Mining with principles

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Tom Butler
CEO

With an increasing focus on stakeholder engagement, we need to show our commitment to mining with principles

The CEO of one of our member-company joint ventures, which runs one of the largest mines in the world, recently told me that he spends only 20% of his time managing the mine. The remaining 80% is spent managing issues “outside the fence”.

Much of the work that he does outside the mine comes under the broad term ‘stakeholder engagement’, which is a common thread running through this year’s Global Leadership Report.

Stakeholder engagement is becoming more important as society’s expectations of the mining sector continue to evolve at an ever-increasing pace. The social contract used to be that companies should look after their employees and shareholders, pay their taxes, and do no harm to the environment and surrounding communities.

Today, the social contract is much more complex. Solid environmental performance is taken as a given. But companies are increasingly expected by society to have a social purpose and ’do good, not just well’.

The recipe to achieve this is complex and the mix varies from site to site, and country to country. But in my view, it involves a number of key ingredients: active participation from communities in the development stage; a proactive approach to tackling climate change; and a focus on responsible supply and addressing issues in the supply chain such as human rights.

The best-performing companies deliver these ingredients through the successful management of multistakeholder partnerships.

The bedrock of stakeholder engagement is trust. To earn and maintain trust, we have to communicate our purpose, but also be seen to deliver on it. This is easier said than done in today’s world of shifting values and disruptive technological change.

Edelman’s 2017 Trust Barometer found that trust in leaders had plummeted. This year’s barometer acknowledged that, while trust in CEOs had increased slightly, the enduring sentiment was “a world of seemingly stagnant distrust”.

This is the backdrop to the additional challenge that we have in our sector of legacy issues around how mining companies used to work, which still impact on how we are trusted. As the saying goes, “trust arrives on foot, but leaves on horseback”.

It has been estimated that 50-60% of a company’s reputation is driven by the reputation of its peers. Therefore, if we want to improve trust in the mining sector, we have to work together as an industry – and along the value chain – to show that we work to principles that are aligned with society’s expectations.

Such collective action is already happening in numerous areas. For example, the industry is collaborating with customer-facing companies that are under pressure to show that their products do not include metals that have been produced by children or affected by any of a number of other important environment or social issues.

To give another example, ICMM members have committed – with significant input from Worldwide Fund for Nature and other stakeholders – to an agreed set of principles around the use and management of water, designed to minimise negative impacts on other users and encourage performance improvement by companies.

It is now no longer enough to say that mining will supply the metals needed for modern lives. We also have to show that the metals needed are mined with principles.

With the ever-increasing demand for metals to help the world decarbonise, and with developmental targets such as the Sustainable Development Goals, it will be more important than ever to make sure that metals are mined responsibly. This means respecting the environment and the communities near both existing and as yet untapped deposits, and bringing tangible benefits to the economies and societies in which miners operate.

There are many outstanding examples of where the mining sector is playing a leading role in addressing the big issues that face us all. We need to share best practice with each other to drive up the standards of everyone in the industry – and we need to publicise our successes and communicate our commitment to mining with principles.

And last but not least, we need to deliver consistently on those commitments.