• Industry: Energy & Natural Resources
  • Type: Business and industry issue, Publication series, White paper
  • Date: 2/7/2014

Sustainability: not just a cost, but a source of value 

Sustainability: not just a cost, but a source of value
Businesses cannot succeed in societies that fail, and there is a strong commercial rationale behind investment in the workforce, the community and the wider environment.

Sustainability ‘megaforces’

For mining companies, the main sustainability megaforces which include climate change, scarcity of energy, water and natural resources, and environmental decline, have not become a core part of corporate strategy. And, organizations often react to issues when they occur.

If managed appropriately, these megaforces could provide unprecedented opportunities for growth, through new business models, cost savings opportunities and preferred access to stakeholder capital.

A safe and healthy workforce

The fallout from personal tragedies resulting from fatalities or injuries, financial cost of legal claims and non-compliance penalties, and the potential damage to the organization’s reputation can be huge – and can wipe billions of dollars off the shareholder value.

Environmentally responsible operations

While mining companies are accustomed to a minimal financial outlay for activities that negatively impact the environment, taxes and penalties for air pollution and carbon emissions are becoming more widespread, and will inevitably extend to cover waste discharge, as well as the use of scarce natural resources.

Former mining sites are now routinely expected to be restored to their former level of biodiversity, which will also incur substantial charges in the future. Plus, organizations are being asked to measure and report upon an ever-increasing set of environmental indicators, to inform regulators, investors, non-governmental environmental groups, and the media.

“Stakeholder trust is the key to maintaining permission to operate, to develop a shared vision of the future that brings social progress and economic opportunity.”

Social license to operate

Mining companies’ legal and moral obligations are merging, and to gain a social license to operate, they have to comply with the spirit, rather than the mere letter of the law. At a bare minimum, the development of schools, accommodation, hospitals, clinics and other community facilities should be viewed as an essential part of doing business. Failure to satisfy expectations can lead to unrest and could ultimately prevent the mine from working effectively, as workers and communities may cease to cooperate.

Learn more about sustainability as a key driver of value (PDF 1.7 MB)


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Rohitesh Dhawan

Rohitesh Dhawan

Global Mining Leader, Climate Change & Sustainability, KPMG in South Africa

+27 82 719 6114