'Big change': Miners face investor pressure on sustainability


'Big change': Miners face investor pressure on sustainability

Written by Nick Toscano for SMH - 30th October 2018

Leaders from Australian and international mining giants on Tuesday discussed how concerns over sustainability, responsibility and climate change had become mainstream and live topics all across the industry, and were now guiding investment decisions and operating practices.

"When I look at sustainable development, I look at it as a bit of a journey," said Gary Goldberg, chief executive of gold miner Newmont.

"I look back 20 years ago and the word 'sustainability' really wasn't in the mining lexicon."

Tom Butler, chief executive of the International Council on Mining and Metals, said there had been a "convergence" of the environmental and social demands of communities in which miners operated and the demands of institutional shareholders.

"This is all a big change from a generation ago when there was certainly pressure from communities and NGOs that spoke for them, but sustainability was a long way from being mainstreamed due to investor pressure that we see today," he said at the International Mining and Resources Conference.

"We are today in a very different place ... with a much better understanding of what it takes to engage successfully with communities in order to obtain and maintain our social licence to operate."

Miners are facing increasing scrutiny over so-called ESG (environmental, social, governance) issues from investors worldwide, with campaigns such as Climate Action 100+ pressuring big emitters, and shareholder activists targeting the likes of BHP, Rio Tinto and Whitehaven Coal with climate-related shareholder resolutions.

Mr Butler said the mining and metals industries were adopting a more proactive approach to ESG issues, including global warming, community engagement, water-impact management and mine closures, and had to be able to demonstrate that their products were "responsibly produced".

"I believe the days are gone when the social contract was that companies should look after their employees and shareholders, pay their taxes and maintain their social licence to operate by minimising harm to the environment and assisting the development of surrounding communities," he said. "Today we are expected to do more than that - to play a role in the development stage, and to do good, not just to do well."

If miners are not able to demonstrate such commitments, Mr Butler said, "we will find our access to finance and markets under threat, let alone access to projects".

"Taking the right approach to environmental, social and governance issues has more relevance today to shareholder returns than it has ever had," he said.

Graham Kerr, managing director of Australian miner South32, said climate change had become a core focus for the company's board and senior management team, and "it's actually changing how we invest our dollars".


He said South32 had recently constructed two desalination plants in Africa and a solar farm in northern Queensland.

"It's also driving very much how we are thinking about our exploration projects," he said. "We have a number of local projects on the way at the moment and they are skewed very much to what commodities we think the world needs in a future with climate change."

Gold mining company Newcrest's managing director, Sandeep Biswas, said climate change was a "very live topic" that would gain even greater prominence as renewable sources of energy became increasingly capable of providing base-load power

Mr Goldberg said Newmont was now applying a "shadow cost" of a $50-per-tonne carbon tax when assessing new projects due to global inconsistency on a price on carbon, and was in the process of switching from diesel to natural gas power generation on a mine in the Northern Territory in a bid to reduce emissions.

"It's got to be fit for purpose in different places, but it's front of mind when we are looking at investment decisions," he said.