With increased pressure from stakeholders, mining companies are often expected to demonstrate great care when it comes to Environment, Social and Governance (ESG).
Today’s consumers now demand companies to demonstrate responsible practices – from how they protect their local environment, to their consideration of social issues such as diversity and modern slavery.
In 2018, a study conducted by research firm Gartner found 81% of marketers expected that they would be competing mostly on the basis of customer experience within 2 years. It seems their expectations were spot on, with the majority of organisations going to extreme lengths to deliver a next level customer experience in return for positive reviews and referrals.
Recently though, there’s been a second major shift in customer expectations beyond their immediate personal experience with a business.
This change in consumer perception is complemented by increasing regulatory changes in areas such as carbon emissions; requiring companies to implement practices that demonstrate a commitment to sustainability.
Very few industries in Australia are as impacted by these changes as the mining sector – particularly for established oil and gas operators who also face growing competition from new entrants focussing on 100% renewable energies.
With pressure rising for all mining businesses, there has never been a better time to start evaluating their environmental, social and governance (ESG) practices.
Laying the foundations for ESG
ESG is the standard by which a business is able to measure and ultimately manage its sustainability and ethical impact, and there are several key areas that mining companies can look to when evaluating their operations and setting ESG goals.
The first is local environment. By measuring and understanding your company’s impact on the environment(s) in which you operate including local communities, you can begin to determine areas of improvement.
This then allows you to benchmark current performance against future goals, as well as track and report on progress along the way.
Impacts to local environment could include:
- Air and noise.
- Waste and recycling.
- Hazardous substances.
- Carbon footprint.
It’s important to be clear on the specific environmental impacts your business might have, so the targets you set are measurable and achievable.
Another key area for mining companies is social responsibility.
This includes issues such as:
- Gender diversity.
- Aboriginal employment.
- Labour practices.
- Community safety.
Each of these can be measured and benchmarked against best practice – ultimately allowing your leadership to ascertain whether the company is currently performing well or has lots of room to improve.
Benchmarking and reporting on performance
Once ESG goals have been defined, the business can then implement a plan for how and when progress will be tracked and reported on.
There are a variety of frameworks which support this activity, and it can help to work with an ESG specialist to ensure you select the most suitable approach for your business.
For example, measuring carbon offsets requires a very different approach to how you might measure changes in your workforce to achieve diversity goals.
Ultimately, your framework should align with your business’s unique ways of operating so you can truly understand what success looks like.
Where your ESG goals align with compliance obligations, there are certain regulatory frameworks which must be applied to allow consistency for auditing.
An expert in ESG can help you determine if these apply to your business, and how to ensure your reporting templates and methods enable compliance.
Lastly, engaging an experienced third party to conduct regular internal audits is a great way to get feedback on areas of concern, while validating areas of success.
This is particularly valuable for reporting, as recipients (such as your Board) can be assured that ESG efforts are being monitored objectively.
Engage RSM’s ESG experts to support your mining business
With a long history supporting mining companies across Australia with tax, accounting and advisory services, RSM’s experienced team are well-placed to help you lay the best possible foundations for ESG.
In addition to showcasing a commitment to environmental and social issues to the general public, we often find our clients are able to attract quality investors who consider ESG an essential element prior to providing funding.
If you have a future goal to publicly list your company, you will also need support in evaluating how ASX listing guidelines for ESG apply to your business.
We can help you:
- Understand the implications and importance of ESG.
- Benchmark performance against your peers.
- Develop ESG monitoring and reporting frameworks.
- Break down silos to enable a holistic view of ESG.
- Integrate ESG into shareholder reporting.
To speak with an experienced ESG specialist from RSM, simply contact your local RSM office.