AMN - Responsible investors should share judgements – comment by Yolanda Torrisi

An industry push for investors to share their assessments of environmental, social and governance risks is an important focus for this week’s Mining Indaba conference, so we can improve our practices and act on the assessments.

Environmental, social and governance (ESG) concerns have been in the spotlight over the past few days as Indaba delegates in Cape Town share their views on how the continent can maximise its investment.

While more than 2,300 people and organisations have signed up to implement good Principles for Responsible Investment (PRI), the exact way people take stock of risks can be unclear. This creates uncertainty for project developers, who often share information for due diligence assessments but then have difficulty finding out what judgements financiers made and how they used them.

International Council on Mining and Minerals (ICMM) chief operating officer Aidan Davy reckons the investors’ lack of transparency on ESG concerns is creating a quandary.

“Investors rarely disclose specific details about their internal processes for integrating ESG factors into investment decision-making,” he says.

Davy thinks a double standard applies to due diligence investigations. “Investors express frustration with mining companies’ inability to provide readily comparable data on an asset-by-asset basis to facilitate the investment decision-making process,” he says.

“However, they are typically coy about how they use the information – their descriptions of how they integrate ESG factors vary from science to art to alchemy.”

To transform our projects and adopt good practices on the continent, we need transparency at both ends.

Davy believes the investment community “needs to pay much more attention to the quality of management of ESG issues … and move beyond a narrow focus on risks with a direct and tangible connection to enterprise value; they also need to find a way to give credit for social value-creation.”

Social value is a factor that Indaba delegate Sierra Leone President Julius Maada Bio values, with 20 per cent of the African country’s budget now dedicated to investing in people and education.

The free education effort is helping put women into science and technology careers and creating career paths for young people.

“We will have a healthier, better educated and highly skilled young population fit for the 21st-century global economy, and that will lead and drive the country's national development,” President Bio says.

“They will be well-equipped to deploy science, technology and innovation which in turn will attract investment.”

Social cohesion and better safety management are two benefits SPG Global principal credit analyst Simon Redmond sees from counteracting ESG risks.

“Governments around the globe are increasingly demanding social infrastructure and other forms of social responsibility from miners,” he notes in a push for consistency.

“Long-term business continuity is key, as it ensures alignment between stockholders and stakeholders.”

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com