Commentary: Approaching the sustainability trend

Companies need to continually reframe business practices in order to survive as markets, technology and expectations change. More specifically, miners need to consider the many other complexities driving the widespread and growing criticism of the industry’s environmental and social impacts.

How mining companies respond to these challenges will affect their competitiveness, and perhaps even their survival. Addressing the shifts in social realities that are defining the marketplace has manifested itself in varying forms of corporate social responsibility. It’s clear that miners see sustainability as a strategic issue, but for some companies it can seem too overwhelming to start, while others are launching initiatives without any overarching vision or plan.

In a recent Harvard Business Review article, David Lubin and Daniel Esty look to previous game-changing mega trends to map out the new sustainability imperative. They say that “all business mega trends have features and trajectories in common. Sustainability is an emerging mega trend, and thus its course is somewhat predictable.” They look at how firms have won in prior mega trends, such as globalization, and explain how it can help companies craft strategies and systems to gain advantage. It requires a fundamental and persistent shift in how companies compete, and they say sustainability is an “inescapable strategic imperative for corporate leaders.” In mega trends, companies adapt and innovate, or are swept aside.

To further understand this trend and the importance of sustainability reporting, it is also compelling to go inside the minds of a group of influential individuals known as the “millennials.” They are aged 17 to 35, and they have a drastically different outlook on what they expect from organizations. According to the World Bank there are 1 billion millennials around the globe, and they are the first generation to grow up “inherently digital.” They are a group that has information at their fingertips, and they expect two-way dialog from organizations. For businesses to realize success and manage social and environmental risk, this new generational paradigm and its trending behaviours need to be taken seriously.

According to a global survey by Edelman, 87% of global consumers say they believe businesses should place at least equal weight on society’s interests as on business interests. The survey found that people in rapid growth economies — including China, India, Malaysia, Indonesia, the United Arab Emirates and Brazil — expect to engage with brands and corporations on societal issues. And when asked what causes they personally cared about, top-ranking causes globally were: improving the quality of healthcare, protecting the environment and ensuring access to safe drinking water. Top-ranking causes in the U.S. were alleviating hunger and homelessness, improving the quality of healthcare and supporting human and civil rights. Knowing the different perspectives around the globe can lead to an even greater return on your investment with your sustainability efforts. But ultimately, the new culture for mining companies is to promote a healthy economy and a healthy society, and preserve a healthy environment for future generations.

With expectations for the scope, depth and quality of information rising, meeting these expectations will require new collaborative creativity with extensive and ongoing engagement from the front lines. But sustainability should be a staged evolution into your overall business strategy. Typically, businesses start by focusing on risk mitigation and cost reduction, and over time they develop strategies for increasing value. Eventually, companies can differentiate value propositions through new business models that enhance corporate culture and brand leadership, and sustainability becomes a competitive advantage.

For miners, the focus should be on conducting and communicating efforts in a way that garners trust and generates positive reputations among stakeholders.

Here are six key factors that will make your sustainability strategy credible:

1. Clearly identify the impacts of your operations. Companies should be sure to include, in detail, the impacts of materials such as explosives, energy supply, water use, emissions effluent and waste, tailings, impacts on ecosystems and habitat, wildlife and species at risk and issues associated with reclamation and mine closure.

2. Reach out to your stakeholders and listen to their concerns about the impacts. Gathering this collective intelligence is perhaps the most effective reputational risk management exercise. What is most important to them? This will help you develop and define the scope and focus of your efforts.

3. Develop a company policy. Be clear about your approach and what is going to be included. Include a description of your internal management and governance systems and identify your priorities. For example, there may be a number of local farmers concerned about water supply. What exactly are they concerned about, how did you engage with them and how are you addressing their concerns? Be specific. The International Finance Corporation’s performance standards on social and environmental sustainability provide the most widely accepted framework.

4. Clearly state how you will measure your sustainability program. If you can’t measure it, you can’t manage it. Use things like sustainability scorecards and metrics that identify qualitative and quantitative, and short- and long-term goals. If you operate internationally, it should include broad global issues with local targeted solutions. Show commitment and take it seriously.

5. Put in place a third-party auditing system. Auditors should identify areas of improvement and the next steps. Were you operating in full compliance? Did any environmental incidents occur?

6. Put all of this together in a clearly articulated report that is available in ways that engage. This report is the evidence and communications piece for your stakeholders.

Some form of sustainability reporting is already a requirement for many member associations in the industry. The days of mandatory reporting and more stringent regulations are just around the corner. There are limitations to resilience if companies are not improving their capacity to meet needs. Going forward, firms with a clear vision will come out ahead.

— Megan McIver is the president of Toronto-based Verona Com­mu­nications. For more information, please visit www.veronacommunicationsinc.com .