Strauss said what will likely become more significant in ESG is the data being relied upon by mining companies.
Implementing ESG strategies to address water consumption and waste management is essential, Strauss told the audience at the AME Roundup conference in Vancouver on Thursday.
“A well-touted environmental and social governance system provides objective and transparent methods to management, and the board, and improving stakeholder relationships,” Strauss said.
“Reliance on quality, consistent data is likely to become a significant differentiator for investment funds,” he said. “Fund managers are increasingly seeking to see independent assessments that provide not only management’s commitment, but also a means to credibly track ESG and for management to set out their organizational, environmental and societal jobs in a clear and consistent way.”
Blockchain to communicate ESG assessments
Strauss also pointed to blockchain, which although is not related to ESG, he said it can provide the means to validate the origins and providence of the underlying commodity.
Strauss said that Blockchain will become the basis for companies to communicate ESG assessments and ensure customers have a record of committment.
Strauss said that last year, Apple, in its report to the SEC, stated that they had removed over 140 smelters and refiners from their supply chain, as they were unable to validate the responsible sourcing of minerals.
“Apple’s claim of responsible sourcing, which was laughed off as impossible only a few years ago — is happening. Blockchain is the conduit to achieving this goal,” Strauss said. “Every company in the mining industry would be influenced by this to one extent or another.”
The takeaway for explorers, Strauss said, is that if they are unable to prove that their company, and exploration site, is enacting ESG, that the economic impact of the discovery will become increasingly moot.
“The value of discoveries will no longer rely entirely on geology and metallurgy, but on the prominence of the relationship you have with your stakeholders, and the acceptability of your governance on the wider society,” he said.
Strauss said the impact of smelters and refiners being removed from the supply chain is the first step to impact the differential pricing of metals over the coming years.
“Those mine sites that can prove their providence will be accepted,” he said. Those that can’t will find a smaller pool of customers, and therefore the emergence of discount pricing for exactly the same underlying ore.”
“Providence does not start from ore production, but from the time when the local First Nation group was engaged, or from the moment explorers started drilling, from the time that management tied its compensation to ESG goals.”
