Waving the ESG flag

Investment were top of mind for shareholders. That has now changed, with more companies paying closer attention to the environment, social and governance (ESG) aspects, says Warren Beech, a highly accomplished and widely acknowledged mining, natural resources and infrastructure specialist at Beech Veltman Inc.

Beech says investors have come to realise the power held by the communities in which they extract resources, as these communities often determine the success of a project. He adds that if ESG is properly embraced, it has long term benefits across the spectrum, but cautioned against looking at it from a scorecard approach.

Beech says governance is equally as important as the environmental and social components. “It's sometimes left behind, not only at investor or mining company level, but also at governmental level, where governments do not implement transparent governance and regulatory structures, and that's a concern,” he commented. He advises investors to take a nuanced approach by considering the E, S and G aspects separately before doing so collectively, to make an informed decision.

Beech believes that CEOs should be responsible for a company’s ESG agenda. “The face and the voice and the narrative is always the chief executive officer. You need to listen to the CEO, supported by his or her board members and the role players, including the head of sustainability, the head of legal, head of risk, etc. For me, the CEO sets the tone, and if the narrative is not clear and it is not supported by all the key stakeholders, then it's difficult to understand what a company's ESG commitment is,” said Beech.

The mining expert raises concern that while ESG is trending globally, there is a risk of the acronym becoming a buzzword that’s just bandied about.

“ESG, when applied properly, plays a vital role in growth, development and the longevity of a business, to the benefit of all stakeholders. It's important for the health of the business and for the sustainable future of any business. “The biggest risk is that everybody is now trying to get on board because it is perceived as the current trend rather than a key component of a successful, sustainable business. I think we need to just go back to basics, look at the three components and report on those and show compliance in a comprehensive way.”

The conversation wraps up with Beech’s insights into South Africa’s energy crisis, the impact that has on ESG compliance, and the broader commitment to the energy transition towards a green economy.

He sadly admitted that coal, considered “dirty energy”, will probably be around longer than expected, forcing a review of the timelines set to drastically reduce emissions by 2030, even though some mining companies are committed to sustainability and making the costly move to cleaner energy.

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