World Gold Council: Gold Miners 'Must Create ESG Value'

John Mulligan is Climate Change Lead at the World Gold Council. Here he discusses the sustainability & ESG challenges facing the gold mining industry

What does the World Gold Council do?

The WCG bridges the gap from mine to market, helping ensure the gold mining community is fully informed of and responsive to the shifting expectations of investors, consumers, policy makers and wider society.

We seek to facilitate the sector’s contributions to positive social and environmental outcomes by producing credible and transparent industry standards of responsible and sustainable business practice. 

These initiatives are reinforced by the provision of research and data to allow gold’s diverse stakeholders to better understand the industry’s impacts and measure its progress. 

Our members are the major gold mining companies who together produce around two-thirds of annual global gold production from the formal, corporate mining sector. 

The WGC believes these members and other responsible gold mining companies can play a significant role in the socio-economic development of the countries and communities that host their operations, and we are committed to supporting that role. 

What does responsible gold mining look like?

This is best defined by the 51 principles that form our Responsible Gold Mining Principes. These were developed after an extensive period of consultation, to capture the material ESG risks and impacts of gold mining, and to allow companies to demonstrate – in ways that can be independently verified – what responsible and sustainable mining looks like in practice.

Is it possible for gold mining to be net zero?

Yes, but it will require other shifts in the global economy, and particularly in energy systems and technologies.  

That said, unlike other sectors and some other metal supply chains there is little in the process of gold production that is intrinsically ‘hard to abate’, and its potential pathway to decarbonisation is therefore quite clear. 

Much of that relates to how the industry consumes or generates electricity, and its rate of progress will likely also reflect how supportive investors and governments are in encouraging the transition to clean energy sources.

But gold mining doesn’t require substantial infrastructure, and has long experience of developing mines in a fairly independent fashion in remote locations and ‘frontier’ economies. It has often had to be an early adopter of introducing renewables. This can have the benefit of catalysing change in the wider local economy.

What are the main ESG issues facing gold mining?

Gold mining, as with the wider mining sector, needs to find ways to build and maintain trust, across the value chain and in host locations.

As much of the gold market depends on discretionary spending of some sort, gold miners have a particular need to prove the net positive impacts of their activities. 

This includes their ability to expand and accelerate decarbonisation and as well as them making positive contributions to environmental protection and conservation. 

They also need to demonstrate more clearly and effectively their ability to create local value and wider positive impacts, aligned with community needs.

In order to ensure these contributions are fully appreciated and supported, it is likely that more collaborative relationships and partnerships, with long-term time horizons, will need to evolve. The industry may therefore need to find ways to counter the short-termism imposed by capital market perspectives and election cycles.

And mining is undergoing a technological revolution which will also need to accelerate, to ensure it becomes a cleaner, safer and smarter industry.

How can gold supply chain ESG issues be tackled? 

The gold supply chain is global and diverse, and gold mining is only one segment of it, alongside gold’s many uses and downstream markets. 

Mining is clearly an industry which has a physical impact on the environment. It is also energy intensive, so until renewable energy becomes the norm this means it will be carbon intensive. 

Mining companies need to commit to clear policies of emissions- and impact-reduction. As a minimum they must commit to ‘no net harm’. 

Gold miners also often operate in regions that already have major social and economic challenges, so they have to be sensitive to local community needs and socio-cultural conditions. 

Responsible gold miners have come to recognise they have to demonstrate their ability to create and distribute value for their hosts and neighbours. In doing so they can generate opportunities and legacies that extend well beyond the mine and its operational life. 

But the greatest environmental and social challenges globally are associated with the informal (or ‘artisanal’) sector, and these challenges often extend well beyond gold-market issues or control. Instead, they reflect social problems associated with extreme poverty, political instability, lack of local capacity and, often, lack of the rule of law.

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