RMI Report 2022 reveals little ESG action at mine site.
By Mark S. Kuhar
In its latest assessment of 40 companies and 250 mine sites, the Responsible Mining Foundation highlights a striking disconnect between corporate commitments and mine site action on critically important environmental, social, and governance (ESG) issues.
Commitments are now commonplace, yet basic actions at mine sites – to inform and engage with communities and workers on, for example, safety issues or environmental impacts – are rarely evident. Some 94% of the mine sites score an average of less than 20% on the 15 basic ESG issues assessed.
It is at mine sites where the risk of harm is greatest and companies can certainly be expected to show respect for those most exposed to these risks. And without evidence that corporate commitments and protocols are being implemented at mine-site level, the credibility of these HQ measures will be limited.
At a time when many companies are announcing record profits and ambitious plans on technical issues such as emissions reductions or efficiency gains, there is an urgent need for a similar level of effort and leadership to ensure responsible practices across companies’ operations.
MINE SITES LAG BEHIND CORPORATE STANDARDS
The vast majority of the 250 assessed mine sites across 53 countries cannot demonstrate that they are informing and engaging with host communities and workers on important ESG risk factors, despite the fact that many companies require their mine sites to take these basic actions. For example, most companies show some level of corporate protocols for their operations to engage with other water users on water management and to engage with worker representatives on occupational health and safety.
However, only a minority of the 250 assessed mine sites show any evidence of having implemented these requirements. Hélène Piaget, CEO of RMF, said, “We have seen examples of leading practice on many issues – companies are proving it can be done. What is needed is much quicker adoption of these good practices to enable the industry, especially at mine-site level, to prevent harm, limit risk and build trust.”
Although the results on corporate policies and practices remain low on many issues, overall it is good to note that companies show an average 11% improvement over the previous assessment in 2020. However, this average masks significant differences between companies at opposite ends of the performance spectrum.
Companies in the first tier – i.e., those with the highest overall results – show only an 8% average increase in their results. This contrasts with the 41% average improvement seen among companies in the third tier, who are beginning to catch up by putting in place policies and practices on a range of ESG issues, while increasing their transparency.
COMMITMENTS NEED IMPLEMENTATION
The RMI Report 2022 finds that formal ESG commitments are becoming the norm, and it is clearly within every company’s reach to meet society expectations on ESG policy commitments. But implementation and performance tracking remain weak. If companies are serious about ESG and sustainability, the leadership needs to ensure that these departments have sufficient budget, people, agency and respect within the organisation.
There is much scope for companies to improve their responsible policies and practices by adopting the good examples shown by their peers, highlighted as leading practices in the report. Given that the energy transition will further increase demand for minerals and metals, it is more important than ever for companies to accelerate their continuous improvement efforts and normalise responsible mining
The Responsible Mining Foundation (RMF) is an independent research organisation that encourages continuous improvement in responsible extractives across the industry by developing tools and frameworks, sharing public-interest data and enabling informed and constructive engagement between extractive companies and other stakeholders. The foundation does not accept funding or other contributions from the extractives sector.
WHERE MINING AND CLIMATE IMPACTS INTERSECT
Commendable and important as mining companies’ commitments to become carbon neutral are, emissions reduction is only one element of a responsible response to climate change. Recent research by RMF reveals that action to assess and address climate-related risks on people and environments impacted by mining – yet essential for a just transition – is conspicuously missing from current efforts by mining companies.
The mining sector is a significant contributor to global greenhouse gas emissions, particularly when Scope 3 emissions are taken into account. In the absence of efficient recycling value chains and real circular economy models, it is also clear that the energy transition will create additional demand for metals and minerals.
Many mining companies are positioning themselves to take advantage of this opportunity, though appealing appellations like ‘green mining’ and ‘future-facing industry’ obscure the socio-environmental challenges that mining still faces as an industry. Recent research by RMF reveals that the majority of assessed large-scale mining companies have not identified and disclosed how climate change may exacerbate their impacts on communities, workers or the environment.
These weak performances contrast with the much stronger results on companies tracking and reducing their GHG emissions. Although human-induced greenhouse gases emissions are the main reason behind the huge changes in the world’s climate system, working solely on the reduction of these emissions leaves local impacts and risks unaddressed.
Mining companies’ approaches to climate-sensitive issues such as water management, tailings, or community health show a similar trend to how they address broader climate change, with a strong focus on operational considerations and much less attention to the salient impacts that mining operations have on local stakeholders, biodiversity and the environment at the local level.
There is a real risk of ‘carbon-washing’ if companies’ re-branding is underpinned only by their current limited action on climate impacts and narrow net-zero focus. To defuse this risk and deliver a positive contribution, companies, financiers, insurers, and governments must ensure that mining’s climate-related (and climate-exacerbated) impacts are identified, assessed and addressed.
Mining companies can show more leadership in how they tackle climate change beyond their risk to business by mainstreaming and normalising leading practices amongst their peers. Action on the ground at mine-site level, where mining and climate impacts intersect, is essential for the wellbeing of local people and the health of local environments – as well as the stability of the socio-economic context of the mining operations themselves.