6. Conclusion: Collectively Raising the Bar in ESG

Now, with a renewed sense of urgency to act and lead the industry has an opportunity to leverage its collective strength to address sustainability challenges and deliver systemic change. This should be the industry’s “North Star” and requires cross-sector collaboration, meaningful participation, and multi-level cooperation. These are the essential elements of a market system approach to scale impact and truly create shared value over the long term. Additionally, this approach can aid in reverting the historical negative perception on the industry, especially once mining companies begin to emerge as a “partner of choice” for governments and communities alike. In short, by harnessing its collective power and making a serious commitment to ESG, the entire mining industry and its stakeholders stand to benefit.

The mining industry is on the precipice of fundamental change, not least with the world’s minerals-reliant energy transition gaining momentum. Adding to the challenge, times of great uncertainty, ambiguity and unprecedented business complexities call for CEOs who can chart a new path. As we examined in this report, industry leaders need to expand their capacity to be adaptive, relational and self-aware to lead effectively amid extenuating internal and external forces. Adopting a distributed leadership model is equally important for CEOs who strive to transform their companies into purpose-led businesses with a real commitment to ESG.

Because of its nature, the mining industry has its own set of challenges that play against an even more unpredictable landscape. But instead of focusing on managing risk, leaders should focus on the opportunity: the companies that will thrive in the future are those that ultimately commit to sustainable practices today. As Jörgen Sandström, Head of Energy - Industrial Transformation at the World Economic Forum, points out, embedding sustainability into the company’s core is no longer optional: “The SDGs are often referred to as the biggest purchasing order in the history of humankind. Step-by-step the world is phasing out hydrocarbons, greening all societies, industries and economies. We will thus need more minerals, metals, and materials than ever before for this transformation. As a result, sustainability as a strategy is moving from risk mitigation to an opportunity. Looking ahead, companies will need to transform their business models by making strong strategic links to sustainability. Companies must ensure that sustainability permeates everything they do, otherwise they risk being out of business in a few years’ time. This hinges on the realization that your business depends on key stakeholder groups—including regulators, the financial sector, communities and end consumers—who increasingly want more responsibility and transparency.”

Another component that leaders should prioritize, as discussed in detail in this report, is a strong commitment to excellence in governance and transparency, which is essential for strengthening trust with society. In the 2021 Edelman Trust Barometer, business has (just barely) emerged as the only trusted institution globally underpinned by high expectations from society for companies to “focus on societal engagement with the same rigor, thoughtfulness, and energy used to deliver on profits.” This expectation is evident, with 86 percent of respondents placing their hopes on CEOs to lead on societal issues, especially when government fails to act.46

In addition, the board plays a critical role in shaping how a company’s sustainability agenda plays into the future of the business. Boards must build effective sustainability governance structures – a sustainability committee, much like an audit or risk committee, is important – but sustainability must be the responsibility of the full board. The mix of board skills and diversity is also expanding as mining companies realize the benefits of having different perspectives around the table. We are beginning to see a broader representation of skills from the wide-ranging ESG landscape; improvement in gender diversity; and greater representation of different stakeholder groups, including recent appointments of directors from mining-affected communities.

There is simply too much at stake for companies not to take action on ESG in the mining and metals industry. Companies and their entire ecosystems can no longer afford ESG-related incidents. They not only damage communities, company reputation and operating license, but also limit future career prospects of company leaders and diminish attractiveness to current and future employees. As such, it is of paramount importance for companies to challenge themselves relentlessly and continuously on their ESG performance. And while the work starts now, it should be an ongoing process.

At the same time, companies should use times of crisis as a learning curve, says Professor of Business and Public Policy at Oxford University, Karthik Ramanna. “It usually takes an external event for culture change happen. Smart companies and leaders never let a crisis go wasted.”​ We are, for example, seeing this under Rio Tinto’s new leadership post the Juukan Gorge cave blasts, and similarly under Vale’s new leadership following the Brumadinho tragedy.

Our hope is that this report helps mining companies equip themselves with some essential principles and mechanisms for embedding sustainability at their core. It will take vision, commitment, and collaboration from leaders to put these concepts into action and define what works best for them. We suggest that companies embark on this journey in the spirit of actively listening to local communities, stakeholders and their own employees, while staying attuned to emerging technological trends and socio-economic upheavals. Without doubt it will be a challenging journey. However, if as an industry we continue to make consistent, courageous and collective progress on the ESG agenda, the way ahead may well lead to a prosperous and positive outcome for all: companies, people, and the planet.