Why Mining Companies Can Create Business Value While Increasing Sustainability

Artem Malkov and Ilya Epikhin, Arthur D. Little, outline how mining companies can balance the requirement to become more sustainable while increasing production to power the green transition.

The metals and mining sector stands at a critical crossroads, facing the challenge of meeting growing demand for essential metals and minerals, while simultaneously reducing its carbon footprint and driving the green transition. As well as a need to reduce greenhouse gas (GHG) emissions, the sector faces growing pressure to lower its water use, improve its waste management, protect biodiversity and local communities, and ensure the safety and well-being of its workforce.

At the same time, mining is essential to delivering the materials required for the green transition, driving demand for stepped-up production and new mines, increasing the need for investment, despite long payback periods and uncertain future requirements.

This makes it hard to create, and action, effective sustainability plans. Move too slowly, and stakeholder relationships will suffer, but if you move too fast, requirements may change, rendering your actions meaningless.

All of this means that mining companies must transform how they think about sustainability, embracing it as an opportunity rather than seeing it solely as a cost or a risk. They need to carefully select and prioritise green initiatives that both improve sustainability and positively impact shareholder value, such as through improved risk management, increased efficiency, and greater innovation. Simply disclosing ESG performance figures is not enough – there must be a well-articulated ESG strategy and detailed initiatives in place to demonstrate ongoing progress.

Assess and identify potential pain points/risks and then set short-term, intermediate, and long-term goals. Make these concrete and ensure they are holistic, meeting the needs of all stakeholders, which means going beyond GHG reduction to cover areas such as pollution and water management.

Identify the right initiatives across all dimensions of sustainability, then manage a portfolio of initiatives that balance company value with ESG impact. Prioritise activities that enhance sustainability while contributing to the bottom line, such as by reducing costs or increasing shareholder value. Look at areas as diverse as reducing GHG emissions through the adoption of renewable power, improving water management through smarter recycling systems, extracting materials from existing tailings, and safeguarding biodiversity by supporting local conservation efforts.

Develop step-by-step, actionable plans (including roadmaps, KPIs, and budgets) and set up effective organisational structures to manage and drive sustainable development, backed by a project management office and rigorous monitoring to ensure successful implementation. The actual structure for sustainability management will vary from fully centralised to completely decentralised depending on the company and its operations – choose one that fits your specific needs.