ESG concerns grow as miners rank environment, social issues and decarbonization as top risks for 2022

·3 min read

Two new risks emerge driven by the volatility of a market still impacted by COVID-19

  • Decarbonization emerges as a key disruptor, impacting strategy and operations

  • Digital is seen as an opportunity for businesses to innovate and differentiate

  • Pressure from capital markets and society is creating new risks

TORONTO, Oct. 18, 2021 /CNW/ - Global mining executives rank environment, social and governance (ESG), decarbonization and license to operate (LTO) as the top three risks facing their business over the next 12 months, finds the EY Top 10 business risks and opportunities for mining and metals in 2022 report.

EY Top 10 business risks and opportunities for mining and metals in 2022 (CNW Group/EY (Ernst & Young))
EY Top 10 business risks and opportunities for mining and metals in 2022 (CNW Group/EY (Ernst & Young))

"It's clear that purpose, long-term value and sustainability are no longer add-ons to business as usual — they are business as usual," explains Theo Yameogo, Americas Mining & Metals Leader. "Companies that can demonstrate they are operating in the best interests of a broad group of stakeholders can maintain their license to operate and gain a competitive edge in the fight for capital and new assets."

While many conversations in the market currently focus on energy transition and the road to decarbonization, 25% of survey respondents rank environmental and social issues as the number one risk to their business — indicating broadening expectations around issues such as biodiversity, social impact and water management are top-of-mind. In response, miners say they are beginning to integrate ESG factors across corporate strategies, decision-making and stakeholder reporting.

"Navigating ESG is increasingly challenging given the breadth of issues the sector continues to face, coupled with the myriad of reporting standards they need to adhere to," says Yameogo. "Expected boosts in investment towards digital transformation and innovation will be critical to help companies diversify and differentiate, while allowing them to address emerging risks with a purpose. Possibilities include improving onsite health and safety, helping transition to net zero, producing greener outputs or responding to increasing ESG measures from capital markets."

Sector disruption caused by evolving external and societal factors is also driving new risks and opportunities, pushing companies to reshape the future of the industry. Two new risks emerging this year: "Uncertain demand" due to energy transition and post-COVID-19 markets at number six, and "New business models" that need to be considered to capture value amid volatility at number nine.

"In the face of generally positive future demand, both as a result of government stimulus and the energy transition, it's critical that mining and metal companies have the ability to compete effectively, particularly with new entrants into the sector as downstream players invest to secure supply," Yameogo adds. "This means considering new business models, a strong focus on scenario planning and then optimizing portfolios to allow for flexibility in the face of increasing change."

Read the report for more insight into the top risks and opportunities for mining and metals companies.

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This news release has been issued by Ernst & Young LLP.

EY Canada logo (CNW Group/EY (Ernst & Young))
EY Canada logo (CNW Group/EY (Ernst & Young))

SOURCE EY (Ernst & Young)

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