

26th August 2022

By: Nadine James

Features Deputy Editor

     

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Environmental, social and corporate governance (ESG) in mining initially “took a bit too long” to transition from a form of charity to an industry imperative, says professional services firm Accenture Africa sustainability lead Thandekile Matenga.

“When I say charity; ESG in the old days in mining meant building boreholes and clinics for communities and providing opportunities for individuals and businesses in the vicinity of the mine to make a living. Although these are noble aims, they never addressed sustainability.

“Mines now understand that ESG means investing in new technologies, decarbonising operations and, most importantly, thinking about the future beyond mining.”

She explains that sustainability must become a priority key performance indicator for all companies alongside revenue, profitability and customer growth metrics. “The role of the chief sustainability officer must be elevated to an executive position. Organisations must effectively market their sustainability credentials as the critical differentiator against their competitors.”

This is especially important because, as Matenga says, “you and I, as customers, are now more demanding about our expectations from companies regarding sustainability.”

She comments that ESG-driven investments have become more mainstream because various 2030 Net Zero legislations have provided an impetus for such investments.

As such, the next phase for sustainable investing and ESG is scaling up opportunities, and using the available funds to do so.

“Funds are readily available and, in many instances, these are AAA-rated funds. Green project bonds allow companies to ring-fence the risk of investing in green projects without compromising on their balance sheets.

“For example, the Green Climate Fund is sitting on $30-billion in funds it struggles to allocate to projects. “We do not suffer from a shortage of funds globally but a lack of projects. “We need to be brave and bold and scale up opportunities, from renewables to green products to green mobility.”

Mining companies must also secure the necessary digital and ESG talent and upskill existing employees to meet future needs, says Matenga.

She says skills are a function of diverting staff into ESG projects, providing training and development opportunities and prioritising capital expenditure in mining environments to green projects. “Nothing beats learning on the job, but learning on the job requires live opportunities.”

She also suggests that mining companies continue to do “the basics” well, these include water and waste management, transitioning to using self-generated power in operations and adhering to environmental standards and rehabilitation requirements.

Further, mining companies should actively explore opportunities to transition into green energy businesses.

“The projects I am currently working on include green hydrogen and ammonia projects, supporting clients looking to augment their ESG Risk and Governance Processes and, interestingly enough, green technology projects that include the deployment of Accenture's Sustainability Accelerator, a green initiatives performance management software.”

Matenga adds that green hydrogen and ammonia chemicals plant build will stimulate one of the most underdeveloped provinces in South Africa, will require a private-public partnership (PPP) for logistics and port capacity, and will provide numerous opportunities in its value chain for black-owned businesses.

As such, it encounters the three challenges becoming evident in ESG, namely, the need for technical skills; for PPPs; and for coordinated efforts by corporates.

“Firstly, ESG is, increasingly becoming a technical subject that requires skills and resources. “For example, the demand for technical talent increases as we move into green hydrogen, green ammonia, and fuel cells. Secondly, effective ESG requires PPPs. “We will need more significant investments in rail and logistics, port capacity and plant build capabilities, and PPPs can be integral to securing investment and buy-in from financial institutions.

“Thirdly, ESG requires a coordinated effort by corporates as opposed to the current landscape where individual companies pursue their pet projects.”

In terms of mining specifically, Matenga notes that a major concern is grey areas in mining legislation. “A good example in South Africa is whether existing environmental permits will allow mines in future to, for example, store or handle hydrogen on site as a replacement, for instance, for diesel.”

However, she avers that, where there are grey areas, there are opportunities for those who move quickly.

Other challenges affecting ESG in South Africa include a lack of awareness by consumers about the power that they have to compel companies to go greener, a lack of publicity and education even at schools around the importance of environmental considerations and a skills shortage, especially in technology-related ESG investments and project development.

She notes that, at Accenture, it is accepted that meaningful partnerships are the only way to scale up ESG and sustainability. “Consequently, we already have partnerships with the World Economic Forum, the United Nations, engineering firms, and software providers. “We are also exploring partnerships with local universities, which provide the bulk of research thinking, and supporting companies that want to head-start investments in green projects.

Edited by Creamer Media Reporter

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