Without a doubt, mining investors and the fund-providing institutions that they represent are applying more environmental, social and governance (ESG) pressure on today’s mining CEOs.
Long-serving CEOs, who never heard ESG issues being raised at investor meetings in the past, are now finding themselves being questioned on ESG matters at virtually every investor meeting.
What is more, investors are cold-shouldering mining companies with poor ESG records and supporting those with good ESG records.
In addition, some fund managers are being mandated to reverse out of particular mined products that fail to tick the ESG box and to support the mined products that do.
According to US law firm Latham & Watkins, recent studies show that the implementation of ESG in mainstream finance is presenting opportunities for sustainable, long-term returns, with asset managers, asset owners and pension funds recognising the importance of ESG factors to investors, stakeholders and shareholders.
The firm describes ESG factors and metrics as being external to the traditional list of financial metrics and including climate change, resource depletion, waste and pollution, deforestation, working conditions, local communities, health and safety, employee relations, diversity, executive pay, bribery and corruption, political contributions and lobbying, board diversity and structure and taxation.
One of the institutions doing the ESG measuring is Institutional Shareholder Services (ISS), a provider of governance and responsible investment criteria for asset owners, asset managers, hedge funds and asset service providers. Institutional investors look to ISS to identify ESG risk and to manage proxy voting on a global basis.
South African mining companies need to do more to bring ESG to the foreground. For example, South Africa has one of the greatest green national patrimonies in the universe in the form of platinum- group metals (PGMs).
Have PGM mineworkers and labour unions been made aware that they are a major part of the world’s potential future climate solutions? Has that also been put across to copper, manganese and nickel mineworkers? Has the South African government, as the custodian of all the metals and minerals in the ground, been told that South Africa Inc and its metals with catalytic properties can play a role in making the world a better place, in collaboration with international original-equipment manufacturers?
PGM mining companies must also be given the permission they are requesting to build solar power plants at their mines. In this way, they could show off what could be done by powering their truck fleets with zero-emission fuel cells that use their own platinum product as a catalyst.
Things are moving and that momentum should be built on. South Africa’s private and public sectors need to work together to persuade the world that PGMs and clean hydrogen can twin to help it attain the 2 ºC global warming reduction target set in Paris.