YUGEN PILLAY: SA’s mining sector plays a key role in achieving UN SDGs

While there is recognition that mining companies need to transform their way of working to successfully implement environmental, social & governance (ESG) policies, only a few have understood the complexity of including these in the company’s overall strategy.

It is commendable that most companies are focusing on ESG issues, but this is only a reporting framework. The unfortunate part is many companies implement only the minimum ESG requirements to meet the UN’s sustainable development goals (SDGs).

The SDGs are a set of 17 global goals established by the UN in 2015 to promote sustainable development and address a range of societal issues, including poverty, inequality and environmental degradation. These goals must be achieved by 2030.

The mining industry, as a key economic sector that extracts and processes natural resources, has the potential to have a significant impact on the achievement of these goals.

The SDGs guide businesses and investors to embed sustainability into their strategies. They have become increasingly recognised as a requirement for responsible investment as the world shifts its focus more towards ESG issues.

Many companies do not see the benefit of implementing ESG policies as part of company strategy. Yet it is difficult for SA companies that do not implement ESG policies to attract foreign investment, as this has become a prerequisite for global investors and a measure of performance. 

Guidance on reporting by companies that support ESG in SA includes the King IV Report on Corporate Governance. To list on the JSE, companies are obligated to apply King IV and report on the application of King IV corporate governance principles and recommendations in their annual integrated reports.

Unfortunately, not many companies are providing full disclosure on ESG matters in their annual integrated reports and are therefore not seen to be making an effort to meet the SDGs aligned to their type of business.

Aligning corporate strategy with society’s needs

Given the growing emphasis on ESG performance, a wide range of voluntary and compulsory ESG disclosure requirements have emerged, both in developed and developing markets. Like the audit of financial statements, third-party (external) assurance is required to enhance the reliability of published ESG information.

Asset managers, pension fund managers and other investors and stakeholders need to know what companies are doing when it comes to ESG issues to achieve the SDGs. CEOs and other executives of companies must understand that SDGs and ESG assist in evaluating a company’s impact on society and the environment. At the company level, SDGs help align corporate strategy with society’s needs.

We need to remind ourselves that the UN designed the SDGs to be measurable, so that companies can hold themselves accountable for progress towards achieving them. The goals being measurable means a company can be scored for its efforts, giving a potential investor an indicator to invest responsibly by aligning their portfolio with the SDGs.

The mining industry can contribute to a more sustainable and equitable future for all by implementing sustainable and responsible resource extraction practices, promoting economic growth and development, and addressing a range of societal issues.

However, it is not that easy, as the mining industry also poses several challenges to the achievement of the SDGs, including environmental degradation, human rights violations and conflicts. It is therefore important for mining companies and governments to take a proactive approach in addressing these challenges.

According to Minerals Council SA statistics, the value of mining production reached over R1 trillion during 2021, a 12% real improvement on 2020. The industry contributed R480.9bn (8.7%) to SA’s GDP in 2021, compared to R353.2bn (7.1%) in 2020. Exports reached R841.6bn, 48% higher than 2020’s R557bn.

One of the main ways in which the mining industry can contribute to the UN SDGs is through responsible and sustainable resource extraction — SDG 12 is titled “Responsible Consumption & Production”. This goal calls for the sustainable use of natural resources and the promotion of environmentally friendly production and consumption practices.

In the mining industry, this can include implementing best practices for resource extraction, such as using renewable energy sources, reducing water and energy consumption and minimising waste and pollution.

Additionally, mining companies can work to ensure the responsible management of mine closures and rehabilitation to minimise negative impacts on local communities and the environment. This is a concern constantly raised by mining communities.

According to statistics SA, in 2021 a total of 458,954 people were employed by SA’s mining industry. This figure has remained relatively stable in recent years despite the Covid-19 pandemic.

The mining industry can also contribute to the UN SDGs through the promotion of economic growth and development. SDG 8, “Decent Work & Economic Growth”, calls for the promotion of sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all. This includes providing employment opportunities for local communities and promoting the development of local suppliers and businesses.

The mining industry can also contribute to the achievement of several other SDGs, including:

• SDG 1 (“No Poverty”): by reducing poverty and increasing income for local communities through sustainable resource extraction and economic growth; and
• SDG 13 (“Climate Action”): by reducing greenhouse gas emissions and mitigating the impact of climate change.

An example is coal mining companies’ involvement in the Just Transition from coal extraction and energy use to other forms of alternative energy. 

In conclusion, the mining industry has a significant role to play in the achievement of the UN SDGs. By implementing sustainable and responsible resource extraction practices, promoting economic growth and development and addressing a range of societal issues, the mining industry can contribute to a more sustainable and equitable future for all.

• Pillay is lead partner and director in business consulting at SNG Grant Thornton.