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As world leaders met in Egypt to discuss loss and damage caused by global warming, the United Nations projected the world population to surpass 8 billion people on November 15th 2022. 650 million more people since the world leaders convened to set the Paris agreement goals back in 2015. 650 million more people needing food, shelter, energy, and transport. Add fossil fuel independence to that mix by ramping up renewables and we are far into resource-rich territory.
Due to the length of the supply chain between the raw material from mining and the finished product as a component of an electrical device or part of the battery of an electric car, making the connection between a wind turbine and a copper mine is not always clear. Wood Mackenzie reports that 1 MW of wind energy requires 5 tonnes of copper (and 15 tonnes if the turbine is offshore). Given that the turbines being built today are the size of the Eiffel tower and of 9MW capacity, the copper usage alone is staggering.
There is no doubt that mining requires tonnes of earth to be excavated, for grams of the metal searched for, but one fact remains: without mining, the current world we live in would be untenable. Although shunned by some as being “sin stocks”, the mining industry is an integral part of the shift to a battery and wind-driven greener future. However, being essential doesn’t make the industry immune from their sustainability responsibilities and stakeholder expectations.
What is sustainability anyway?
The recurring definition in the literature is that of the 1987 United Nations Report, “Our Common Future” more commonly referred to as the Brundtland report. Here sustainable development is defined as “…development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Herein lies the problem. Sustainability is such an overarching word. Some take a too focused view on it synonymizing it with emission reduction. Some praise the vagueness and ambiguity claiming that it is a complex topic and cannot be summed up concisely as it is used in different situational contexts. This creates a bit of a problem. With no singular definition, those using the terms will choose that most suited to their circumstances – for “greenwashing”, as a cover for unsustainable practises. The result is that many investors opt for negative screening, an easier approach, but considered by academics to be the least beneficial method.
A personal sustainability definition preference, in the context of mining, was put forward by Han Onn and Woodley in their 2014 research paper “A discourse analysis on how the sustainability agenda is defined within the mining industry”. They subdivided sustainability into three groups. The first is perpetual sustainability, which in a mining context focuses on shareholder benefits and the continuation of the business itself. The second is transferable sustainability, which looks more to the stakeholders outside of the business, with the third going further still, to the broader intergenerational environment and termed transitional sustainability.
It is debatable which of the multiple stakeholder specific interpretations of sustainability in mining is best as each have their own individual merit. It is for this reason that we choose a stakeholder approach to our analysis, aiming to view the different sustainability aspects through the eyes of the stakeholders, economic, environmental, social and governance (EESG).
Why not use existing codes?
Despite a large number of codes and recommended standards, there seems to be a lack of clarity on clear and actionable approaches. This is understandable, as given the geographical spread of mining across multiple cultures and sub-cultures, as well as different minerals mined with different techniques, a universal set of clear and specific rules are challenging to approach.
If we add the complexity of sustainability definitions to that, it makes the measurement of sustainability actions even more difficult. This is manifested in the wide-ranging and sometimes contradictory results rating agencies provide (see also Florian Berg et. al., 01.2022, Aggregate Confusion: The Divergence of ESG Ratings”). Some might measure employee satisfaction for example by measuring employee turnover. Another might measure it by the number of employee-related court cases brought against the company. The measurements differ, but both carry relevance. So who’s correct? In our view, both could be, although the company ratings might be diametrical opposites.
How can mining and sustainability go hand in hand?
Oftentimes, mining companies have to make up for the legacies left behind from high profile environmental incidents in the mining sector in the 1990s. This is the image that most still have of the mining industry today. 30 years on, the industry has come to realize that ESG adherence is crucial if the operations seek to develop other sites in the future. Disputes, strikes, environmental clean ups through spillage or seepage of chemicals can in the long run prove more expensive than its prevention.
The company sustainability appraisal finds its roots in a detailed MBA study which focused specifically on integrating sustainability into mining investments. In the first step of the sustainability analysis, a “fatal flaw” filter is applied, which are exclusionary factors and considered to be unacceptable. In the second step of the sustainability analysis, the companies are examined across four lenses. We use the word lens as we imagine “looking through the eyes” of the individual stakeholders when making the assessment. Each lens (economic, environmental, social and governance) is weighted equally as we do not prioritize one pillar of sustainability at the disadvantage of another. 90 questions span across all four lenses, and these individual questions are weighted differently. These questions have been applied to the industry using the technical expertise of the team.
The integration is best illustrated with examples, such as an electrified mining truck fleet in Sweden, or solar panels on a tailings dam in Chile, or the DNA analysis of local rivers to identify biodiversity at the start, with the aim of preserving it throughout the life of mine.
Sustainability serves all stakeholders in the long run, and we hope that the work we do will contribute to an awareness of co-creation of value. There are challenges, but if we shun industry because of its past, instead of working with it to create a more sustainable future, we will not progress with the necessary implementation of meaningful change.
