Environmental Social Governance (ESG) is not a new concept. In fact, it has been part of many industry conversations for years, with some early movers seeing the need for change 10, 15, even 20 years ago. In more recent times the buzz-term ESG has come to be and there has been a growing need to integrate these commitments within central business functions due to the impact of climate change.
ESG is on the lips of executives everywhere and according to the Economist, investment management sectors are claiming that more than a third of their assets, or $35trn in total, are monitored through one ESG lens or another.
The mining sector is one that, in its very nature, impacts the environment and as a result has faced heavy pressure to make changes in order to improve in these areas and better address ESG. Many companies over the past five years have set ambitious ESG targets but the challenge from here is how to move from intent to action.
In a recent report by Deloitte on the Trends in Mining, ESG was a prevalent topic and something clearly being discussed across the board. Deloitte Australia Mining & Metals Leader Steven Walsh said the sector was facing one of the most transformative times in its history. Given the core objective of mining remains unchanged going forward, companies are presented with the opportunity to redefine and reorganise their businesses to create a more environmentally and socially responsible future for the industry.
Over the past five years, global majors have been setting ambitious targets to decarbonise their processes and anyone yet to do so will need to keep pace with the fast-moving expectations around ESG from stakeholders and markets. It is no idle exercise in making these considerations and a key factor is the allocation of capital spend across their assets, the way this is done will either make or break their competitive advantage over the next decade. Key differentiators will be how miners appeal to expectations of investors and position their assets for the long term.
As energy accounts for approximately 25-30% of mining operating costs it makes sense that this is the first factor to consider. To implement strategy focused on energy-management related projects that have clear economic returns would certainly be the most impactful. Many organisations have determined this the key focus. Objectives have been set and relevant strategies developed all with the best intentions. However, without embedding these into their organisational structures and operations, companies will be left at a standstill.
To move from promise to action, mining companies must be set up to respond to ESG opportunity, challenges and risks which requires operating models that facilitate accountability, visibility and collaboration between departments along with a clear governance structure.
All the major players have set clear emission goals and are starting to take action to help reach these. Miners such as BHP, Rio Tinto, Glencore and Newmont have committed to reach net-zero emissions by 2050, while other companies, such as Fortescue, are committing to carbon neutrality by 2030. The strategic groundwork and ambitious targets have been set by these global leaders and action is following suit, some examples can be seen with Fortescue driving forward with decarbonised locomotive fleets and BHP installing solar panels on sites.
Greenfield mines have a great opportunity to incorporate more sustainable technologies up front. Kirkland Lake Gold’s Macassa mine and Newmont’s Borden mine in Canada have been ahead of the curve for some time having implemented electric vehicles into their operations since they began operating in 2016.
For older mines with fossil fuelled infrastructure the challenge is great in upgrading their assets, this is predominantly due to a misalignment between the renewable assets and the life of the mine itself. It is crucial that the installation of new infrastructure be a smooth transition from fossil fuelled energy to renewable energy as any disruption will put production at risk, and that in itself requires consideration of many moving pieces.
Additionally, companies are also exploring how they can extend their environmental commitments to their stakeholders with Rio Tinto recently entering an MOU with Ford to jointly develop more sustainable and secure supply chains for battery and low-carbon materials to be used in Ford vehicles. It’s clear many miners are shifting from intention to implementation by making investment in carbon reducing technologies and looking to clean up the supply chain but, in these actions, it is becoming more apparent that there is a growing need for qualified talent to drive, operate and continue these initiatives for mining companies to achieve their ambitious targets.
In the last 24 months, ESG roles have been created and implemented across the board and in the last 12 months alone, the top 10 global mining companies have hired staff into 284 newly created ESG positions within their organisations.
Executive roles such as Director of ESG and Environmental Managers are being implemented into organisations, focusing on policy and procedures, environmental management systems, environmental compliance, standards and legislation. The creation of these roles has aided in facilitating accountability and visibility over operations to ensure environmental strategies are being followed and targets are kept front of mind.
With the creation of these roles has come talent who are highly qualified to step into the positions but also a range of candidates simply adding ESG skills to their applications to seem more attractive. This then leaves hiring managers needing to comb through a plethora of applicants claiming they can do what is needed without the necessary qualifications and experience thus hindering much needed progress.
CSG Talent has worked with many clients to place ESG leaders and many have identified key desirables for an ideal ESG leader as; experience on site to fully understand mining processes, previous leadership experience and academic qualifications in environment/sustainability and/or social sciences. Placing the right leaders allows companies to have dedicated resources to address all aspects of ESG and enables more efficient progression towards set goals. In an industry such as mining where business naturally disrupts the environment it is even more important to find capable talent to help counteract this with proactive initiatives and out of the box thinking to help reach ambitious net zero goals.
CSG Talent’s Director of Natural Resources, Simon Gillibrand shares his thoughts and insights into the topic.
“Over the last 10 years we have seen a real shift from ESG being simply a PR exercise, to it becoming a genuine focus within the business. In many cases, this has led to the Social Government being at the forefront of the company strategy and the development of their assets. The growth of decarbonization within the mining industry has led to the adoption of new skill sets into the sector.
“We have worked with clients to attract candidates from the Space, Aerospace, Defence, and Renewable Energy industries, whom have all brought a fresh outlook, as well as the introducing and developing new technologies, for example, electrification of mines and equipment, development of hydrogen fuelled vehicles and specialist technologies such as dry stack tailings. It’s a very exciting time, and we look forward to seeing what the next 10 years will bring.”