We live in strange times, and global warming and climate change have finally gained broad acceptance.
The extreme weather being experienced everywhere makes it pretty difficult to deny; and therefore, decreasing carbon levels is necessary and being taken seriously.
However, there’s a huge challenge, including how to mine the necessary minerals to achieve the products that will decrease dependency on the world’s present emission-laden products. Extracting these minerals will increase emissions, so therefore, how does one achieve lower emission levels? It’s a paradox to be sure.
Then of course, the war in the Ukraine has increased the need for energy – and it’s become more political than ever (not to mention it’s now a weapon of war).
ESG is exhausting. While many companies have made significant strides, ESG, including the acronym, has become politicized to the point where many don’t see the benefits, whilst doing their level best to comply with all that is required.
With over 32 standards and frameworks worldwide, it’s no wonder companies are experiencing ESG fatigue. However, tools like the Onyen ESG reporting software are available to finally tackle the requirement to measure performance, which sets the bar even higher.
Next? The TCFD (Task Force on Climate-related Financial Disclosures). The TCFD is most likely to become mandated in many jurisdictions – including Canada and the UK – and will impact not only mining, but finance, banks, fund managers, insurance companies… You name it, it’s going to impact it.
This means they will need to have data. Lots and lots and lots of data. So where will they get it?
The ISSB was established out of COP26 in Glasgow 2021 to develop a global set of disclosures for the capital markets. With the extractives industry literally going bonkers trying to follow over 32 separate standards (including the new ones coming out of the ICMM), depending on where you are in the world, the TCFD will be mandatory and it’s supposed to make life a little easier. The World Gold Council, the G7, and the G20 have confirmed it. Certainly, the institutional investors and financial sector is pushing it as well to manage their risks and to administer their investments on behalf of their customers.
One of the areas where the ISSB will have a huge impact is on water measurements and their definitions. What does this mean? More confusion. Why? Presently the two main standards founded to the TCFD are SASB and the CDSB. Now that they’ve amalgamated, we have the IFRS S2 standards. While mostly focused on GHG, the areas of how those emissions affect water isn’t really being understood.
Some creative responses have occurred in meeting this gap – take BHP’s Blue Carbon Breakthrough Grant project. It’s helping towards the development of “biodiversity credits” along the lines of “carbon credits”. We hope this initiative goes well as these credits can result in funding communities and Indigenous peoples who take stewardship of their ecosystems seriously.
The Onyen system includes TCFD and also meets the XBRL (eXtensible Business Reporting Language) requirement for outputting all ESG reporting to regulators and a plethora of financial stakeholders in the investment community for which the extractives industry relies on to thrive.
While many companies are solely focused on GHG – the fact is, water, energy, and social risks are the areas that many capital markets stakeholders will focus on, and as the TCFD mandate becomes a reality, the only way out of this morass of standards is technology and understanding what is really needed. It doesn’t matter how politics twists the facts. Money will always be the driver when it comes to good corporate governance and measuring sound corporate performance. And the extractives community understands that in spades.
