Deloitte report details mining industry’s growing deficit of trust
Deloitte’s annual mining trends report highlights the industry’s growing issues with stakeholder trust. Enhancing governance and ethical practices will be one remedy, but a meaningful move towards environmental sustainability likely holds the key.
In its most recent annual mining trends report, global Big Four professional services firm Deloitte has focused in on a pressing industry matter: the issue of eroded stakeholder trust. And with public sentiment at an all-time low in Australia following Rio Tinto’s wilful destruction of tens of thousands of years of indigenous heritage at Juunkan George, Deloitte argues that winning back trust will be an industry must, including getting serious about sustainability and decarbonisation.
“Miners need to rebuild trust among stakeholders, including investors, the workforce, and the local communities, as success in the future will be based on factors beyond just financial performance,” said Deloitte Australia’s Mining & Metals practice leader Ian Sanders, who has been with the firm for over thirty years and contributed to the global report.
The industry, Deloitte contends, sits at a critical juncture. While looking beyond the road-bumps of Covid-19, the Deloitte report considers the mining industry as a possible key-holder to a lower carbon future through many of the minerals it mines, yet notes that it’s also starved of capital. Similarly, it has the potential to create widespread meaningful employment, but often fails to attract top-line talent. These contradictions can be in large part attributed to the ongoing deficit of trust.
Covering ten particular minds trends with the overarching theme of rebuilding trust among a wide array of stakeholders, including insights into adapting work culture and developing the next generation of integrated safety systems, two of the trends delve straight into the likely heart of the matter; decarbonisation and the industry’s role in the transition to a clean energy future, with the public putting ever more pressure on miners and investors for environmentally sustainable solutions.
Sustainability
Co-authored by Adelaide-based Financial Advisory partner John O’Brien, the section on decarbonisation suggests its time for mining companies to move beyond strategy and on to execution, with a reminder that industry players should recognise the correlation between stakeholder sentiment and company valuation; “Companies that fail to commit to a decarbonisation agenda could find their share prices affected, which strengthens the case for decarbonisation.”
As to enhanced decarbonisation initiatives, three areas of advice for miners include the integration of emissions data into ERP systems to gain better real-time insights into the trade-offs between emissions reduction, productivity and finance; improving product traceability and associated carbon footprint data on metals and minerals, with upstream manufacturers and retailers now keenly assessing their supply chains; and for miners to consider their own value-chain partners as well.
Beyond their own immediate emissions, mining companies should also be sharpening their strategic planning on portfolio diversification, Deloitte says, with a significant opportunity ahead to rebuild trust by supplying the critical and green minerals required for the transition to a cleaner energy future – such as with the growing demand for copper and nickel among other promising commodities. Naturally, winning back trust would still require ethical and sustainable mining practices.
