Page 4 - pd280-Mar20-mag-web_Neat

A different approach

to engagement

Down the years, I’ve found many will, at some point, come across a mining company and begin ask-
of the major corporate presentations ing difficult questions.
at big conferences such as Mining There is no slick marketing campaign which can hide the reali-
Indaba rather anodyne. They reveal ties. Millennials, particularly, have far greater levels of media liter-
little about their operations and speak acy than any previous generation and will quickly see through cor-
only briefly about their financial per- porate messaging and demand evidence of social performance.
formance. Such is the banality of the The only choice, as mining companies have begun to recognise,
presentations, a newcomer could be forgiven for not even knowing is to ensure they fulfil their ESG credentials, not just as a box-tick-
what industry they were part of. ing exercise but as a key metric in their overall performance.
The dullness extended to the obligatory ESG slides, where com- And, it is not only consumers who are pushing miners in this
panies would include pictures of smiling kids in the developing direction.
world, planting trees or writing in classrooms. This all may sound The rise of ethical investment and more activist shareholder
highly cynical on my part, but these presentations are utterly un- groups has placed further pressure on miners to prove they are
believable. Nobody, from shareholders to governments or commu- delivering benefits to all stakeholders.
nity stakeholders believe the corporate presentation which paints The world’s major funds all demand full transparency on ESG
the company as some sort of quasi-World Health Organisation for strategies and are willing to assert their position publicly – see
their hosts. Black Rock chief executive Larry Fink’s letter about fossil fuels or
This year’s Mining Indaba, however, was different and is why we the Church of England’s demand for a full industry audit of tailings
chose to dedicate this month’s cover story to issues surrounding facilities.
ESG. So far, this new trend has been largely focused on the environ-
The change was apparent from the moment Anglo American plc mental aspect, with the major diversified miners announcing their
chief executive Mark Cutifani began his address on the opening withdrawal from thermal coal assets and talking up their interest in
morning of the Cape Town conference. There were no token slides “future-facing metals” such as copper and nickel, as new BHP Ltd
at the end about community investment programmes and the num- chief executive Mike Henry described last month.
ber of schools and clinics built, as though ESG is something which Even the gold miners are promoting their “green” credentials by
sits almost separate to the company’s core business practices. announcing new renewable energy initiatives on their mines as
The tone had changed and ESG was now firmly flowing through they begin the long trudge towards carbon neutrality by 2050.
the heart of companies like Anglo American. But what of the other aspects of ESG? As usual, Barrick Gold
For Cutifani, it is not enough for Anglo American to make a con- Corp chief executive Mark Bristow isn’t shy to tell his peers they
tribution to solutions of global and community problems, it must be had been focusing on the wrong things.
part of the company’s mission. “Right now, I think there’s a little bit too much focus on the E part
“We are not here to help; we are here to play our part,” he said. of the ESG. The S is as important and so is the G,” Bristow said last
For the ultra-cynical among us, you can imagine the Australian month. “To Barrick, securing and maintaining its operations’ social
executive having a very different message in investor briefings. license is a strategic comparative, a core part of our business and
However, the elevation of ESG issues by Cutifani and other mining just not another box to tick.
executives is actually being driven by shareholders. “Even late Capitalism’s most unvarnished practitioners have
For those who watch the wider corporate world, the arrival of suddenly discovered the merits of a social conscience and now
the trend towards embracing ESG practices as core business is say they won’t invest in a business that doesn’t have a satisfac-
hardly surprising. Sectors which are more consumer-facing have tory ESG rating… I’ve been arguing for a long time that a good
been undergoing this change for several years. Consumers in the business also has to be a good citizen, particularly in emerging
21st Century, particularly younger generations, demand far better countries. Mining companies have a moral obligation, as well as a
ethical behaviour from brands and corporations and expect them commercial reason, to help develop economies and uplift people.”
to have a clear “purpose” outside the generation of profits. And, The problem with societal issues is performance indicators are
they are willing to withhold purchases to pressure companies into not as clean-cut as environmental factors. Carbon emission lev-
making cultural changes. els are easy to measure, whereas the upliftment and well-being of
Miners were largely immune to this trend in the first two dec- people is not.
ades of the century because consumers rarely considered them. This is certain to cause miners problems while they unpick their
However, as customers of major consumer brands demand total societal impact. We can expect to read stories of mining compa-
transparency on the provenance of every material in their products nies caught with supply chains which do not adhere to the new
– from the factories which produce Nike trainers to the source of strict standards of community engagement and upliftment but,
metals in an iPhone – miners are finding themselves coming under given the new-found focus on the space, solutions are likely to be
scrutiny. generated and mining’s standing in society elevated as a result.
The customer wants to know where the consumer brand sourced
its material so the consumer brand scrutinises its supply chain and
dominic@paydirt.com.au @DominicPiper

Page 4 MaRCH 2020 aUSTRaLIa’S PaYDIRT