In a recent conversation with Sabrina Dias, SOOP’s Founder and CEO, she brought up an interesting viewpoint that has been rumbling around out there for a while now: namely, that ESG (environmental, social and governance issues) in the mining industry is nothing more than a scam perpetrated by environmentalists and left-wing groups to garner interest in their political leanings and secure money for their “woke” views at the expense of common sense. (For the purposes of this article, ESG and sustainability are used interchangeably.)
To support this viewpoint, the person may cite a company that was once all-in on ESG and is now “back-pedalling” and seemingly cooling their heels.
While this could be interpreted as disengaging with the policies of ESG, Sabrina believes this is a short-term view and one that doesn’t take into account the many intricacies of sustainability.
A recalibration of ideal practices vs practicalities
Sabrina sees it instead as a recalibration from all-in enthusiasm for the envisioned possibilities ESG could bring, to a realization that a company must balance the practicalities of implementing those initiatives with the reality of the costs associated with them.
The truth is that some aspects of ESG do not come cheap. We can’t replace a fleet of diesel-powered haulers with electric ones at no cost. We can’t build a new school for a community with zero budget. Nor can we overhaul a system of governance in one fell swoop. They all take time, money and patience. But they are definitely worth the effort for the long-term success of a business.
The distrust behind the “woke” viewpoint
The question the naysayers most often seem to ask is, why would we want to do any of these things anyway… they’re just unnecessary expenses that are taking away from profits.
It’s important to try and understand the possible roots of this skepticism.
- Greenwashing breeds distrust – Some skeptics believe many companies don’t “walk the talk.” Instead, they talk about the steps they’re taking in sustainability but actually do nothing – a situation known as “greenwashing.”
- No consistent measures – Skeptics may point to the overwhelming number of inconsistent standards and measures in place to gauge how a company is faring in its ESG goals. With such inconsistency, they argue, it’s easy for bad players to pick and choose what they’re measured on, while the “bad” stuff is hidden away, presenting a skewed version of their achievements.
- Sustainability vs profits – Some critics feel ESG is an endless drain on profits and we should never trade profit for sustainability.
- Perception of the mining industry – Others feel mining is a “dirty” industry and no matter what it says or does, the negative impacts will always outweigh any positives.
All valid points that may have been true at one time or another. But are they still true today? Let’s take a look.
The strides mining has made
- While there are, unfortunately, bad players in any industry, the vast majority of companies realize it’s in their own best interests to “walk the talk.” Adopting renewable energy measures, increasing water conservation, improving the lives of communities in which they operate, are enlightened ways of doing business ethically and practically today in the extractives sector.
- It’s true there are many standards and regulations out there that have emerged as ESG has grown. To address the issue, the International Sustainability Standards Board (ISSB) announced in June this year that it had developed a set of disclosure requirements that aims to create a common language for reporting on sustainability. This should make it easier to assess a company’s efforts across the whole spectrum of sustainability.
- As mentioned earlier, ESG measures do cost money. Nobody is asking a company to spend so much on sustainability that it is no longer profitable and goes out of business. Taking a strategic approach to the sustainability measures a company adopts allows it to stay profitable and become sustainable. And the reality is that a company that adopts sustainability throughout its processes becomes more profitable overall (think, cost-savings in operations, reduced delays in permitting, less disruption from local communities, to name a few).
- There is a view that still exists today that mining is a “dirty” industry, all negatives and no positives. However, mining companies have been striving for years to counter that narrative, to become a company of choice, not only for future employees but for clients and suppliers as well. They know that doing “good” and taking care of communities, being more environmentally friendly in their operations, and actively being more inclusive and equitable within their own organizations, is better for them overall (environmentally, financially, and reputationally), and for all whose lives they touch.
A sustainability report provides proof
To change the viewpoint about “woke” ESG, we need to show evidence of the overwhelming benefits sustainability actually generates. Publishing an annual sustainability report that uses credible disclosures and tracked data to showcase hard facts is an excellent way of doing this, demonstrating to all stakeholders a company’s commitment to being a responsible corporate citizen.
Sustainability = our future
We are now living in a world where measures like ESG are urgently needed across all sectors. We see the devastation in multiple countries impacted by wildfires, extreme temperatures, hurricanes, droughts, floods… These are no longer unusual events; they are the new reality we are experiencing, and they are projected to become not only more frequent but increasingly severe.
Couple these with the modern slavery practices that still exist in many countries, and the corruption and greed threatening every level of business, and it is apparent that ESG measures are needed more than ever to strengthen the foundations of good business practices.
If we want to ensure there’s a planet for future generations, we need to incorporate sustainability into everything we do so we don’t even think twice about it. It makes good business sense for the long-term sustainability of a company and increases shareholder value.
So, to answer the question, “Is ESG a woke scam,” doomed to sputter and burn? No, it’s not. While the term “ESG” may fall out of favour, just as CSR (Corporate Social Responsibility) did before it, sustainability itself will never fade away.
Sustainability is not “woke.” It’s vital.
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If you would like guidance on how to incorporate sustainability into your company, reach out to us for a chat. SOOP Strategies offers customized solutions to fit exactly what your company needs. Email us at info@soopstrategies.com or call us at (416) 669-8436.