Deloitte points to 'sea change' in mining sector ESG reporting

The solar installation at Sandfire Resources' DeGrussa West Australian copper mine was a first-mover for renewable energy use in an off-grid mining application. Source: Sandfire Resources

As superannuation funds struggle with "imperfect" tools to assess climate risk, a Deloitte expert says miners have undergone a "sea change" in how they analyze and report data to aid those investment decisions.

Climate change's compounding impacts "across the enterprise" of mining is driving a "growing need to seamlessly integrate emissions data with a company's operational and financial data," according to Deloitte's latest annual Tracking the Trends report issued Feb. 1.

The report came as research and shareholder advocacy group the Australasian Centre for Corporate Responsibility, or ACCR, said in a same-day report that Australian superannuation funds divesting high-emitting coal investments are not achieving real-world emissions targets.

While ACCR Climate and Environment Director Dan Gocher said in an interview that funds are setting emissions targets "based on metrics which aren't conclusive," Deloitte said predictive analytics can help miners, for their part, understand the impacts of climate change on both societies and their operations.

Deloitte's report said miners can proactively recognize likely emissions generated from assets over their life cycle by assessing their current baseline and setting targets using historical data. This will make it easier to "harmonize decarbonization efforts in primary operations, reexamine asset portfolios to identify opportunities for carbon reduction, and determine which technologies to invest in."

Miners need to develop "deep-dive" emissions plans for specific assets and mine sites involving site power, material movement electrification and processing, Deloitte said.

The company highlighted efforts already underway by enterprise resource planning, or ERP, providers such as SAP SE and salesforce.com inc. to help miners access real-time data essential to understanding the trade-offs they need to make between emissions reduction, financial resources and productivity.

'Sea change' in reporting

Deloitte Australia mining and metals leader Ian Sanders told S&P Global Market Intelligence that "what is being reported today from three years ago has been a real sea change, and each year organizations will be positioning themselves to be climate change leaders in terms of what they report."

Yet, he cautioned that "the information and intelligence coming out of the ERP systems is nowhere near as advanced as organizations would like."

Miners are therefore working with software providers and others to accelerate the gathering of that intelligence so they can report "more reliable information to the investment community and make better decisions themselves," Sanders said.

As an example, Deloitte's report said the company explored options to integrate emissions data into an unnamed miner's ERP, generating a collection of papers that helped guide the executive team and board on a global strategy, leading to the creation of an internal fund to help accelerate the deployment of abatement projects.

More miners are setting targets to reduce emissions, and Gocher believes that over the next five years "the real [mining] leaders will start to make much bigger gains than what they've set their targets at."

"A lot of the mining sector is coming to the table to reduce emissions," he told Market Intelligence, adding that he has been surprised by the number of companies looking at putting in solar installations in their remote locations to power their mines.

Elizabeth Gaines, CEO of Fortescue Metals Group Ltd., whose operational emissions have risen since fiscal 2018, told Market Intelligence that "as an industry, we are seeing an increased interest from stakeholders, including the investment community, on environmental, social and governance considerations."

In 2020, the company set a target of net-zero operational emissions by 2040, which Gaines said is underpinned by a pathway that includes its US$700 million investment in the Pilbara Energy Connect, or PEC, project and partnership with Alinta Energy (Australia) Pty. Ltd. on the Chichester solar gas hybrid project. These will power around 25% of Fortescue's stationary energy requirements by solar.

Gaines said the PEC's major benefit is its ability to support the incorporation of additional large-scale renewable energy at any point in the integrated network.

Though Deloitte's report spoke of a "trust deficit" with investors, the workforce and local communities, Sanders said miners are "more open and transparent than they've ever been" about "real initiatives" in talks with investors where climate is invariably front and center.

With the sector looking to change its global footprint and improve its image through technology, supply chain accountability and collaboration, Sanders said "there's more of that going on than you would potentially read, and is one of the strengths of the mining sector in the past two years."