The presenters at Creamer Media’s ESG-focused webinar this week (from left to right starting at the top) Melanie Naidoo-Vermaak; Shannon de Ryhove; Sarah Cooper; Kurt Roelandt; Tsakani Mthombani and Lael Bethlehem
When considering how to make environment, social and governance (ESG) a real driving force that helps to shape the work of companies, gold miner Harmony Gold sustainable development group executive Melanie Naidoo-Vermaak believes the real work lies in bringing “different evidence of ESG issues and embedding it within an organisation so that a robust organisation can be built”.
This, she says, is critical when aiming to create a balance between the three pillars, as there is a high degree of overlap and integration between the elements, and when creating value for an organisation, while simultaneously managing and optimising different opportunities.
However, this often means that “trade offs” between elements are needed, Naidoo-Vermaak says.
She presented at Creamer Media’s ESG-focused webinar this week, along with Sedibelo Resources chief ESG officer Lael Betlehem.
Also presenting was Impala Platinum (Implats) sustainable development executive Dr Tsakani Mthombeni, who said ESG initiatives should be driven “by the core desire to meet the company’s purpose, which is to create a better future”.
He explained that, to achieve long-term value creation, focusing on the sustainability pillar of ESG had allowed the platinum miner to focus on material issues within the business, which Mthombeni said “guides Implats in selecting and sequencing priorities”.
While the 'ESG' acronym has encouraged discussion, he urged industry stakeholders to “not lose sight of the deal” as the concept can allow companies to lead their people through ESG commitments and opportunities.
Additionally, the modern idea of ESG challenges the old notion of sustainability, which focused on the management of natural resources.
“Our impact on natural resources, but also our sustainability in relation to the people around us and who work for us, means that we have to advance our health and safety objectives through a purpose-driven set of ideas,” Mthombeni said.
Digby Wells ESG division leader Sarah Cooper, however, recommended that one should not view ESG as a “magic bullet”.
“ESG isn’t just a tick box [exercise]. It is disclosures, and disclosures require actual action that show what is happening,” she said, adding that companies that are in a position to assist, should assist drilling and mining companies, for example, to “understand what they need to do and to help them improve”.
“This makes them a better partner of choice for mining companies, and it cascades all the way down the supply chain.”
From an advisory perspective, Envision Advisory Services director Kurt Roelandt said questions were abundant when assisting companies and clients that wanted to adhere to ESG requirements.
“One of the best questions we get is how to establish a baseline for measurement, especially on the environmental side, such as understanding Scope 1 and Scope 2 emissions. We also get questions on carbon offsets, but we mostly see different types of clients according to their maturity, and we still have several clients that are only now starting to focus on ESG.
“It's a big, audacious issue to deal with if you start with ESG, so we also have clients that are already more evolved along the maturity curve,” Roelandt said of his experience in the field.
“We see also people that tried to embark on their ESG strategy who want to align their strategies, but it needs to be an integrated approach. We have these three pillars in ESG, but you will have competing forces in-between. Advisory service is about bringing them all together to create a certain competitive differentiator, because sometimes companies still see ESG as something they must do,” he commented.
A different view, he said, was to try to change the mindset and to differentiate from the customer perspectives, overall innovation perspectives and financing perspective. “It can really bring a lot of value in the company”.
However, when discussing the issue of ESG becoming a matter of compliance rather than a driving force, Roelandt said this largely depended on the maturity of each entity, as the different objectives of each company, and their driving force, had an impact.
“The differences between the tick box exercise and a real purpose-driven organisation have to do with leadership and whether or not the leadership of the organisation feel some personal commitment to running the company in this particular way, rather than those who are just seeing this as another thing that they have to comply with,” he said.
Roelandt added that ESG was “here to stay”, emphasising that it was “not a short-term intervention and it is core to a business”.
“ESG is going to be your differentiator, your competitive advantage, and I think businesses really need to start thinking about how they are going to incorporate and embed it into decision-making within the organistion.”
He urged businesses and firms to start having the conversations in the boardroom, as “that’s where it starts with ESG and subsequent strategies. It needs to make its way into operational practices, build its way into life-of-mine planning, it needs to compete for capital, and it needs to be a consideration in the growth process”.