Connecting the E to the S to drive the G

In recent years, Environmental, Social and Governance (ESG) has quickly become an integral part of decision-making for many investors, businesses, and governments around the world. ESG applies to a variety of industries, but in South Africa, the mining industry has been central to this dialogue. ESG initiatives include an individual and/or organisations’ efforts to incorporate environmental, social, and corporate governance factors into their analysis, decision-making and investment practices.

As one of the major global suppliers of precious metals, such as gold and platinum, South Africa’s mining industry has a substantial impact on the nation’s economy, employment, and environment. This, in turn, has a significant impact on downstream economies, communities and environmental factors with communities facing ecosystem degradation, soil erosion, extreme climate events, lack of water or quality water and therefore, ultimately the ability to live, work and earn.

Therefore, it is essential to ensure sustainable and transparent practices within the sector.

Mining needs to balance economic, social, and environmental factors for sustainable and responsible operations that respond to resource insecurity, market volatility, labour unrest, and exchange fluctuations. Key challenges to achieving market transformation in South Africa include unemployment, economic inequality, skills shortages, growing population, infrastructure shortages, limited industrial capacity, lack of sustainable market growth, and economic underperformance.

Some of the most important factors for successfully addressing ESG on a commercial level would include:

1. Aligning your information, management, reporting and impact measurement so that there is one coherent strategy for transformation. This includes all the local legislation, that focuses on compliance, your unique market positioning to drive best practice which aligned to the expectations of ESG reporting (or any other suitable measurement framework that one uses). This means that one strategy defines the roles and responsibilities of your environmental team, mine rehabilitation team, mine closure steering committees (where applicable), sustainability specialists, community engagement specialists, human resources team, finance and risk team and your operational leadership. These are not Adhoc events that are reported on annually, this is a coherent strategy to drive an ethos that supports a world-class approach to leveraging the natural circular economy that a mine creates.
2. Gathering accurate ESG data. An important part of ESG compliance is understanding and measuring a company’s performance against established ESG criteria set by regulatory bodies, investors, and stakeholders. This requires businesses to gather a significant amount of ESG data from different sources and then to organize it and aggregate it. Sourcing your social data must be done authentically, as community members are also stakeholders and should be sincerely engaged to support deeper understanding and therefore collaborative solution-seeking.
3. Keeping up with increasing regulation and investor demand. The regulations and investor demand for ESG compliance is constantly changing, organizations need to stay on top of updates to be sure their operations meet all current standards and expectations.
4. Adopting new technologies. The complexity and dynamism of ESG compliance means that new technologies must be adopted to stay current and compliant. Businesses may need to invest in new software, tracking technology and analytic capabilities to keep up with changing regulations. While the cost of adoption may be high, the cost of non-compliance is higher.
5. Monitoring ESG performance and key indicators. Maintaining compliance means businesses must constantly monitor their ESG performance and key indicators, evaluating where they stand at any given time and taking corrective action when necessary. This ongoing process can be daunting but, if linked to strategy, then should be an absolute imperative of the CEO.

A sustainable corporation maintains human, natural, and social capital while creating value for itself and society through those engagements. It is the job of corporate governance to ensure that corporations operate sustainably by adhering to these principles of value creation and capital maintenance.

By approaching development strategically, the mining industry can fully integrate and maximise the use of its unique set of assets, operating models, and localities to continuously drive cost efficiency, quality improvements, proactive environmental innovation, and social cohesion. While this demonstrates an intention to develop a more sustainable model for mining to support operating certainty, it further enables competitiveness, growth, and development of the South African economy.

In moving beyond compliance, investment in the development of a sound ESG or greater Sustainability strategy, should link all the local and international objectives to drive meaningful and sustainable transformation within the local economy. This can be achieved by translating these investments into the measurement of commercial returns through tracking and quantifying value. However, developing the right strategy is a mammoth task that requires unpacking each operating activity in every element of the organization to pull through into an overarching, comprehensively aligned focus on being an "organization for the future".

An example would be Supplier Development, where programmes target local capacity and capability improvements that will ultimately enable mining firms to pick up this value in procurement once capacity has been built into the beneficiary groups where activities are focused.

This is realised through the measurement of the following key commercial metrics:

• Availability of local commodities and services at total costs lower than the currently imported alternative • Impact of exchange fluctuation avoidance
• Improved lead-time to accessing commodities, services and disciplines, reducing risk through a more adaptive and agile supply chain process.
• Cost efficiency created by driving local market innovation, and the establishment of technically intelligent industries.
• Reduced total procurement costs of local-to-site commodities and disciplines.

Using mining waste as a means to develop enterprises may include pyrolysis of the rubber produced through conveyer belts, tyres etc as a source of electricity and for the production of activated carbon to address pH in soil and water. Greenhouses that are structured to capture their own water allows areas with poor soil quality to still be productively used.

Partnering with large suppliers to achieve key deliverables.We work with Tsebo Solutions Group, who provide security, catering, cleaning, site management and energy solutions.

On a mining site, some of the projects that we have supported them to implement show the circular economy that can be created through thoughtful application of every single activity. The food used in the kitchens is sourced from local farmers. The “wet waste” from kitchens becomes biodiesel to go back into the farming ecosystem. Recycling of key items for more sustainable community-produced packaging and cutlery packs for the inclusion and job creation for Gogo’s and people with Disabilities. Drone manufacture, robotics training, manufacture and participation by Youth in support of the advanced excellence in security solutions. Coupled with an integrated model that allows farmers to use drone technology to determine water and nutrient needs in the farming activities. Biodegradable cleaning liquids from locally sourced materials, brooms made by local communities and spray bottles from recycled plastics. Recycled water and renewable energy, waste used for building materials, the list of opportunities to align the social and the environmental to achieve good governance, are limitless.

Alien invasive vegetation can be proactively used to provide a livelihood for communities well beyond the life of mine. Active participation in forestry projects, water cleaning, manufacture of soil to replace soil degradation. Ownership of the ISP that services a community to provide for home-schooling through technology and a long-term view on how the ecosystem could ultimately become self-sustainable are powerful objectives that reduce the risk of the current structure of highly dependent mining communities who have increasing demands.

Effective strategy promotes a participatory and inclusive process based on an informed understanding of who our communities and stakeholders are, where the demand for compliance with environmental and social factors converge, and the key market gaps, market competencies and opportunities that site behind these developmental opportunities.