Steve Fiscor Publisher & Editor-in-Chief

This edition of E&MJ offers considerable coverage on environmental, social and governance (ESG) strategies. Almost every publicly held mining company, even coal mining companies, have an ESG strategy today. It’s not mandatory and the terms are rather difficult to define, but everyone’s doing it. Why? It’s the right thing to do and it bolsters a company’s image and the value of its stock. And, vice versa, not having a plan could be severely detrimental to a company’s image and its stock.

The term ESG was first coined in 2005. In the last four or five years, however, its use has expanded exponentially, seemingly supplanting sustainability. So too has another term, greenwashing, which relates to making deceptive or empty claims about ESG values. As this edition was going to press, the U.S. Securities Exchange Commission was launching an investigation into Goldman Sachs over its ESG mutual funds. In May, German authorities raided Deutsche Bank’s office in Frankfurt over allegations of greenwashing.

The shift to ESG has been brought about by financiers and stockholders. That’s especially true for the mining industry. A mine financier speaking at an American Exploration and Mining Association luncheon three years ago, said, “If you don’t have an ESG strategy, you will not get financing.” What’s a little frightening about this situation, however, is that it allows unelected and sometimes uninformed groups to rate companies on principles that do not have a defined regulatory meaning. Political extremists see it as a means for environmental activists and those with socially progressive views to advance an agenda without legislation.

That became clear last month when the S&P 500 ESG Index dropped the electric-car maker Tesla. To hear Tesla CEO Elon Musk call ESG an “outrageous scam” was an eye opener. Musk went on to say that ESG has been weaponized for phony social justice warriors. The S&P 500 Index said Tesla lagged its peers in several areas, namely carbon strategy, working conditions, and the handling of a regulatory investigation, and it stood firm on its decision.

ESG reporting and compliance is subjective and relies heavily on the company’s honest assessment. Therefore, it’s important to set an accurate baseline. Just like any other engineering study, benchmarking is key to understanding where a mining company stands. From that point, the company can show improvement by implementing various strategies. Readers will see there are a multitude of companies with tools to support those efforts.

Today, most mining companies feel like they have a handle on the G, and the E is a work in progress, but the S could be a wildcard. Mining executives should practice some restraint before setting overly ambitious future goals. With the criteria being a moving target, a mining company trying to do the right thing could be judged arbitrarily.