Describe the conditions in the mining sector that pushed you to develop the Digbee ESG disclosure tool.
ESG itself is common sense, but the disclosure process has become hugely complex. With over 40 standards applicable to the mining sector, yet none tailored to the junior sector, the immense confusion should not come as a surprise. At the BMO conference in 2020, I was encouraged by a number of influential institutions to develop a solution which would address these challenges. Thereby helping both the mining community to embrace ESG disclosure as well as provide the necessary standardized output that would encourage change on the ground, increase confidence in the sector and thus allow capital to be attracted to the industry.
Since the launch of our first framework in March, there has been an overwhelming degree of support from all sides of the industry – miners, capital providers, insurers, and governments. The opportunity ESG presents to the industry is vast. Credible ESG disclosure, combined with the requirement for mining products to enable the transition to a low carbon economy, gives me confidence that we will see improved acceptance of the industry, leading to positive impacts on the ground as well as in valuations and access to capital.
What does Digbee ESG do for the different stages of mining companies – exploration, development, and production?
Digbee ESG is a right-sized disclosure framework, aligned to the leading global standards. This fit-for-purpose disclosure tool provides a comprehensive assessment that captures the granularity of the ESG data in a context driven basis from the project level to the boardroom. We have developed this tool with the understanding that a mining project in the DRC is going to look very different from a project in Canada, so it effectively rewards those management teams striving towards best practice while contextualizing each project depending on their own specific circumstances.
“Over half of the world’s assets under management are now pledged to meet climate change goals. It’s only a matter of time before this embraces the full suite of ESG topics.”
Digbee only invoices at the time of submission, which allows mining companies to know what to disclose through our frameworks on their own time. Further, companies can opt to hide their inaugural score for 13 months or until their next submission, helping prevent concerns about the impacts of a single score. By disclosing with Digbee ESG, mining companies at any stage can not only engage more effectively with investors, but also shareholders, local stakeholders, governments, new talent for the hiring process, insurers, and the wider public.
Are you targeting the investor side as well with this disclosure tool? If so, how does the tool engage with them?
Definitely. Digbee ESG was conceived and encouraged by leading institutional investors who were frustrated with the lack of credible and standardized data available. This was beginning to hold back investment just as the new commodity cycle was emerging. Mining has the potential to attract “green” finance for developments that are critical to the world’s transition to a sustainable future. Digbee ESG was developed with the intention to raise confidence in the sector by demonstrating real evidence of ESG performance and thus encouraging new pools of capital into the sector. Both scores and core details are freely accessible on the Digbee platform, giving investors a credible and objective means to assess and track companies on their ESG, as well as the ability to compare companies and projects in context.
As we see ESG move from a matter of principal to one of regulation for the Board of Directors, what role does Digbee ESG play in fulfilling this obligation?
“If certain information that happens to fall in any of the ESG categories is material to that company, the company needs to disclose it. We expect management and the board to do that, and we will come after them when they don’t.”
— SEC Commissioner Elad L. Roisman, July 2020
Digbee ESG brings matters to the board level by incorporating a “Board Approval” step, which is integrated into the disclosure process. This ensures that companies engage with ESG-focused employees or their consultants. It provides the entire Board of Directors with the information required to meet their Board oversight obligations, use objective data as part of management remuneration scorecards, and assists risk management controls beyond the finance function. This will help develop a comprehensive approach and promote a company culture that fully embraces ESG.
With the growing movement of capital towards sustainable, responsible, or “green” investing, how does Digbee ESG impact those capital pools?
Over half of the world’s assets under management are now pledged to meet climate change goals. It’s only a matter of time before this embraces the full suite of ESG topics. Mining is rated worst on the S&P environmental and social table despite the very positive trends in many areas, such as health and safety, water conservation, and social engagement. For the industry to inspire confidence beyond its normal boundaries and attract new capital, then a means to credibly track ESG is essential. The mining industry has historically relied upon a very small pool of capital in which to tap into. This ebbs and flows depending on the cyclical tide, but it is clear from our engagement with “green” investors that there is a new recognition that without mining, there can be no transition to a sustainable future. The huge effort employed by the major producers to reduce emissions and improve their practices will succeed over time, but the new breed of developers have less friction in which to create a positive culture towards sustainable production. If properly showcased with credible supporting evidence, it has the opportunity to encourage new pools of capital to finance the much-needed production of new raw materials.
