|An underground truck exits the Ellesmere portal of Kirkland Lake Gold Ltd's Fosterville gold mine in Victoria, Australia.
Source: Kirkland Lake Gold
Acknowledging that environmental, social and governance principles are increasingly important to investors, gold companies are increasing their efforts to stand out in those areas as they try to appeal to a broader investor base.
The growth of ESG investing is increasing scrutiny on many companies, and parts of the mining sector bring a complicated history to the topic. During a virtual conference in late-September, gold companies large and small touted their ESG credentials, although a recent report concluded that miners have more work to do when it comes to sustainability.
"At Newmont Corp., we have a fundamental belief that strong ESG performance is essential for delivering sustainable, long-term value all of our stakeholders," Newmont President and CEO Tom Palmer said during Gold Forum Americas. He touted Newmont's efforts to prevent fatalities and injuries, achieve gender parity among executive directors, reduce water consumption and more.
Peter Marrone, executive chairman and founder of Yamana Gold Inc., said a commitment to ESG principles and tracking was one of six core considerations a gold miner must make in its investment case. In interview sessions hosted by the conference, executives with smaller gold companies such as Caledonia Mining Corp. PLC and GoGold Resources Inc. touted the benefits their companies offer to communities in Mexico and Zimbabwe.
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"We do welcome the increased scrutiny on these non-financial areas. We feel we've got a lot to offer," Caledonia CFO Mark Learmonth told S&P Global Market Intelligence, adding that there could be more done by the company to share its ESG stories.
A Sept. 23 joint report of the Responsible Mining Foundation and the Columbia Center on Sustainable Investment at Columbia University concluded that as a whole, the mining sector is falling short of the United Nations' Sustainable Development Goals, or SDGs, a common metric related to ESG themes. A news release about the report, which examined 38 large-scale global mining companies, said while many large mining companies list the goals in their sustainability reporting, much of the effort is "purely cosmetic."
The report said there are some good practice examples in the mining sector, including regarding educational and partnership goals. It also states that the industry is doing poorly on several measures, including gender equality, health and water issues. No company is taking strong action on all 17 of the UN's goals.
"It is heartening to see many companies showing attention to the SDGs to some degree, given the developmental context within which so much mining takes place," the report states. "Integrating and reporting on the SDGs, however, is still not the norm, though good practices are seen among a few companies."
The World Gold Council, a market development organization for the gold industry that counts some of the largest miners of the commodity among its members, released its own report on the gold sector's contribution to UN Sustainable Development Goals this month. The organization released the Responsible Gold Mining Principles in 2019 to codify sustainable practices within the industry. The new report documents several "notable contributions" the gold sector has made to the 15 goals that it said are relevant to the sector's sphere of influence.
"The SDGs are becoming increasingly urgent as 2030 inches closer," World Gold Council CFO Terry Heymann wrote in the report's foreword. "The SDGs are a roadmap to a better, more sustainable future."
In another letter in the World Gold Council report, Lisa Sachs, director of the Columbia Center on Sustainable Investment, calls on companies to take a data-driven and transparent approach to sustainability goals.
Mark Fellows, director and co-founder of Skarn Associates Ltd., said bridging the gap between a technically driven approach to minerals economics and what he said has traditionally been a more subjective approach to ESG metrics is critical for mining companies. ESG ratings for the same firm can often vary widely, Fellows said.
Fellows told attendees of the gold conference that Skarn is working to provide less subjective ESG measures. He said there has already been some progress made by the industry, and he sees signs of opportunity on at least one topic at the front of many ESG investors' minds: climate change.
"This is an industry which is really managed and pushed forward by risk-takers, by innovators and pioneers — by people who are not afraid to go to difficult environments and do something challenging," Fellows said. "I think that the gold mining sector, therefore, has a natural role in a zero-carbon energy revolution and ultimately, we're going to turn this threat into an opportunity."