6 minute read 1 Jan. 2020
Mining field

How to weave ESG factors into your digital strategy

By Thibaut Millet

EY Canada Climate Change and Sustainability Services Leader

Business and environmental leader. Contributor to clean capitalism. Guide for companies‘ path to sustainability. McGill MBA alumnus.

6 minute read 1 Jan. 2020

Digital tools offer an opportunity for miners to improve existing programs to track, mitigate and report on ESG and EH&S risks and performance.

As originally published in Canadian Mining Magazine.

Environmental, social and governance (ESG) issues are becoming increasingly important to internal and external stakeholders. Whether it’s from employees, customers, activist or institutional investors, mining and metals companies are feeling the pressure to review strategies and invest in proper processes, measurement and reporting to address concerns and comply with evolving regulations.

A large component of ESG for mining and metals companies is environmental, health and safety (EH&S) — a function of the business that reviews compliance and operational issues in managing EH&S risks, which can have a big impact on workplace productivity and financial performance.

Operating in typically high-hazardous conditions with many onsite and community complexities, the mining and metals industry can face a lot of scrutiny when it comes to ESG management. Unique risks, like working with large and heavy equipment, tailing pond management or erosion and site contamination, require more attentive management. As the sector struggles to access new sources of investor capital to transition from operations to growth, companies need to step up their game and look at how to effectively and efficiently manage ESG and EH&S outcomes.

There are a number of existing and emerging technologies that the miners can leverage to improve their ESG and EH&S outcomes.
Thibaut Millet
EY Canada Climate Change and Sustainability Services Leader

Many mining and metals companies already have existing programs implemented to track, mitigate and report on ESG and EH&S risks and performance. Where the opportunity lies is with digital. Technological advancements are enhancing our ability to mitigate risk, make decisions and allocate resources. As the industry moves further into the digital age, there are a number of existing and emerging technologies that the miners can leverage to improve their ESG and EH&S outcomes. We’ve already started to see some examples these initiatives emerge:

  • Software enablement and advanced analytics: collect larger EHS data points to calculate better performance indicators to meet corporate and regulatory requirements, while anticipating and mitigating risks, and identifying opportunities to reduce incidents and improve productivity.
  • Virtual reality: improve training effectiveness by providing organizations with a high-impact, scalable and efficient method to rapidly build the capabilities of workers — particularly those with less experience in high-risk environments.
  • Drones and robotics: perform typically dirty and dangerous jobs by accessing areas that are difficult to reach, such as those collecting data from inaccessible areas of legacy mines for remediation efforts. This technology can also be used to significantly reduce time performing things such as large site scans or map areas of cultural heritage close to the mine.

These technologies and others are bringing positive impacts to ESG and EH&S management, including: 

  • Employee health and safety: dedicated software solutions, mobile applications and wearable technologies allowing for more effective EHS management to help improve the safety of staff.
  • Risk identification and mitigation: improved, standardized and up to date risk assessment, implementation of more targeted risk mitigation measures, which can be tracked in real time via monitoring technologies.
  • Impactful, targeted training: more accessible, digestible, specialized and interactive training for employees through digitization, which enables improved learning and support long term behavioral change.
  • Data analytics: expanding the ways to collect data, the types of data that can be collected and the methods available for analysis, which feed better insights.
  • Collaboration: improving the way employees interact with each other and with data, and better facilitates the reporting of lessons learned (such as near misses) and leading practices.

From the automation of processes to data collection and predictive analytics, mining and metals companies stand to experience a step change in ESG and EH&S performance — that is, if they grasp these digital opportunities effectively.

Digital effectiveness is, and remains to be, a challenge and a massive opportunity for the mining and metals industry. In fact, it’s listed in the top three of the EY Top 10 business risks and opportunities – 2020 report again this year. The application of technology has become business as usual for many miners, but there needs to be more forward movement from digital implementation to integration across the enterprise. There’s a real opportunity for companies to develop end-to-end digital approaches to unlock sustainable productivity and safety improvements — which, in turn, can lead to an enhanced license to operate and improved margins.

Here are a few steps mining and metals companies can take to successfully leverage digital technologies in end-to-end ESG processes to better understand and manage risks:

Assess the current state

Identify what problem needs to be solved and have a clear picture of what success looks like to make a tangible impact on the business.  Companies also need to understand the people, systems and processes, so that they know where they stand and can prepare to set the roadmap to where they are going. Determining where you are involves more than just inventorying current systems; it requires performing a holistic assessment of the state of technology inside and outside the organization.

Align with the digital strategy

ESG or EH&S systems shouldn’t exist in isolation. They should align with or support the broader business goals defined in the overarching digital strategy. Any transformation project — including ESG and EH&S — requires continuous evaluation to address changes in the organization, corporate strategy, technology trends and the market in general.

Review pre-implementation readiness

Prepare a readiness assessment to address what’s needed to make the digital transition a success. This can provide insight into areas requiring additional alignment efforts, allowing the company to pre-empt issues and anticipate additional resources needed. For example, it’s unlikely that a company’s ESG or EH&S professionals are equipped with the proper digital capabilities. This may require new talent needed to navigate the transition or training programs to build the skills required to operate and optimize new digital platforms.

Address process alignment

Compare the current state against where it needs to be. Understanding the current state’s strengths and shortcomings presents the opportunity for operational alignment and allows the business to explore options that could alleviate current constraints and pain points. As business units become more aligned, it can help simplify implementation and upkeep of technology, and streamline resource deployment flexibility.

Capture the data

Take stock of the automated digital systems and solutions that support real-time, customizable and accurate data for informed decision-making. Colleting timely data on factor such as air quality, environmental impacts and local procurement can help companies to make more informed decisions on necessary improvement – and better communicate ESG and EH&S performance and actions to stakeholders. 

Enable strong reporting and analytics

Develop an approach that supports simple and consistent reporting throughout the business. This will enable employees to take ownership and develop better insight into the company’s ESG and EH&S trends.

An organization that embraces and effectively uses digital technology will be equipped to make better, quicker and smarter decisions to achieve organizational objectives and improve ESG and EH&S performance. Many organizations already have the existing infrastructure and access to digital technologies — now it’s time to integrate. By gauging the health of existing systems, examining current business processes and identifying goals for the digital journey companies can make big strides to develop a strong ESG and EH&S culture to help improve performance and the bottom line.

Summary

The mining and metals industry can face a lot of scrutiny when it comes to environment, social and governance (ESG) management. Although many companies already have existing programs to track, mitigate and report on ESG and EH&S risks and performance, there's a real opportunity to improve with digital tools. Things like VR, drones and advance analytics can help miners improve processes to better understand and manage risks.

About this article

By Thibaut Millet

EY Canada Climate Change and Sustainability Services Leader

Business and environmental leader. Contributor to clean capitalism. Guide for companies‘ path to sustainability. McGill MBA alumnus.