More than compliance – the rising importance of the ‘S’ in ESG

Ngaire Tranter, General Manager ESG, RPM Global

Within all sectors of industry we’re seeing a surge in Environmental and Social Governance (ESG). This new wave of sustainability is different to what has gone before. It’s driven by an era of globalisation and is heavily influenced by geopolitical dynamics, an increase in societal expectations and a rise of nationalism in these current pandemic- orientated times.

So, what does this actually mean for projects here in Queensland, and more broadly, Australia? Within the current robust regulatory environment, there is pressure to transparently communicate the status of ESG within your project and/or organisation.

The minute you supply to market, seek finance or communicate to key stakeholders such as shareholders, community and First Nations People, there is now an expectation that you are able to clearly communicate your ESG strategy and performance. This expectation encompasses all aspects of running your business, from your internal operations to your supply chain, both upstream and downstream.

This ESG pressure has started to align with economic considerations and, where perhaps sustainability was once a “feel good” action, there is now an expectation for clear analysis and metrics that consider all aspects of ESG and underpin your internal and external communications.

In terms of ESG, we miners are well positioned. We’re adept at being compliant on all fronts of ESG, as our policy environment and community demands. However, the dial is shifting, and simple compliance with policy and standards is no longer acceptable. There is an expectation of proactive and innovative approaches to ESG.

The recent Juukan Gorge case is a clear example and highlights that compliance is not necessarily a defendable position. The pathway for the ‘E’ and the ‘G’ in ESG is relatively clearly mapped out. There is plenty of talk around the E in terms of net zero or decarbonisation planning, which is truly all-encompassing of environmental considerations once you delve into the detail. The G is supported by our policy environment, in particular the ASX, United Nations Compact and the raft of international standards such as the Global Reporting Index, Sustainable Development Principles, International Finance Corporation Performance Standards, the Equator Principles, and the list goes on (to a tally of around 30 international standards).

In terms of ESG, we miners are well positioned. We’re adept at being compliant on all fronts of ESG, as our policy environment and community demands. However, the dial is shifting, and simple compliance with policy and standards is no longer acceptable.

It’s the ‘S’ in ESG that has rapidly emerged whilst all eyes have been focused on the ‘E’ and the ‘G’. Establishing metrics in this space has been a significant challenge for organisations. Our policy environment has been designed to ensure public participation in our processes, the Environmental Protection Act 1994 often focuses upon the linkage between harm to environment and ultimately people.

Quietly though, the dial has shifted and we’re seeing rapid growth of social considerations, particularly in the finance space. Health and safety considerations are being drawn to the forefront and so too are human rights assessments. The latter is the element that is the emerging piece of the puzzle that cannot be ignored for our Queensland operations and organisations.

Human Rights and Social Assessments are naturally grouped together, however, there are nuances here and the two should not be considered one and the same.

The International Council on Mining and Metals (ICMM) Principle 3: Human Rights defines human rights in the context of mining as “respect for human rights and the interests, cultures, customs and values of employees and communities affected by our activities”. Within the Queensland context, we are further guided by the Human Rights Commission Australia and the introduction of the Human Rights Act 2019 (Qld), all of which lead to the reinforcement of the concept that “mining organisations should ideally be considering human rights and social impacts throughout the whole mine life, from pre-feasibility to closure”.

Given the new Progressive Rehabilitation and Closure Plan legislative framework here in Queensland, it’s useful if we consider the closure context and the human rights expectations and actions that can be proactively adopted in these activities. One of the most significant impacts an organisation can have is to establish early communication with the wider community around the end rehabilitation goal, or final landform. Having accessible systems to provide comments on rehabilitation outcomes early in the mine life may garner more community support.

There can be social and economic benefits to successfully closing a mine with outcomes endorsed by neighbouring and wider communities (i.e., forestry outcomes, grazing, agricultural outcomes, recreational outcomes). It’s important to acknowledge that these outcomes may change over time, which is juxtaposed with the PRCP guideline requirements of a firm schedule with detailed milestones and with the mine planning process, where options analysis dictates that one option must be selected to move forward in this regime.

To allow for successful navigation of this process, early engagement and true options analysis in line with the financial considerations being made in pre-feasibility is key. Fundamental concepts such as Free, Prior and Informed Consent (FPIC) come into play well before the first plan is drawn up, and this is often a critical element that comes to light during project financing. How does one establish FPIC when our legislative process sets forward a path to interact with our First Nations People and communities?

This contradiction of practice highlights the rising expectation for more than just compliance. The process of engagement to develop FPIC should be one of strategic planning for early engagement, enduring beyond the tenure of any particular individual within your organisation.

An orchestrated space for this conversation between the mine and key stakeholders must be allowed to truly address the fundamentals of human rights considerations. And if you don’t consider human rights within your project’s development?

The community will speak through regulatory and legal frameworks, causing delay and uncertainty to project progression. The challenges are sophisticated and considered, and place onus on concepts such as intergenerational rights and broader human rights assessments.

This is a clear and emerging consideration for projects, wherever they may be in their lifecycle. Due consideration of, and a robust plan for the “S” will certainly mitigate risk and prevent issues for your projects. 