esg-reporting-challenges-in-the-metals-and-mining-industry
Article
Sustainability Reporting

ESG in the mining and metals industry: reporting challenges

March 18, 2024

The metals and mining industry plays a key role in supplying the raw materials needed for the global energy transition. Paradoxically, the sector has been undermined by underinvestment. Simultaneously, industry watchers are bracing for a chronic supply shortage due to come as demand ramps up for metals and minerals to produce batteries and renewable energy technology.

At the same time, mining companies are facing pressure to decarbonise from within but still lag behind in terms of net-zero commitment. As it tries to find its footing in supplying the energy transition while minimising a negative footprint, the industry is not spared from investor demand for ESG. The challenges of ESG reporting for the industry are characterised by a complex and isolated value chain and a lack of industry-specific standards for ESG data and reporting.

Supply chain transparency

Mining supply chains are a complex network of upstream and downstream activity. They stem from small to large-sized players and include extraction to processing, transportation, and market delivery. These operations span the globe and take place in remote locations - often in developing countries with weak institutions. Especially here there is less incentive and more roadblocks to end-to-end transparency.

The industry is notorious for human rights abuses and precarious working conditions sometimes in conflict zones. The industry average score on human rights is just 19%.

Information on human rights issues at the mine-site level is greatly lacking. Only a third of mine sites reported a grievance mechanism for communities and workers. With no formal institutions in place to report, record, and monitor issues, traceability and transparency becomes elusive.

Lack of industry-specific guidelines

There is no specific guidance on sustainability reporting for the metals and mining industry. The most widely used reporting standard in the mining industry is the Global Reporting Initiative (GRI) Standards as an ICMM (International Council on Mining and Metals) member requirement.

Although the GRI Standards is generally applicable across industries, it does not capture the range of variances in the entire mining value chain. Although it operates on the principle of materiality that allows companies to focus on the issues that matter to the business, matching these to relevant GRI indicators is still a challenge.

There is also a distinction between corporate-level disclosures and site-specific disclosures. Differences between the two can vary wildly as each site has different stakeholders and impacts, resulting in different sets of disclosures. At present, since there are no requirements or guidelines on site-specific disclosures, mine-site-level reporting is lacking. Unfortunately, most impacts occur at this level and hence go unreported.

What can companies do?

Strengthening mine-site level reporting is key to improve reporting quality. Companies need to dedicate resources and train site teams on ESG data collection and reporting. Also having systematic due processes such as grievance channels to address issues will enhance the quality of the data and disclosures.

Industry benchmarks can be useful references. For example, the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, addresses conflict in the extractive stage, and the Responsible Mining Index which ranks large miners on human rights practices.

The ICMM’s Mining Principles are directly relevant for the metals and mining industry. Mine-site level disclosure and third-party verifications are outlined in the Principles of the International Council of Mining and Metals.

The Initiative for Responsible Mining Assurance (IRMA) audits miners to assess environmental and social performance. The Responsible Mining Initiative offers a Conflict Minerals Reporting Template that helps to increase transparency on the mineral origin and the smelters and refiners that it passes through. Companies should utilise these resources to form a reporting framework that makes sense for them at the corporate and mine-site-levels.

How we help you

  • We guide you through the various sustainability benchmarks and frameworks to understand which works best for your business.
  • We simplify the collection of ESG data in your organisation by offering one central platform to automate data collection with integrations into ERP, HRM, CRM, EMS etc.
  • We facilitate data collection from your suppliers, contractors, and tenants, ensuring relevant information arrives in a complete and accurate manner. We will handle the burden of information exchange with multiple stakeholders.
  • We help you complete the information requests from investors and guarantee the protection of business-critical information, for example about sensitive business strategies.
  • We conduct risk assessments of your value chain and set up a grievance mechanism that will automate the flow of data to our analytics platform.  

Resources

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