Modern Mining January 2023

COLUMNIST

where robots can now go instead. Some of the push back to this argument is that companies should be allowed to pollute in developing countries because this is simply part of what a ‘just’ transition looks like. Justice, however, is possibly best defined as reduc ing the divergence between social costs and private returns (the definition of negative externalities). Ensuring that companies internalise costs that were previously offloaded on those who could least afford the negative health implications of a destroyed envi ronment only seems sensible and just. Finally, ESG is not just some western imposi tion. It is an extremely useful lens through which to understand how firms and governments should think about the future. When we look back in ten years’ time, it would be extremely disappointing if we had

achieved an energy transition away from fossil fuels but had destroyed ecologies and livelihoods in the process. To reverse the resource curse and ensure a more liveable planet for all of us, every firm and every government with an interest in mining needs to work towards a global ESG standard that avoids the current confusion of different rating agencies measuring and weighting various metrics differently. Standards-divergence confusion notwithstand ing, it is increasingly clear that future access to capital will be increasingly contingent on one’s ESG credentials. In a recent intelligence report published by Good Governance Africa, the executive summary states the following: ’Asset management firms will be subject to rigorous disclosure requirements should they want to credibly market their funds as promoting sustainability. These rules are an attempt to regulate what is currently a disordered market, where firms are quick to employ the ESG concept for marketing purposes, but investors have no way of ascertain ing whether the claimed credentials are legitimate or verifiable. In our view, this regulatory trend towards preventing concept abuse is a welcome develop ment and will help to separate the wheat from the chaff in a world that is under immense pressure to achieve low-carbon growth. Early adopters of ESG principles – those who mainstream social and environmental responsibility into how the firm is governed – will see optimal long run returns. Those who engage in greenwashing or are too slow to adapt will suffer long-run decline.’ I can think of no stronger closing words, and trust that delegates at the 2023 Mining Indaba will take the message seriously. 

Every firm and every government with an interest in mining needs to work towards a global ESG standard.

Early adopters of ESG principles will see optimal long-run returns.

60  MODERN MINING  January 2023