The bland and, to the uninitiated, nonsensical ESG acronym brings real difficulties to mining companies as they strive to boost their environmental, social & governance (ESG) credentials.
The problem lies in that there is no one universal set of standards that underpin ESG metrics measured by mining companies, investment funds, consultants and global bodies.
For European, American and other socially conscious funds looking at SA mining companies, there is a level of complexity inherent in the country that may not be fully understood and yet there is a demand for compliance with standards set within those funds.
Again, each fund has slightly different metrics when it comes to assessing ESG compliance.
Until recently, a fund could easily write off investing in an SA-focused mining company because its energy source was completely derived from fossil fuels.
But what choices realistically existed for these companies until President Cyril Ramaphosa’s announcement that companies could install 100MW of embedded renewable energy?
Until then, companies could only install 1MW and then mineral resources & energy minister Gwede Mantashe grudgingly upped this to 10MW, ignoring all input from mining companies and other businesses.
So, having an energy minister standing directly in the path of green energy and doing his level best to stop companies installing renewable energy plants until his boss twisted his arm, must surely be a factor completely out of the control of companies funds may have shunned because of their energy source.
Social issues in SA are scarily complex and quickly hijacked by self-interested people or groups in societies where poverty and unemployment are rampant.
If SA mining companies don’t tick boxes drawn up in first-world boardrooms by experts who think they know better, then they face losing investors.
While ESG is an easy acronym to earnestly bandy about and tip a hat to, it is an incredibly difficult and variable set of metrics to meet and make everyone happy.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.