According to Kevin D’Souza, chief sustainability officer at Resource Capital Funds, the mining industry has made numerous mistakes that have negatively impacted its public perception. D’Souza believes that in order to attract new investments, the industry needs to address its past errors and openly discuss the steps it is taking to rectify them.
One of the main concerns for mining companies, especially juniors, is securing financing for their projects. As commodities such as gold outperform mining company stocks, some project developers see ESG (Environmental, Social, and Governance) initiatives as a way to improve the industry’s image and attract investors away from other sectors like technology.
Promoting Indigenous Equity
The panelists stressed the importance of integrating ESG practices into corporate culture, focusing on achievements rather than ratings, tailoring initiatives to local circumstances, avoiding greenwashing, and going beyond surface-level efforts like building schools and hospitals.
D’Souza predicts that equity partnerships with Indigenous groups will become more prevalent, starting in British Columbia. He believes that this shift will have a significant impact on the industry as a whole.
Antti Grönlund, managing director of Appian Capital Advisory, believes that the concept of a social license is outdated. He suggests that industry stakeholders should prioritize social integration and actively listen to community opinions before implementing any plans.
Jonathan Cordero, head of corporate development at Eurasian Resources Group, emphasizes the need to highlight the positive impact of mining on climate change. He mentions the importance of recognizing and investing in countries that require the most attention, such as Congo, Zambia, and Zimbabwe, to successfully transition to clean energy.
To effectively evaluate ESG strategies, D’Souza proposes four key questions:
- Does the company consider ESG as a fundamental driver of value creation?
- Has the company identified what is genuinely relevant to its operations in terms of ESG?
- Can the company demonstrate the practical implementation of its ESG initiatives?
- Has the company effectively communicated its own story?
Shifting the Industry’s Mindset
D’Souza emphasizes the need for the industry to change its communication strategies and refrain from merely self-promotion. He believes that the industry’s motto should reflect the necessity of addressing its reputation issues, rather than assuming that everyone needs mining but no one likes it.
Graham Dallas, head of business development for Europe, Middle East, and Africa at the Toronto Stock Exchange, adds that meaningful technological advancements, such as deploying autonomous ground vehicles for sampling, can attract investor attention.
Grönlund highlights the importance of educating consumers about the role of mining in their everyday products. He suggests that some manufacturers have successfully showcased the minerals used in their products and the mining process behind them.
D’Souza criticizes the use of ESG ratings, considering them an oversimplified assessment of a company’s efforts. He recalls his experience at Barrick Gold, where the company boasted about its financial contributions to communities but failed to celebrate the actual outcomes. He believes that companies should align their ESG actions with their core values.
In summary, the mining industry must address its past mistakes and actively communicate its efforts to improve. By integrating ESG practices into corporate culture, investing in equity partnerships with Indigenous groups, and shifting communication strategies, the industry can rebuild its reputation and attract new investments.