No sector unaffected by growing ESG demands
In a world facing challenges ranging from climate change to social inequality, every business sector will experience rising demands on its environmental, social and governance (ESG) performance. No sector is unaffected by growing ESG demands.
“The importance of ESG issues has grown steadily in recent decades – building momentum from concerns around environmental and human rights, which are now front-of-mind for consumers and governments alike,” says Vis Reddy, managing director of SRK Consulting. “It is now clear that no project can succeed without prioritising ESG factors from its early stages.”
Reddy says that SRK Consulting had been a pioneer in evolving its professional services to meet a range of sustainability hurdles – and had recently re-branded its environmental business unit to focus on ESG.
“The rise of ESG confirms SRK’s approach that good engineering is a holistic and complex process that must address a myriad of risks through the integrated application of relevant disciplines,” he says. “This applies to every stage in the economic value chain.”
According to Darryll Kilian, partner and principal environmental consultant at SRK Consulting, mining has to take account of the greater ESG focus required by financiers and other stakeholders. “The financial sector is being subject to mandatory ESG disclosure requirements in many jurisdictions and is responding quickly to stakeholder interest in ESG investment”, says Kilian.
Consideration of ESG from the earliest stages of planning, from exploration onwards, is now recognised to add value to mining projects. Mineral resource and reserve reporting codes are being updated to recognise this,” says Kilian.
However, the urgency to address ESG in planning projects goes well beyond the mining sector. SRK Consulting has increasingly seen ESG risks affecting projects related to water, infrastructure and energy.
Vassie Maharaj, director and principal consultant in social risk and stakeholder relations management at SRK Consulting, highlights that projects in every sector now require effective engagement processes for meaningful stakeholder participation and shared value.
“The evolving global ESG framework places social aspects at the centre of the project lifecycle – requiring decision-makers to take account of issues such as gender, human rights, vulnerability and livelihoods in development planning and implementation,” says Maharaj.
According to Franciska Lake, principal environmental scientist at SRK Consulting, SRK’s ESG offerings focus the expertise and experience of a number of professionals on advising clients to integrate these requirements into their operations and systems.
Lake notes that there has been an important shift to strengthen the link between licencing and the engineering design requirements, which aligns with SRK’s standard integrated approach to projects.
Reddy argues that the sustainability requirements of large financiers had once been the prime drivers of ESG, but that this pressure was now coming through at many points in the supply chain.
“From manufacturers to end-consumers, our society is looking more closely at the whole supply chain to see whether ethical and other standards are being maintained,” he says.
In a recent example of this, the Re-Sourcing initiative is working to ensure that the European Union sources its minerals responsibly and sustainably. Funded by the European Union’s Horizon 2020 research and innovation programme, the Re-sourcing project has involved SRK Consulting to help facilitate the necessary input from affected stakeholders in Africa and Asia.
Kilian points out that companies across the continent are expected to make more ESG progress on issues such as disclosure, integration and inclusivity as well as health, safety and climate change. Aside from the lender requirements, this impetus is also being driven by international sustainability frameworks such as UN Sustainable Development Goals and AU Agenda 2063 which are in turn influencing national legislation.
Enviro now ESG at SRK
SRK Consulting has long been a pioneer in offering sustainable solutions to address the environmental, social and governance impacts of development.
“Our environmental business unit – now rebranded as the ESG unit – has been evolving its sustainability approach for decades,” says Kilian. “This has allowed us to take a leading role in helping our clients to align with frameworks and standards – for instance, from the earliest versions of the Equator Principles and the International Finance Corporation’s Performance Standards.”
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