Abstract

ESG – Environment, Social and Governance - reporting is fast becoming the norm for organizations that want to be evaluated as proficient at managing their ESG risks and opportunities. More and more investors and private equity firms are utilizing these non-financial criteria to screen their investments. Markets are increasingly experiencing an intensifying scrutiny of ESG issues as investors are keen to invest in funds and companies that are actively promoting positive impacts and minimizing negative ones. Furthermore, companies and portfolios that can illustrate progress in these areas utilizing data to support a favourable storyline, will get the most attention.

The benefits of working on ESG performance go beyond access to capital. It also leads to operating cost reductions, improved productivity, reduction of capital costs, revenue growth, and ultimately long-term value creation. This is where organizations make the shift towards creating brand equity alongside new and innovative business models.

But, once a company determines its material ESG factors and commits to establishing goals, what focus areas should get additional investment and how should the strategy be operationalized? More importantly, who should be involved in the implementation of these high impact programs and projects?

DSS has spent the last 50+ years helping mining companies transform their safety cultures and operationalize worker and process safety transformation strategies. More recently we have been working with clients to conduct their ESG materiality assessments, set strategies and implement carefully evaluated and prioritized impact programs. We believe there are 2 important levers that mining companies should be utilizing to achieve sustained ESG results.

The first is to invoke the rigour of setting strategic priorities, undergoing organizational alignment and utilizing portfolio performance management tools found in the practice of Operational Excellence. We have come to realize through our client work that for companies to gain the most ESG impact, they must approach it strategically and systematically with a strong focus on continuous improvement.

Secondly, mining companies should be focused on equipping existing HSE and operational risk management leaders with the right knowledge and skills to lead company-wide ESG transformation. These folks have a common understanding of what it takes to move the needle on important issues that require visible leadership commitment, risk management skills, employee engagement and a shift in mindsets and behaviours – all critical elements to support an ESG transformation.

By overlaying an ESG lens on these two functional areas in a deliberate way, companies can move the needle from managing ESG as a compliance requirement to achieving value creation.