ESG is currently the biggest risk to the mining industry

ESG is currently the biggest risk to the mining industry – and I am not just saying so to be provocative

ESG is currently the biggest risk to the mining industry. And I am not just saying so to be provocative.

Consider the 2019 dam collapse at Valé’s Córrego do Feijão mining complex in Brazil that killed 270 people and resulted in the CEO being charged with murder. Valé ended up signing a $7 Billion deal for repairing the socio-economic and environmental damage that resulted in the dam’s collapse.

The argument could be made that Environmental, Social, and Governance (ESG) measures could not have predicted or prevented the tragedy. But that is neither here nor there.

Consider Norway’s sovereign wealth fund, which currently stands at $1.3 trillion and is the world’s largest such fund. The funds’ managers fully expect that climate and social issues will dominate investment decisions in the coming decades. ESG will soon be amongst the most important investor criteria. Forget about your company balance sheet or income statement. Investors want to see that you are serious about taking care of the planet and its people.

And while ESG has moved into a pre-eminent position, reporting on ESG is more difficult than ever. Reporting is complicated by the fact that multiple ESG rating schemes pose divergent requirements and also by the sheer amount and complexity of the data from which ESG reporting is generated.

One of the answers to these complexities has been to get rating agencies to help guide investment decisions. Several ESG-based rating and index services, including international companies like MSCI, Bloomberg, and Sustainalytics, have proliferated in recent years. The problem is that these companies often seem to get it wrong, resulting in investor distrust. Mines with the highest ratings don’ always have the best track record. And when disasters strike, in-depth reviews often demonstrate that the high ratings were unfounded or misattributed.

Until recently, most mining companies have discounted the impact of ESG on investor decisions. The reason is the lingering belief that all investors care about is profit and that the “noise” around ESG is more posture and pantomime than deeply held beliefs. But this is changing.

The world’s top mining companies have all realised that their future will depend on their ESG portfolios. Whether this is driven by heartfelt considerations for the environment, or by the need to ensure continued support from deep pocketed investors, the market doesn’t care about your motivations.

ESG reporting depends on a multitude of historical data and analysis. As a company that specialises in data collection and analysis, 4Sight’s OT division is ready to assist all our mining clients in gathering reliable data for accurate analysis and reporting.

Advanced Process Control and Asset Performance Management are two area’s in which mining companies can easily demonstrate a real commitment to environmental and energy related concerns. At 4Sight, we have experienced teams ready to assist mining companies in implementing programs that will not only help them to do the right thing but boost investor confidence while increasing positive ESG reporting.

Contact us today to find out how we can help boost your ESG rating in a manner that stands up to investor scrutiny while helping your mine to cut costs and create a safer working environment.

Contact us today!

Contact us today to find out how we can help boost your ESG rating in a manner that stands up to investor scrutiny while helping your mine to cut costs and create a safer working environment.