MINING company boards have recognised the need for improved expertise in issues relating to environment, sustainability and governance (ESG), but more needs to be done as they were not yet sufficiently skilled, said Reuters citing investors.
“The level of understanding and capability at board level is insufficient at the moment in the mining sector, and it doesn’t yet in our view support the transition of these companies to best practice,” Andy Jones, metals and mining lead at investment manager Federated Hermes, told the newswire.
There have been moves, however, by the mining sector in overhauling the skills set of its boards, most noticeably by Vale, the Brazilian iron ore giant which was culpable for slimes dams accidents claiming the lives of employees and community members.
Seven of the 13 members of Vale’s new board set for approval this month have extensive experience in ESG and sustainability-related issues, up from five previously, said Reuters which added it was the company’s biggest board shake-up since it was privatised in 1997.
The company has also added requirements for nominees to have experience in community relations, said Reuters.
AngloGold Ashanti last year appointed as a non-executive director a mining governance adviser to the United Nations Economic Commission for Africa, Kojo Busia, after the board identified the need to increase its efficacy in ESG oversight, it told Reuters.
Barrick Gold also bolstered its ESG credentials with the appointment of World Bank executive director Anne Kabagambe to its board in November, highlighting her experience in international development.
Executive bonuses have also been adjusted so they reflect ESG performance.
“The remuneration is obviously key in terms of setting incentives, but that on its own doesn’t work unless the board is getting the quality of information and there is a spirit of independent thought and challenge,” said Joanna Hewitt, a partner at law firm Baker McKenzie in London who advises companies on corporate governance.