Judy Kuszewski, Chair of the Global Sustainability Standards Board, explains how the GRI standard for mining will “illuminate” how investors can hold companies to account.
A 2020 World Bank report estimated the production of minerals, such as graphite, lithium and cobalt, will need to increase by nearly 500% by 2050 – the equivalent of nearly three billion tonnes – to fulfil sufficient upscaling of clean energy technologies and energy storage solutions. The same report estimates that over three billion tonnes of minerals and metal will be needed to deploy renewables – wind, solar and geothermal power – to achieve a sub- 2°C future.
In January, an investor-led initiative was launched to address systemic risks in the mining sector to ensure a just transition to net zero, partly in reaction to a string of mining-related disasters that have generated despair and distrust from local communities and untold environmental damage.
At the launch of the new Global Investor Commission on Mining 2030, Angelica Amanda Andrade, whose sister was killed in the Brumadinho tailings dam disaster, challenged BHP CEO Mike Henry on the progress of the company’s efforts to right the wrongs of the 270 people killed.
“We need to start having penalties and fees for mining companies that continue to have human rights and environmental violations. If that doesn’t happen, then any action taken is just political – and what’s the point of that?” she said. “The climate transition cannot be an excuse for the allowance of continuing poor standards and lack of ethics.”
But how can the mining sector, which is essential to the supply of minerals to make the clean energy transition a reality, reconcile its socio-economic contributions with its environmental and social impacts?
“It’s not a question with a single answer or an easy answer,” Judy Kuszewski, Chair of the Global Sustainability Standards Board (GSSB), the independent body that oversees the development of the Global Reporting Initiative’s (GRI) standards, tells ESG Investor.
This question is central to the formation of GRI’s new sustainability reporting standard for mining.
“Through the development of the of the standard, this juxtaposition has really been front and centre,” says Kuszewski. “Having that kind of balance in mind the whole time is a foundational principle to the work that’s been done here.”
The expert working group that the GSSB established to formulate the mining standard draft placed great emphasis on circular production models, with metals being a prime target for reuse and reprocessing as part of the solution.
The GSSB gathered 20 sector experts to participate in a working group that helped develop content for the standard. Its membership includes Bryony Clear Hill, Manager – Standards, Reporting and Circular Economy at International Council on Mining and Metals (ICMM), Michèle Brulhart, Executive Director of the Copper Mark, and Kristi Disney Bruckner, Senior Policy Advisor for the Initiative for Responsible Mining Assurance. “Mining can cause impacts in terms of human rights risks and damage to the environment, particularly when mining in sensitive areas,” says Kuszewski. “However, mining will still be needed, no matter how efficient we become in closing that loop.”
Rising material extraction has shrunk global circularity from 9.1% in 2018, to 8.6% in 2020, and now 7.2% in 2023, according to recent report by think tank Circle Economy, adding that the resulting ‘circularity gap’ has left the world almost exclusively relying on new (virgin) materials.
In fact, more than 90% of materials are either wasted, lost or remain unavailable for reuse for years as they are locked into long-lasting stock such as buildings and machinery, the report added.
“It’s clear that we’re still going to need to mine minerals as part of an ongoing solution to climate change and addressing some of the significant global challenges that we have,” says Kuszewski. “But it’s critical that this is done in a responsible manner, with the support of local communities and with equitable benefits to society as a whole.”
The role of robust, consistent, clear and comparable reporting to hold companies accountable and to form the basis for stakeholder dialogue is necessary and important, she says, so that the disclosures that mining companies make using the GRI standard reflect the information needs of all stakeholders – “that’s more important than ever”.
Quantity and quality
In addition to minerals and metals being required to provide essential functions for across all economies, the mining sector is also a contributor to development in many lower income countries.
“[Mining] provides employment, pyramid spending, taxes, community development, infrastructure, and investment,” Kuszewski says. “And yet, at the same time, mining activities bring potentially major negative impacts that affect communities’ livelihoods, through biodiversity loss, pollution, access to freshwater, noise, displacement and health and safety threats.”
In the development process for the GRI standard, she says, it became clear that mining companies increasingly must respond to the expectations that society has to balance the negative impacts alongside the positive benefits.
“Transparency over those impacts is at the heart of the GRI standards,” she says, but notes that transparency is only one part of the story.
“It’s our aim that the transparency that reporting of this sort can provide enables accountability for companies, enabling the ongoing checks and balances as to whether or not the contract between society and the mining companies is being upheld.”
Scrutiny at national and international levels means reporting rates in the extractive industries is relatively high, with 80% of major companies reporting on sustainability, according to KPMG’s ‘2022 Survey of Sustainability Reporting’. However, mining industry stakeholders widely regard the quality of reporting in the sector as inadequate.
The fact that extractive industries, including the mining sector, take a quantity over quality approach to sustainability reporting is an issue the new GRI standard aims to address.
The GRI standards broadly, are aimed at aggregate level disclosure, often for large, multinational businesses and, therefore, there is a certain tension between the information needs at that global aggregate level versus the site-specific information that is critical in the mining sector, says Kuszewski.
The working group members that contributed to the development of GRI draft standard noted that that financial reporting is “extremely detailed” but there was room for improvement when it came to the level of detail of non-financial information.
“There is a great deal of financial information […] and it takes an enormous degree of resources to comply with expectations, yet it’s an accepted practice – it’s just simply part of what you do as a business,” she says. “It could be argued that for a sector with as many impacts as mining that sustainability reporting should contain just as much information.”
By using a widely accepted standard that draws on robust, international instruments, and the consensus views of stakeholders across the mining sector, investors and other stakeholders will be able to “cut through some of the noise”.
Investors will have access to sustainability reporting that focuses on the most important topics overall for disclosure, but also enables the granularity at site level that is essential to measure environmental and social impacts, says Kuszewski.
“Being able to connect that global message with the individual experience of people on the ground is incredibly important for the strength of those relationships, but also to avoid accusations of greenwashing and reputational risk for companies.
“It’s incredibly common to have one story that seems to emerge from global aggregate level reporting, which may not comport with the lived experience of communities and workers on the ground in any given individual site.
“Stakeholders have been quite clear that that level of transparency is essential.”
Reporting in harmony
On the eve of the fourth anniversary (24 January) of the Brumadinho tailings dam disaster, the UNEP and Church of England Pensions Board (as a representative of Principles for Responsible Investment) announced the formation of an independent Global Tailings Management Institute (GTMI) aimed at driving mining industry safety standards.
The exposure draft, open for consultation until 30 April, features three topics that are new to the GRI standards: tailings facilities and hazardous waste streams, artisanal and small-scale mining, and operating in conflict zones.
“Tailings were identified by the expert working group as a key focus area and it features as a standalone topic in the in the draft standard,” explains Kuszewski.
“The work around [tailings] is to communicate key information about companies’ management of tailings facilities – the ponds and dams, which can be vast in size and cause huge damage if they fail – with the intention of preventing devastating events.”
The core function of the GTMI is to oversee the implementation of the Global Industry Standard on Tailings Management, with the GSSB’s expert working group ensuring that the new GRI sustainability standard for mining did not create divergent reporting requirements.
“GRI does not create additional or conflicting reporting requirements with what’s already in that standard created by the GTMI,” says Kuszewski. “That standard is already accepted and embraced by stakeholders across the board, so the reporting on tailings in the draft GRI standard explicitly refers to compliance with the GTMI and it aligns fully with its requirements.
“It was really important that we not create overlapping, conflicting, redundant, or in any way divergent reporting requirements – it’s one that is fully integrated and supported by the GRI standard.”
Feeding investors’ appetite
The exposure draft of the GRI mining standard was unveiled at Alternative Mining Indaba in Cape Town, South Africa on 7 February and offered a “unique opportunity” for GRI to engage civil society and communities impacted by mining.
“It was an opportunity for some deep discussions about what’s happening on the ground, where mining companies should do better,” says Kuszewski.
The event, where the GRI team was present, was also attended by mining companies and institutional investors eager to digest the new standard.
“There was keen interest in the in the proposed standard, not least because of the recent developments that are going to make sustainability reporting increasingly mandatory for many companies, for example, under the EU’s Corporate Sustainability Reporting Directive (CSRD).”
The GRI standards, including the sector standards, are founded on the basis of authoritative intergovernmental instruments, and the consensus views of civil society, business, mediating institutions, investors, labour, the kind of the multi-stakeholder foundations that underpin everything that GRI does, she says.
“That’s absolutely the same, the same purpose and the same methodologies and, therefore, I would expect the same kind of positive takeaways for investors as well.”
Kuszewski made note of the efforts being made by financial institutions and investors in propelling transition and driving sustainable change in society, as well as asset owners’ acute understanding of their role in helping to achieve both.
“While we are aware of, and certainly respect the fact, that investors need to make a return, they also need to have a view on financially material sustainability information,” she says. “However, what’s financially material changes over time and, in all cases, it starts first with understanding impacts on people and planet that are associated with the activities of an organisation.
“That fundamental foundation of impact is what the GRI standards broadly enable and, therefore, it feeds not only investors’ intrinsic motivations to understand the sustainability impacts and issues and risks and so forth, but also to understand better over time how those impacts become financially material.”