Energy Transition and Social Responsibility, the Changing Landscape in Mining, Natural Resources and Energy
The energy, natural resources and mining industries have had to adopt a transformational mindset to address the perception of their historical lack of environmental and social stewardship.
- Mining accounts for 7% of GHG emissions while Oil and Gas production is responsible for 15% globally
- Since 2019 surveys of CEOs in these industries show that sustainability has been one of their top 3 priorities and despite changes in the global political landscape and a potentially less constraining regulatory environment, sustainability remains at the top of their strategic objectives
A key driver for sustainability and innovation in these industries has been the increased public awareness of their impact on the environment and local communities. Institutional and private investors are hearing loud and clear that a genuine commitment to minimizing this impact and clearly demonstrating it through investment in new "cleaner" automation technology is urgently required. Gradually moving away from fossil fuels and eliminating water and soil contamination from production sites is an imperative that these industries cannot ignore. Companies have to tangibly demonstrate through transparent reporting that they truly contribute to the sustainable development of the communities where they operate in order to obtain national and local government licences. Mining and energy in particular have long been at the center of political pressures as they are perceived as key elements of sovereignty. The ESG challenge has added further pressure on companies with globally dispersed operations to demonstrate that they are positively contributing to national and regional development while clearly delivering on their energy transition commitments.
Extractive Industries Often Operate in Fragile Environments
Given the complexity of the challenges: Environmental, social, political, regulatory and reputational, how can these industries adapt to increasing demand while meeting their sustainability targets?
- The adoption of digital technologies: Such as remote sensing, remotely controlled drilling and exploration operations has become a key focus in these sectors. Ironically while traditionally perceived as slow adopters of digitization and AI these industries have become true innovators -by necessity or by choice-
- Innovation has enabled operating costs to come down and productivity has improved while gradually addressing key sustainability challenges.
- Communications and government relations are improving as organizations are implementing well organized "Communications and Community Relations" capabilities often reporting directly to the COO, CEO, Chief Legal Counsel or Chief Sustainability officer
- Reputational and brand risk management is one of the key elements of these industries strategy to involve impacted communities
- This context is driving a cultural shift towards more accountability and transparency that starts with tangible data to enable clear reporting to stakeholders, shareholders and employees