Taking ESG Reporting to the next level
In February, the Responsible Mining Foundation launched the 2022 Responsible Mining Index Report. This is the third report that the RMF has produced which looks at publicly available information from 40 mining companies. The report uses this information to assess their ESG policies and practices and some of their basic actions at the mine site level.
This year analysts looked at over 6,500 documents and the majority of the companies participated in the assessment, providing additional evidence previously unreleased. The report includes company specific information, including where possible at the mine site level. There are some good news stories, but the main headline isn’t great. ESG reporting in the mining sector isn’t hitting the mark.
The RMI Report highlights that companies are not disclosing information at a mine site level.
Specifically, “… 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 basic risk factors such as environmental impacts, safety issues or grievances. … A few mine sites show better practices on some of these issues, proving ‘it can be done’.” The reality is that aggregated data and one-off stories don’t have the context or accountability that build confidence with stakeholders. The RMI Report goes on to note that “ …it is at mine site level that these issues matter most – for local stakeholders who risk exposure to harmful impacts, for investors who need to know about asset-level risks, for board members and senior executives to know if risks are being well managed, and for companies seeking to show respect for their neighbours and host communities.”
The RMI Report also notes that there are some examples of good practice, but systematic evidence across companies and the industry is missing.
There is some improvement on technical issues like emissions reductions or efficiency gains. But this is not seen across ESG issues. “Applying the same level of effort and leadership to, for example, social performance issues or the management and disclosure of local environmental impacts, would do much to help the industry meet society expectations on these critical issues.” The report has some great resources including specific indicators that need work and a database of industry best practice.
There are a number of reasons why these reporting challenges still plague the industry. The RMI report includes a number of detailed recommendations that you should check out on their website. To get you started, here are a few key things that companies can focus on to improve their ESG reporting.
1 | Rethink your audience. Most reports are written for investors or major civil society and advocacy groups that have the time and ability to pour over the reports and data. This ignores a huge audience at the local level. A ‘social licence to operate’ is continuously acknowledged to be a major risk in the industry. However, timely, useable local level information is not often available at the site level. As a result, rumours, anecdotal experiences and assumptions fill the void. Sharing information about how benefits are shared and how impacts are mitigated in an accessible manner can go a long way to building trust and stronger relationships with community members and other local stakeholders. This will look different in every community. For some it could be a downloadable spreadsheet. In others it might be a regular update in the local newspaper or posters at the bus station.
2 | Don’t shy away from the tough topics. Particularly as it relates to social performance, companies continue to focus on good news stories and data that shows their contributions through jobs, local spending, social investments and tax dollars. But we all know that this is only part of the story. Information about negatives impacts is often already in the public realm – through public ESIAs, media report or comments on social media forums. When we ignore the negative environmental and social impacts of mining, ESG reporting can come across as fluffy PR. It is also a lost opportunity to focus on the many ways companies mitigate negative impacts. In January, Rio Tinto released the outcomes of an internal assessment on bullying, harassment, racism and assault. The company shared the Everyday Respect Report publicly, which is a first step is being held accountable and indicating that they are taking it seriously.
3 | Show people how you’re being responsible. Companies continue to focus reporting on commitments like an internal human rights policy, or signing a pledge for responsible mining. These are important indicators that a company is focused on good performance. However, they need to be accompanied by action and information that illustrate how the company is achieving that commitment. The RMI Report refers to this as commitment vs. effectiveness, some others refer to it as effort vs. effect. In addition to sharing commitments, companies need to provide evidence that they are effectively meeting these commitments as well as tracking their performance. For example, reporting the number of dollars spent on social investment programs is interesting. Including the change in community health outcomes over time provides important context that illustrates the contribution these programs make. Likewise, reporting on the companies local hiring policies is interesting. Including the percentage of local employees at the site level, disaggregated by sex (and other relevant demographics) gives context that shows how the company is realizing that policy on the ground. Providing turnover and promotion rates for local hires goes even further to show the effectiveness of local hiring programs. To be understood, this data needs to be consistent, easy to access and provided on a regular basis.
4 | Work with others. One of the great challenges in ESG reporting is that companies control the data collection process, analysis and reporting. Unlike financial reporting, most companies don’t have a transparent audit process that is well understood by stakeholders. Working with others, like having transparent audits by third parties or collaborating with local partners to collect data can go a long way to build confidence and trust in reporting. There is also a huge opportunity for companies to participate in cumulative impact reporting. The benefits and impacts from mining activity are not experienced in a silo, however the cumulative environmental and social changes in an area are rarely tracked. Cumulative reporting can provide invaluable information about the real changes stakeholders are experiencing and provide a platform for multi-stakeholder collaboration.
The RMI Report not only illustrates the current issues with ESG reporting in the industry but provides some great resources and recommendations. Ultimately, moving the needle on ESG Reporting requires a fundamental shift. We need to think differently about the purpose of reporting, who the audience is, how we collect information and how we talk about tough subjects. This will require courage and resources from industry leaders big and small.
CAROLYN BURNS is a director at NetPositive, a non-profit that works the diverse stakeholders
to help local communities see sustained positive outcomes from mining (www.netpositivenr.org).