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ESG scorecard to enhance project planning, unlock opportunities

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VERUSHKA SINGH ESG and sustainability efforts by mining companies will make them more resilient to disruptive occurrences in the industry and global markets

25th August 2023

By: Bridget Lepere

Creamer Media Reporter

     

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Taking an improved approach towards environmental, social and governance (ESG) principles enables mining companies to anticipate and adapt to future sustainability-related challenges and opportunities, as companies with strong ESG practices are better equipped to thrive in a changing business landscape, says sustainable solutions and engineering consulting firm WSP climate change principal associate Verushka Singh.

The extent to which mining companies address and boost their ESG credentials varies significantly across the industry, with increasing attention among rating agencies and concerned non-governmental organisations (NGOs) in the mining sector for ESG credentials to be achieved.

In this regard, WSP has designed and incorporated a ESG scorecard, which captures and quantifies ESG metrics directly linked to a mining company’s projects on which WSP has consulted, unlocking opportunities in other ESG-related improvements to allow for the assessment of its deliverables, adds Singh.

The firm uses a combination of generally accepted ESG metrics, largely drawn from internationally recognised ESG and sustainability frameworks, including the Taskforce on Climate Related Financial Disclosures, the CDP (formerly known as Carbon Disclosure Project) and the Sustainability Standards Accounting Board.

In addition, WSP also considers the mandatory reporting obligations of publicly traded companies and mining-specific frameworks, such as those of the International Council on Mining and Metals and the World Business Council for Sustainable Development.

The knowledge gained through these assessments enables the company to produce better products and improved designs, while helping clients to reduce environmental impacts, increase social values and align with their governance structures.

Singh adds that financial institutions, regulators and investors are aware of the risks posed by poor ESG performances such as limited opportunities to realise ability to financing and operating permits.

ESG performance is increasingly being regarded as a key part of investment due diligence and is starting to affect other financial factors of mining companies ­– such as eligibility for insurance, loans, and sureties – and the industry.

“Strong ESG performance is also seen to result in [fewer] . . . operational risks, enhanced social engagement and increased . . . productivity. Every project and service results in financial, social and environment value for our clients.

“We deliver responsible innovation, rooted in deep scientific knowledge, that positively impacts [on] our clients, communities, and the planet. The scorecard has been beneficial by purposefully building ESG concepts into project planning,” she elaborates.

WSP’s mining services inherently contribute to clients’ ESG key performance indicators (KPIs), such as a miner’s design of its tailing’s storage facilities or its construction services role in reducing enterprise risk and carbon emissions, as well as conserving water resources while protecting human health and local communities.

The social KPIs include metrics under health and safety, increased diversity and inclusion, human rights compliance, and local community impact.

“Stakeholder engagement and community relations are critical aspects of ESG projects in the mining sector, and companies need [to] work to build better relationships with local communities, indigenous groups, NGOs and other relevant stakeholders to ensure transparency, inclusivity and address concerns related to mining activities,” emphasises Singh.

Leading mining companies are extracting value from sustainability trends by reducing their environmental impact, as well as improving their social acceptance and transparency, while supplying metals and other commodities necessary for society to decarbonise.

Singh adds that companies that choose not to respond to the evolving ESG trends and pressures risk losing their ability to operate or compete in the global market.

WSP mining clients are committing to change and lead by example as society and investors hold companies to higher standards in terms of decarbonisation. These efforts will make companies more resilient to commodity price swings, political instability in key geographies, increasing inflation, resource shortages and the fight for talent.

As such, integrating ESG principles into mining operations, along with transparent practices, not only contributes to long-term sustainability and social responsibility but also enhances the social licence to operate, she adds.

An appropriate integration of ESG into a mining company’s practices fosters positive relationships with stakeholders and reduces environmental impact, while an ESG-focused approach can help identify and address potential risks early, including regulatory changes, community opposition or potential reputational damage.

“Investors favour companies with robust ESG practices . . . embracing ESG and showcasing transparency can attract responsible investors who prioritise sustainable and socially responsible investments, resulting in the mining company’s having access to more capital and, potentially, at a lower cost,” concludes Singh.

Edited by Donna Slater
Features Deputy Editor and Chief Photographer

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