ESG Issues Discussed Prominently at Mining Conference

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas) --Environmental, social and governance (ESG) issues got a lengthy hearing February 27 when a keynote session titled "Embracing ESG to build trust in mining investments" opened the annual conference held by the Society for Mining, Metallurgy & Exploration (SME) (Englewood, Colorado).

The conference, held in Denver, drew more than 6,100 attendees and over 585 exhibitors.

For years, ESG has been advocated, generally by Democratic and left-leaning groups, but more recently powerful institutional investors as well as some industries have embraced ESG criteria as a better way to ensure businesses operate for the long-term benefit of all stakeholders. For more on that, see April 12, 2022, article - Oil & Gas Companies Detail Benefits of Integrated ESG Strategy and March 3, 2021, article - Mining Companies Urged to Adopt 'Stakeholder Capitalism'.

Republicans and conservatives have begun pushing back against ESG as investment criteria. Last summer, 19 state attorneys general sent a letter to BlackRock Incorporated (NYSE:BLK) (New York, New York), a very large asset manager that has long been advocating for greater consideration of ESG factors in investment criteria. The August 4 letter, addressed to BlackRock Chief Executive Officer Larry Find, asserted that his company and other institutional investors have been making directing investor funds based on factors other than maximizing financial return.

Around that time, Vivek Ramaswamy, executive chairman of Strive Asset Management (Columbus, Ohio), launched an exchange traded fund (NYSE:DRLL) that would only invest in energy companies that made decisions based on shareholder returns, without considering ESG issues. For more on that, see August 12, 2022, article - Asset Manager Pushes Back on ESG Narrative.

The DRLL fund notched some impressive preliminary gains in the market, which emboldened Republican state officials to swear off doing business with financial firms that considered ESG factors in their decisions. For more on that, see December 6, 2022, article - Fund Pushing Back on ESG in Oil Patch Finds Profits in Kindred Souls.

More recently, Ramaswamy announced he was running for president on an economic populist platform.

All that framed the February 27 SME panel discussion, where none of the panelists was a doubter. "ESG is a framework that measures risks," said Aiden Davy, chief operating officer for the International Council on Mining and Metals (ICMM) (London, England). "The anti-ESG movement echoes (Nobel Prize winning economist) Milton Friedman from 50 years ago," who memorably wrote that the only social responsibility of investor-owned businesses was to increase profits.

The political and ideological opposition to ESG in the U.S. comes from those who see it as a smokescreen and as virtue-signaling, Davy continued.

But he asserted there was a "strong and sound link between ESG and the ability to attract investment and deliver returns," he said.

He added that while ESG opponents want BlackRock and other institutional investors to slow down on ESG, ESG supporters want that effort to accelerate.

Another panelist, Casey Nault, senior vice president, general counsel and chief ESG officer for Coeur Mining Incorporated (Juneau, Alaska), said, "When the owners of the company say, 'These are my priorities,' you have to listen to them because the owners of the company are telling you what's important to them."

"We don't see any slowdown or watering down of ESG on the horizon," he continued, adding that mining companies have had to manage environmental, water and stakeholder issues for some time.

Naught told conference attendees that "there has been a lot of heat and light on the 'E' and 'S' aspects of ESG, but we're hearing from a lot of investors about governance," the 'G' in that acronym. In particular, he said, "investors like that we are tying incentive compensation to hitting ESG goals."

The panelists seemed to regard ESG an evolution of "social license to operate" and "stakeholder capitalism," pressures that have swirled around mining companies and other industrial firms for years. For more on that, see September 124, 2012, article - Mining Profitability and Viability Shaped by 'Social License to Operate,' say Conference Attendees.

Ryan Bond, the third SME keynote panelist, brought an insurance industry perspective to the February 27 panel discussion. The head of climate and sustainability initiative at https://www.marsh.com/us/home.html Marsh (New York, New York), an insurance and risk management giant. He said "insurers are only getting started" on ESG, and that he has noticed "some challenges integrating ESG criteria into a company's operations." But he added that Marsh was trying "to stimulate a broader discussion about the importance of ESG" among insurance and risk-management companies.

He called for "greater clarity on ESG standards and outcomes for investors and stakeholders. Today, there are a lot of Black Boxes around ESG, which insurers don't like."

But he acknowledged that ESG "will come at some point." Bond said most of the challenge is in the U.S., with its "pitched political debate." Insurance and re-insurance firms are global, he said, and they operate in areas outside the U.S., where the debate is not nearly as fraught. "The political debate in the U.S. simply delays ESG implementation," he said.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).