ESG, Part 1: From the Ground Up ESG, Part 1: From the Ground UpBy Melissa Sanderson | Mon, 04/25/2022 - 13:00
In this first of four articles on the subject of ESG, I am starting, literally, from the ground up. By this, I mean that ESG activities must begin as potential opportunities are being bandied about in a company’s headquarters. When a decision is made that a prospect looks sufficiently interesting that company geologists will be sent to the field, that exploration team should include an ESG expert.
Think of it as exploring the social ground to find opportunities and areas of potential risk, just as the geologists are doing with the deposit. As they map the nature and extent of a deposit, the ESG expert(s), through contact with local residents, can map various factors that should form part of the corporate decision-making matrix, including but not limited to:
1. Who is currently using the land and for what purpose.There have been high-profile examples of companies running afoul of Indigenous sacred sites, with attendant high-negative PR and cost consequences. Identifying in advance such important items as a local burial ground (not always conveniently marked with headstones) or an initiation area for young men or women can make a vital difference in the long-term success of the mine. By incorporating this information into the mine planning process from the very beginning, decisions can be made about whether to exclude some areas entirely (and the cost ramifications such a decision would imply about the viability of the mine) or what sort of technology might be applied to extract resources without disturbing the ground sites.
Other factors can be just as crucial, however, even if not as immediately attention-getting. For instance, if there is a stand of trees whose bark or leaves are being used by traditional healers or midwifes, or perhaps a collection of bushes whose berries, when crushed, are a potent anti-diarrhea treatment. Destroying such places can not only sour relations with communities, they can seriously affect the health of the residents – Indigenous or otherwise.
2. Local knowledge of other important issues, such as seasonal (or permanent) water flows and fluctuations, migratory species and their established routes through the potential concession, and endangered flora or fauna.Mapping these sorts of elements by working with the local communities not only can build trust and stronger relationships, it can save mining companies time and money by having to hire consultants to prepare studies needed to satisfy increasingly stringent environmental reporting requirements. Should local government agencies not be willing to accept the information from this source, it nonetheless can be helpful to consultants to have a basis from which to begin a systematic analysis. And, once again, having this information at this preliminary stage can play into mine planning and development.
3. Sharing information with local residents as early as possible can help defuse tensions.In my experience, most exploration geologists know that there are eyes behind the trees or rocks, that they are being observed even if they never or rarely see anyone. In many cases, knowing that strangers are in the area with tools and equipment leads to speculation – mostly negative. Early and transparent communication can, in at least some instances, help diminish or defuse hostility. This is the fundamental principle of the Prior Informed Consent doctrine that, although written specifically with Indigenous peoples in mind, applies equally to any communities that will be near a mine site.
4. This is also an opportunity to begin exploring local needs and tempering expectations, which often far exceed the benefits that any modern mine could deliver.For instance, an American mining company was planning to develop a project in Africa, in an area that had been mined previously by a government-owned company. Because the government company had provided free housing, groceries, schools and a hospital for employees – which numbered over 10,000 people – expectations were running high that the good times were back and the American company would do even more for the workers. It was quite a challenge to manage those lofty expectations. It also is an opportunity for the company to begin considering what programs it might deliver, and build the cost of those into the project development budget from the very beginning, rather than treating ESG-related programs as drains on the operational budget of the mine itself.
5. Finally, the ESG team could begin building bridges and sharing information with local politicians.This also is both a fact-finding and expectation-managing exercise. Understanding what sorts of programs or activities politicians might be expecting from the mining company, and beginning the initial considerations of what could be both affordable and legal, is also an important element in developing an understanding of the true cost – in resources and personnel – of the ESG aspects of the project. Finally, these contacts also can serve as an essential opportunity to begin introducing the national and local politicians to the very important constraints of Western law, such as the Foreign Corrupt Practices Act.
In my next article, I will be taking a look at some important aspects of the “E” in ESG, followed by similar dives into the “G” and finally the “S.”