Corporate sustainability reporting refers to the publication of a company’s performance on topics pertaining to sustainability in particular, vis-à-vis financial reporting, which, as the name suggests, focuses on financial transparency. These sustainability topics relate to a company’s relationship with its natural and social environment, as well as its corporate governance culture. The topics form the reporting criteria of what is now commonly known by the abbreviation ‘ESG’ -Environmental, Social and Governance.
Corporate sustainability reporting is key for all businesses who wish to operate transparently and with accountability, however, it is especially important in the mining sector. One may ask, why is there such emphasis on sustainability reporting in the mining sector? The answer is simple, mining is an inherently destructive activity, and for that reason it should be held to a different and higher sustainability reporting standard than other industries. The ripple effect of a different and higher reporting standard should not be understated. The result is that that mining companies are held to higher ESG standards, thereof greater CSR benchmarks, leading to increased community development through increased and impactful CSR activity.
Statutory Instrument 134 of 2019 on Securities and Exchange is the primary regulatory document for the Zimbabwe Stock Exchange Listing Rules. This governance instrument makes it mandatory for all companies listed on the Zimbabwe Stock Exchange to disclose ESG information as part of their sustainability reporting which, at first glance may seem like a decent starting point. However, the immediate criticisms are two-fold.
Firstly, given the boom in mining activity in Zimbabwe, the number of artisanal and small-scale miners has increased but due to their nature they are not bound by the sustainability reporting requirement in SI 134/2019. One might argue that, due to their small size they should not be bound by such regulations. However, it is due to their small size that they should be if we consider the following:
Reports by the United Nations have revealed that the environmental and social challenges associated with artisanal and small scale mining are often greater than those in large scale mining due to the lack of management processes for environmental and social issues and in addition, the fact that artisanal miners are not integrated into laws and regulations that govern their activity, for example the Environmental Management Agency, requirement for a valid EIA certificate for all.
The sustainable reporting requirement is not as effective for larger scale miners either. Upon closer inspection, one can see that, in fact, not many large scale miners are bound by the reporting requirements contained in SI 234/2019. There are currently only 4 mining companies listed on the ZSE. In other words, only 4 companies in the entire country are required by law to produce sustainable reports. When faced with these facts, it becomes clear that SI 234/2019 on its own cannot bring about a culture of sustainable reporting that can create community level sustainable development.
The second criticism is substantive, in that it deals with the nature of reporting required by SI 134/2019. While it mentions the Global Reporting Initiative(GRI), it leaves companies with a choice of which sustainability reporting framework to use. The two problems that come to mind that are associated with this ‘freedom to choose’ are:
Firstly, comparing companies’ performance becomes difficult if they are permitted to use different reporting frameworks. This is because different frameworks are aimed at different stakeholders and therefore utilise different metrics, methodologies, and scoring systems. As a result, the sustainable reports from the mines produces the idiomatic ‘apples and oranges’ dilemma making it hard to track and compare performance.
In the second place, and related to the first, is the inconsistent quality of reports. As a result of the various reporting frameworks the quality of the reports also become varied and more often than not, the reports lean to the side of a poorer quality in the absence of a benchmark.
So, what then is the way forward? Government action. Government action has shown to be the main driver for sustainability reporting through laws and regulations. This means that by making noncompliance a criminal offence (the stick) or rewarding compliance (the carrot) more mining companies will adhere to set sustainability reporting requirements. Below are a few ways in which the Zimbabwean government can improve the state of sustainability reporting in the mining sector:
- Introducing a mining sector specific standard framework to be used for big and small mines– the GRI framework is the leading global framework and one that is considered to be beneficial to stakeholders collectively.
- Introduction of third -party verification and certification through IRMA (The Initiative for Responsible Mining Assurance) which provides a universal standard for responsible mining to guard against corruption.
- Insistence on host-community/mine-site reporting as opposed to corporate reporting – each mine site should report individually to see how its host community/mine-site community is being impacted by the specific mine’s operations.
To see real development in mining host communities, the Zimbabwean Mining CSR culture needs to make a change for the better. As the world changes, there is a need for all businesses to adopt and promote a culture of sustainability in their organisations, with mining companies being at the top of that list. Ideally, mining industry stakeholders would be proactive in adapting to global trends and norms of sustainability to pass muster. However, the sad reality is that most mining companies require a ‘push’-perhaps in the form of a legal requirement for sustainability reporting- to adapt sustainability into their strategies. What many might not realise, or may be in denial over, is that integrating sustainability strategies is a question of survival for all companies. The reality is that the profound and pressing challenges of resource scarcity, climate change, pollution and societal inequality remain highly relevant. If businesses are to survive and possibly thrive in the face of these challenges they cannot afford to ignore the call for sustainability.