ESG the key to attracting investors

THE mining industry is seeking to position itself as a trusted partner in fighting climate change, a report by global law firm White & Case has found.
ESG the key to attracting investors ESG the key to attracting investors ESG the key to attracting investors ESG the key to attracting investors ESG the key to attracting investors

With commodity prices soaring as the industry recovers from the COVID-19 pandemic, White & Case's sixth annual Mining and Metals report asked 63 senior decision-makers across the industry how they planned to respond to the global energy transition and emergence of ESG as a major factor.

White & Case partners Rebecca Campbell, John Tivey and Oliver Wright worked on the survey.

They found environmental, social and governance was key to attracting investors and holding a social license to operate for businesses, with those focusing their attention on their ESG performance reaping the benefits.

Indeed, 24% of survey respondents listed ESG as the biggest threat to the sector, followed by resource nationalism, supply chain disruption and a Chinese slowdown.

"The opportunity for the sector is clear as end-users, especially those pushing energy transition agendas such as electric vehicle makers, want to be able to tell consumers that the materials they use come with impeccable ESG credentials," the report said.

"That's created the opportunity for the mining sector to position itself as a trusted partner in fighting climate change."

The increase in ESG-related nationalism raised expectation for miners to maintain a social license to operate amid rising tensions with local communities around the world.

Exposure to energy transition materials was the best way to draw in new investors, according to 20% of respondents while 37% reported that cutting their own emissions was the most effective way for miners to respond to climate change.

Increased recycling, 38% of respondents said, could help boost ESG credentials while 32% expected trade tensions to continue into 2023.

According to the survey, copper has been the best performer in 2022, with 31% of respondents tipping another year of outperformance for the metal.

Considered an economic bellwether, copper prices hit record highs in 2021, with the next best performers being lithium and uranium.

Tivey said while the industry was making great strides in terms of shedding its prior image, investors and regulators would hold it to the highest of standards.

"The evenly spread answers to the question about which area of ESG will face the most scrutiny demonstrates that miners need to make the correct decision in every element of the ongoing battle to reduce their carbon footprint," he said.

"If this is achieved, it is possible to envision an energy transition that is aligned with the ESG objectives that are now so fundamental to the operations of a modern mining company."