Jamie Strauss, CEO and founder of Environmental, Social, and Governance (ESG) disclosure and data company for the mining sector, Digbee has said companies that are not focusing more on ESGs risk being shunned by investors.
Speaking to Kitco News, the executive stressed that companies involved in ESGs are aligning with investors’ increased demand and attention to the sector.
“Doors are closing for companies that are not disclosing ESG in a fashion that is acceptable to the underlying investors. At the same time, if we begin to disclose ESG in a standardized form that investors can credibly track, then pools of capital and green money will become available. The green money is vast, and most of those groups are allowed to invest in mining, but they choose not to,” Strauss said.
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He pointed out that mining companies that are not ESG compliant are already feeling the heat, with their stocks currently trading on the downside.
Strauss further projected that in the next 12 to 18 months, the stocks would suffer the real effect of being non-ESG friendly.
However, he pointed out that some change is happening with companies listening and restructuring strategies. He notes that ESG strategies are becoming more integrated between finance and the companies themselves.
Attracting new pool of investors
According to Strauss, companies need to focus on sustainability reports that are becoming more common for firms of all sizes. However, he warned that for companies to attract new capital pools, the need to encourage more third-party assessment to the reports. According Strauss:
“They are being used more, but they are driven on a self-assessment and marketing basis. There’s a limited amount of third-party assessment to those reports. We have to move away from self-assessment. We as a mining industry must try to find credibility. This means we need to attract new pools of capital and doing this on a self-assessment basis is not going to work. We need to go above and beyond.”
Furthermore, Strauss singled out the mining industry as having a poor reputation other than oil and gas for ESG compliance.
He also advised companies yet to adopt ESG over the fear of cost, noting that the initiative should not incur extra expenditure. Strauss acknowledged that the cost element is essential, but the efficiencies with ESGs are worth it.
Strauss singled out benefits like reducing energy and improving relationships with local stakeholders.
Related video: Do investors really care about ESG?
