ESG (environment, social, governance) standards were being used as a “rigid gatekeeper” that is working to inhibit investment on the continent, Warren Beech, CEO of law firm Beech Veltman Inc said yesterday.
He spoke at an event to mark the launch by global audit and certification group Bureau Veritas, of a White Paper on achieving net zero through decarbonisation solutions, for the mining and metal industries. The Paper was one of the new strategies on the energy transition announced at the African Mining Indaba.
For instance, the African Development Bank also announced yesterday that it would develop a “Green African Minerals Strategy” to guide African countries to optimise benefits from the battery and electric value chain.
Beech said greenwashing was a “real concern” because ESG standards don’t take into account the realities of Africa or in South Africa.
He said ESG was being viewed as a “tick-box” or scorecard exercise, and this approach did not, for instance, take into account the longer term nature of mining or metals developments, such as the value created over a period of five years.
He said the White Paper could help create a framework that mining and steel companies could use as a framework to work towards their net zero and decarbonisation targets.
He said the EU and the US were legislating ESG requirements, and while African countries and companies might not need to comply with these regulations, they may well need to as suppliers to EU or US-based companies.
Regulations on ESG requirements would likely eventually also become necessary in Africa, but there were already CSI and CSR policy requirements in place in South Africa, while some ESG factors were included in listing requirements, he said.
Beech said, however, that it wasn’t a level playing field between companies as far as ESG was concerned, as larger companies that were complying with global ESG standards, or that had wished to improve the ESG performance, were forced to invest heavily on it, while companies that did not focus on their ESG did not have to invest in it.
He said that considering the reserves of battery minerals on the continent, “we can set the rules. African countries must take the opportunity to do so”.
“ESG principles need to be looked at in a nuanced way… Resource nationalism is a desperate means for countries to try and make value out of their minerals,” he said.
Mosa Mabuza, the CEO of Council of Geoscience said demand for minerals required for the energy transition was such that for example, more copper would need to be mined, than has been mined all through history, and many copper reserves that were once not considered financially viable due to lower ore grades, would now become viable again. “Where will all these minerals come from? Geosciences and mineral exploration is going to play a massive role (in the years ahead),” he said.
He said he believed scientific development would find a way to allow the detoxification of coal from an emissions perspective.
Igo Hulak, a partner at Kearney, said supply disruptions would likely continue to affect global markets, but Africa’s wealth of natural resources, including many basic and precious metals currently in short supply, could allow the leveraging of opportunities presented by the shift towards an electric economy.
“By leveraging these resources effectively, Africa has the potential to drive additional economic growth, develop industries along the value chain, and create jobs,” he said.
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