It’s fair to say mining companies have a tough job on their hands at the moment as they seek to build trust with their stakeholders. Investor confidence in the sector has ebbed following the Brumadinho disaster. Demands from host governments and communities for operators to demonstrate shared value are growing, and there is a rising tide of concern over climate change impacts and responsible mineral value chains.
There has never been a more critical time for mining companies to refocus their efforts on sustainability reporting, which – if done right – can actively support corporate strategy and risk management, while also helping to strengthen relations with key stakeholders.
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In nearly 15 years of producing sustainability reports and integrated annual reports for the industry, we’ve developed some best practice rules that might help – whatever stage you are at:
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1. Tell your story, don’t tick boxes
Your report should clearly convey the unique story of your sustainability journey to external audiences. Don’t be overwhelmed by the plethora of external reporting requirements – which range from general sustainability reporting standards through to numerous issue- and mining-specific frameworks. While these are a vital resource for guiding your reporting efforts, it is equally important to understand and communicate what differentiates your organisation – with a focus on unpacking the issues that matter most to your stakeholders.
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2. Focus on the process as well as the report
In many respects, the sustainability reporting process is more important than the final report itself. Indeed, much of the true value from reporting is realised when the process is integrated into a broader, multi-year approach focused on improving management systems and driving sustainability performance (including impacts, risks and opportunities). In addition, by taking a frank approach towards areas of weak performance – and acting on those areas – you can clearly demonstrate that your reporting goes beyond PR.
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3. Stakeholders should shape your report, not just read it
The most effective reports are sharply focused on the issues that matter most to an organisation’s stakeholders – ranging from host governments to shareholders. Therefore, you should underpin your reporting approach with a structured materiality assessment – including direct engagement with key internal and external stakeholders. The outputs from this process will provide a robust, company-specific framework around which to structure your report – while demonstrating high levels of responsiveness to those who matter.
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4. Identify and understand your audience(s)
It is equally important to understand who you are communicating with – and why. Otherwise, your report can end up becoming overly lengthy and impenetrable – and may fail to fully address the (sometimes competing) interests of your stakeholders. Producing supplementary, standalone reports can be used to bridge the gap between more standardised, investor-focused reporting by telling highly tailored, company-specific stories and addressing distinct issues of stakeholder concern. This can include in-depth insight into company actions to address material issues for mining stakeholders such as carbon management, water stewardship, tax transparency and tailings management.
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5. Analyse impact as well as output
Stakeholders are increasingly seeking to understand the full spectrum of the mining sector’s positive and negative impacts. Most notably, this includes the investor community, which continues to explore ways to integrate environmental and societal impacts into their commercial valuations. While a single, widely-adopted impact assessment methodology is yet to emerge, leading mining companies should take proactive steps to better understand and communicate their own impacts to stakeholders. This could include in-depth analysis of the direct, indirect and induced economic impacts generated from your creation of jobs, social investment activities and your value chain – as well as unpacking how these impacts support your social licence and broader corporate strategy.
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6. Understand your external context
You can add significant contextual value to your report through strategic analysis of your external operating environment. This helps stakeholders evaluate how well your company is responding to key strategic dynamics facing the sector. Take climate change as an obvious example. The mining sector sits at the heart of the global energy transition. On the one side you have the electric vehicle revolution supporting cobalt and copper demand, while on the other there is tightening carbon regulation and increasing pressure to reduce thermal coal production and consumption. It is not sufficient for miners to only report on their emissions to air. Stakeholders are focused on the steps you are taking to adapt your strategy and business model to these new realities.
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7. Move from ‘traditional sustainability’ towards ‘business sustainability’
Leading companies should broaden and deepen their vision of sustainability to ensure their business delivers long-term value for their stakeholders. This is particularly vital for the mining sector, given the inherent challenges around the conversion of finite resources into sustainable and shared value. This can be supported through the development of a fully integrated annual report (i.e. a single report that ‘de-silos’ your financial, operational and sustainability performance to focus on whatever is most important). The process of producing such a report can be used to drive integrated management and decision-making across your organisation – in support of long-term value-creation.
While all of the 7 steps listed here will help support your reporting journey, the transition towards integrated reporting should be the long-term goal for all mining companies seeking to realise the true strategic potential of the sustainability reporting cycle. It’s just a question of how and when you get there.