Five Critical Considerations for Sustainable Mining Operations

By: Josh Hendry, Senior Consultant, PE INTERNATIONAL

This article is the third instalment of a five-part series exploring critical environmental and social performance issues for the metals and mining industry. Each article poses a question for organizations in the industry and explores the importance and value of being able to respond ‘Yes’.

3) Do you proactively engage with your customers, suppliers and other stakeholders such as investors on environmental, social and governance issues?

Understanding your direct customer’s current needs will always be a key part of any business, but how you understand their future needs may be just as critical. Being prepared to meet emerging challenges for your key downstream markets can be a competitive advantage both within the metals and mining sector and perhaps more importantly with other competing material sectors. This can be achieved by proactively engaging with your direct customers as well as the end users of your materials and other key stakeholders such as consumers and investors to understand their emerging demands and expectations.

Engagement with downstream sectors is often facilitated through participation in various reporting or transparency-related initiatives, such as the Carbon Disclosure Project (CDP), Transparency International, and the Global Reporting Initiative (GRI). While these initiatives are well established and many mining and metals organizations are engaged with them, there has also been a proliferation of initiatives driven by the investment community (e.g., the Sustainability Accounting Standards Board) and/or various downstream sectors (including the electronics, jewellery, product packaging, automotive and building and construction industries) which are key users of metals. While these industries are not necessarily your direct customers, they represent the companies and organizations that may demand more of your direct customers in the future. Examples of these include the Aluminium Stewardship Initiative and Initiative for Responsible Mining Assurance (IRMA), both of which include representation from the mining and metals industry, but rely heavily on much broader representation by downstream industries that use metals in their products.

As new initiatives are developed that impact material selection decisions, it is critically important that the mining and metals industry works to understand the needs and objectives of these efforts. Only then can the industry ensure it is shaping the future of how its materials are assessed and selected for use. While it may not always be advantageous to participate in the design of these types of initiatives, industry must ensure it is deciding whether or not to do so in a proactive manner. When appropriate, being involved with the design or drafting of these types of initiatives can allow for more direct influence in the final schemes and how they are used in the market.

It can be much more difficult to substantially influence the content of standards, for example, once they reach public consultation. This is currently playing out in the case of IRMA, a multi-stakeholder mining assurance system that aims to improve social and environmental performance. IRMA, founded in 2006, is currently being updated and undergoing public consultations. The standard is being designed to certify individual sites rather than companies as a whole, a new concept for the industry and one which has the potential to directly impact mining and metals companies.

However, the current draft standard appears to have direct involvement from only one mining company, AngloAmerican, with others participating in public consultations after the draft was created. While contributing later in the process may be effective in some cases, it can also be a risk as it may leave the industry with less influence on the final version of the standard, given the draft could receive broad support from other stakeholders. Companies involved from the start may also be able to capture a competitive advantage over competitors by being seen as leaders in the sector and also gaining deeper insight into how to leverage their products or operations with respect to the new standard or reporting scheme.

It is crucial that the industry is involved in these initiatives as appropriate, and that it can tell its story positively. However, being aware of initiatives in their infancy is only possible through active engagement with your value chain. Sharing detailed information on your products or operations can be an important step in this process. For example, Eurofer, the European Confederation of Iron and Steel Industries, has created product-specific eco-design packages outlining the ways that steel can be incorporated into products that are made using life cycle considerations, a closed-loop approach and other environmental considerations, ranging from composite flooring to dishwashers. Such initiatives are part of the process of building trust with members of your value chain so they can feel confident that they have all the information they need when they make crucial business decisions about the design and content of their products. That type of trust can facilitate further outreach by stakeholders allowing early engagement in new initiatives and potential opportunities to get involved early their development.

The need for direct engagement means companies must understand the environmental, social and governance performance expectations of multiple stakeholders, including customers, regulators, suppliers and investors. If your direct customers are not demanding more from you yet on these topics, it may just be a matter of time before they are convinced by their downstream markets to do so.

For more information about how to engage your entire value chain, please contact Josh Hendry at [email protected]