Measure to Manage | Hélène De Villiers-Piaget

You can't manage what you can't measure. Strange as it may sound, until recently, there has been no serious attempt to compare mining company performance across environmental, social and governance dimensions.

Enter the Responsible Mining Index. Launched in 2018, the index has been gaining momentum since. Today we talk to Hélène De Villiers-Piaget, head of the Responsible Mining Foundation.

***
Highgrade is a not-for-profit organisation that produces interviews and documentaries that identify, capture and disseminate analysis and insights in the field of natural resources and social progress.

Our mission is to provide open and free access to specialist knowledge and to disseminate good practice and innovation in this field. See www.highgrade.media for our portfolio of published material.

With support from the German Federal Ministry for Economic Cooperation and Development, through BGR, and the Inter-American Development Bank.

***

Follow us on social media for daily insights and behind the scenes moments:

Twitter
LinkedIn

Transcript

Åsa Borssén: 
You can't manage what you can't measure. Strange as it may sound, until recently, there has been no serious attempt to compare mining company performance across environmental, social and governance dimensions. Enter the Responsible Mining Index. I'm your host Åsa Borssén and this is Highgrade.

Welcome to Highgrade and this Natural Resources Podcast. Every now and then in the extractives, like everywhere else in life, an idea captures the collective imagination. And looking back, years later, one can see that society was ripe for it. The Responsible Mining Index was launched in 2018 and has been gaining momentum since. I’m here with Hélène de Villiers-Piaget, head of RMF, the organisation behind this idea.

Hélène, thank you for joining us today.

Hélène De Villiers-Piaget: 
It's lovely to meet you again, this way, podcast way.

Åsa Borssén: 
Let me start by asking you, why do you think the emergence of the Responsible Mining Index generated such interest?

Hélène De Villiers-Piaget: 
That's a few years ago, when we published the first Responsible Mining Index report, we now just refer to it as the RMI report because it's so long. And I guess the interest came for a number of reasons. One of the fact of facts, I think, is that we were covering companies that were not only listed, and well known in the West, but also private companies and state-owned companies. Another reason was that we included a whole section on economic development to try and give it a systemic approach, not just looking at the traditional ESG issues. So, we added an extra E so we talk about EESG. Then lastly, also the fact that we took a salient perspective. So, of course, there's a lot of risk-based assessment that's done by rating agencies, who look at things on a fairly narrow materiality perspective, the risk to the business for the investor. And basically, we took it from the risk to society and the environment at large, not just risk to the business.

Åsa Borssén: 
How did the idea of this RMI reports come up?

Hélène De Villiers-Piaget: 
Well, it's a little bit convoluted. But as I understand it, I wasn't there, but there have been conversations in the early I think 2011, somewhere like that, at the World Economic Forum. And amongst big mining companies. People were concerned that mining activity in resource-rich countries, was often not turning with ease into diversified economic development. And then the other thing that big companies said they felt they were putting in a lot of initiatives around ESG, but that there was no platform that was capturing leading practices, and where some of what they were doing could be shared. These conversations continued. And at the time, there was also an index called ‘Access to Medicine’, which is obvious from its name, what it does. And the thought was that despite that to compliment all the policies, practices, regulations, and so on in the world that were already there looking at development issues around mining, that perhaps an index looking at some of the large-scale mining would be helpful. And I guess that's how it came about.

Åsa Borssén: 
What would you say the aim of the index is?

Hélène De Villiers-Piaget: 
Well, so the index is a product within the Responsible Mining Foundation. And the Foundation's aim is to encourage continuous improvement in responsible mining across these EESG issues. So, it's not a certification by any means. But we provide a snapshot in time of the level of performance, the level of innovation, leading practice, at any two-year period that we look at, across a number of large-scale mining companies. So, encouraging continuous improvement we also learned it's very helpful when one goes to different parts of the world and speaks to companies in different geographic regions where the level of EESG awareness may not be as advanced, and where companies feel more comfortable to be within the context of continuous improvement, rather than pass or fail. And it really allows and acknowledges for the fact that it's a continuous learning process for everyone.

Åsa Borssén: 
And who is your target audience? Is it investors, governments or communities?

Hélène De Villiers-Piaget:  
We think the first audience is actually the industry, because the focus is on the industry, and they have to do the doing. So the others are important stakeholders that engage with the mining industry, care about the impact of mining. Investors are important. So are governments, so are communities, but at the same time, so re academics, bankers, finances insurers. We think the whole range of stakeholders are part of the audience, so to speak. And we do find that we have a very wide range of listeners to our webinars, readers of the website, and so on. So we think it does cover the full range. Although I must say, from our evaluation, it seems that about 35% of our audience has turned out over time to be the mining industry.

Åsa Borssén: 
And is it the mining industry that is funding this?

Hélène De Villiers-Piaget: 
From a funding perspective and a governance perspective, the foundation is independent, doesn't accept funding from mining companies. And when we do studies or reports, the foundation selects the companies that it's going to cover. So, we try to keep some distance between the companies and the reports, so that we have as much credibility and as much independence as possible in the outcomes.

Åsa Borssén:
We tend to believe that good ESG performance is good for business. Is that true?

Hélène De Villiers-Piaget:  
Well, we hear from ESG investors and the Financial Times and other publications keep saying that there's evidence that it's better, as they also say there's evidence that having women on boards, you know, results in better business. And of course, it's hard to find proof for that. But what one can see in the mining industry is so much of the challenges of mining are local. So often the physical problems that arise for mining companies, and the problems of credibility and trust have to do with what happens at the local level at the mine site and around the mine site. And in that sense, if one has good ESG policies and good ESG practices, one's likely to have a higher level of trust, one's likely to be showing a high level of respect, and one's likely to be limiting risk. And that's where we find investors are really interested in being able to see evidence of ESG performance, because they're aware of the risks for them when there's disruption, or distrust around the mining operations.

Åsa Borssén:
There are plenty of attempts to rate resource rich countries, for example, publications by the World Bank, EITI, NRGI, etc. But not necessarily many successful attempts to rate companies. Let's review the headlines. How is the industry performing?

Hélène De Villiers-Piaget: 
I'm just a bit cautious to say that we can't say the industry. But certainly from the sample that we look at, which was in 2020, 38 large-scale mining companies up operating in about 45 different countries for that group was we saw an increase of 17% in the scoring between 2018 and 2020. And we also saw an increase in public domain information or the disclosure of information of 49% in that period of time. One of the things though, that we come across fairly consistently, and we hope this changes over time is it where we see leading practices, they're often in one environment at one mind site or in one country. And they're not consistently implemented across all the sites where the company operates. And we really think that this would gain a lot more stature for the companies, if they look at their best practices, and then make sure to implement them across all their operations in any kind of jurisdiction. The other thing one sees is that sometimes in a particular jurisdiction where a certain activity is required, for example, declaring water quality on a certain regular basis, and so on, companies do that if it's legally required, but in the country next door, they might not do it if it's not required. So we really think there's opportunity for companies to look at their own best practices and do them regardless of jurisdiction, just implement them everywhere.

And then the other interesting thing is, we've come to the conclusion that leadership actually matters within companies. Because people often say, well, there are perceptions in the world around certain geographic regions, or developed or North and South are difficult, high-risk areas for operations. And that that would make a big difference in outcome or performance. And we've actually seen that that's not the case, once is the difference where it depends on the level of intention on the part of the board, and then the management leadership of the organisation. So, when you ask me, how is the industry doing, we think that there is a lot of attention being paid to ESG issues, we also think there's enormous scope to improve, and to learn from leading practice from others. So part of what we try and do when we publish the RMI report is to also make it possible for an emphasis on leading practice and then the learning piece. So, we try and make all the data available, and make it as easy as possible for companies to learn from one another.

Åsa Borssén: 
And you mentioned leadership, are there other factors that come into play? Do you for example see a correlation between company performance and size or nationalities or commodities?

Hélène De Villiers-Piaget: 
That's an interesting one, which I think, again, often plays into one's instinctive perceptions. And we had some thoughts, when we set out that we might have to make sure that we were comparing similar countries and looking at the level of risk in countries or things like that. But what we've actually found over time is that there's really little difference that it depends on the behaviour of the company. So to give you one example, we did a small sample of I think it was about 12 Toronto-listed small and mid-tier mining companies, exactly to test this, this perception that one would likely see better performance in a developed environment than in a developing environment, or that will be different, more difficult for companies in a developing environment. And the result of their study actually, was that although all the companies were Toronto-listed, the best performing mine site was in Burkina Faso. And it was interesting how that particular company, it was a small mine site small company, but they'd spend a lot of time thinking about ESG issues. And they'd also had quite a lot of guidance from IFC along those lines. So the biggest factor is the leadership. The other factor, of course, depends on jurisdictional regulation. So, where countries legislate, regulate, and then make sure that's implemented. And then the other factor is where companies belong to organisations and the organisations might have membership requirements or something like that. So for example, you know, EITI or an organisation that might then influence the behaviour of the companies,

Åsa Borssén: 
And does the report rank companies from best to worst performance?

Hélène De Villiers-Piaget: 
We do do some ranking at a thematic level. But we never use the words best and worst, because we're trying to remember, in terms of our aim is to encourage continuous improvement. So we really avoid the kind of language of winners and losers, and try to encourage in how we set out the report and the sort of visual representation as well as the report that companies rather compete with themselves than compete with their neighbours. And we have found that this is, this has led to a very high level of uptake and engagement with companies that are the poorer performing companies. And we're very pleased with that, because it's really important that you're influencing all the companies not only the ones that are near the top of the list, or the better performers who think they have a hope of you know, achieving something. And often the ones that are still struggling tend to just not try but we're very pleased to see that there's really a high level of engagement across the full range of performance.

***

Åsa Borssén: 
I opened the programme with the statement, you can't manage what you can't measure. The Responsible Mining Index brings in a more systematic way to compare EESG performance across companies in the mining industry. I'm talking with Hélène de Villiers-Piaget about their approach and main emerging insights.

***

Åsa Borssén: 
I'd like to address some of the methodology behind the RMI reports. Rating company performance can't be easy, and I think this is a really important question, do you rate intentions or results - the means or the ends?

Hélène De Villiers-Piaget: 
That is an important question and a very, very worthwhile distinction. So, I guess we look at both. So, the intentions we rate in terms of and we assess, shall I put it that way, in terms of commitments and policies. So on a particular issue, one would often ask what is the policy and test the policy and the commitments involved. But at the same time, we think that that's, of course, the easy part. And so we also look at actions. But in terms of results, we look at effectiveness, that's what we call it. So it's, it's measuring whether there's tracking targets, and remediation and improvement. And that, of course, is the lowest performing part of the measurement areas, the highest performing part as one can imagine, is commitments and policies. But the actual tracking and improving piece is the one that so far doesn't score that well, for most companies.

Åsa Borssén: 
A criticism raised on the RMI report early on was the fact that there’s no feet on the ground. Is there a risk of just reporting what companies tell you?

Hélène De Villiers-Piaget: 
There is certainly and it's one of the limitations that we always highlight that, that it is a limitation that one can't go and verify on the ground. But think about it this way. In the last report, we covered over 1050 mine sites in 45 different countries. So it's a virtually possibility to go and test and get feet on the ground. And also, even if I were to use local people to do so, it's really hard to control and manage that over such a vast scope. So we've accepted that it has to be one of the limitations.

However, I think we found together with other benchmarking type studies, that these bigger companies are smart enough not to provide untrue information. They rather withhold information, but we've not so far come across any companies that share untruthful information. And as part of the hedges against this challenge that we have, because it is limitation, is that we publish all the data. So all the documents go into a document library - for the last report there is 3800 plus documents, original documents. And then we also publish the scoring framework and the results in great detail down to indicator level, so that anybody can go and verify for themselves. And we always invite comments. And we have an erratum page so that we can note if they've been any mistakes. But until now we haven't had any challenges.

Åsa Borssén:  
Another key finding in last year's report was, and I quote, “even the best scoring companies fall considerably short of society expectations in all six thematic areas”. How is this so?

Hélène De Villiers-Piaget: 
Let me go back to how the framework the RMI framework is structured. So, there are six thematic areas to make it easier for people to navigate around. And the piece around falling short of society expectations is that the framework is based itself originally on mapping to a vast number of international frameworks, principles, standards, and expectations from different parts of the world, multilateral institutions, like OECD, also the UN guiding principles, the SDGs, and so on. So those we take as things that are an expression of what society expects, they've been internationally agreed. And then on top of that, we also map very directly all the indicators to the SDGs. And finally, in establishing the framework, and every time we do updates, we make sure to also consult with mining affected people in mining affected countries. So we spent really a lot of time engaging with people who are directly affected by mining, to make sure that we're not we're not just talking to experts who do know a lot and sitting in our own bubble of what we think matters. This has allowed us to say that we think it's a good articulation of what society expects. And then lastly, the framework is also made up not only of trying to manage risks, but also identifying opportunities. And there one thinks of some of the things around economic development where it's not necessarily a risk that's to the company, but there are opportunities for the companies to support broad based economic development in the areas where they operate.

Åsa Borssén: 
Sometimes the issues that matter at headquarters in London or Toronto are quite different from what happens on the ground, at the mine site. How can these different priorities be accounted for?

Hélène De Villiers-Piaget: 
This is something which mining companies themselves actually often express to us. Headquarter people often say it's so frustrating, we've got such a good policy, but it's not being implemented. And sometimes we hear from mine site level, operations level, people also saying, we've got such good things we've been doing, but they don't want to listen to us. So we assume it's a common problem. And one can understand why. We think the mine sites are really important in mining as an industry because so many of them problems and the ESG impacts on local, they're around the mine site.

And if one thinks about headquarters, these are usually problems that might arise have to do more with financial flows or things like that. But the kind of social and environmental problems and worker problems, of course, are at the mine site. So, what we do is we separately measure mine sites, and, and provide some feedback so that companies can also see how their mine sites vary. And also, to go back to the point you mentioned earlier, the critique that there are no feet on the ground. So we take particular mine sites, and write up reports on those mine sites so that local people can look at the reports, and point out if there are any deficiencies in the report on our part, that we've missed something, or use that report as the basis for engaging the company if they want to see improvements. So, one example I recall, is a mine worker in South Africa, in fact, we had a workshop there who said, wow, he's just seeing that the company he works for, there was some leading practice that they were implementing in Latin America. And he's gonna tell him he wanted that at his mine site, as well. So these are the ways in which we try to make some of the data observable at the mine site level without making it too technical.

Åsa Borssén: 
What has the response been from mining companies? And have they taken onboard the data from mine site level?

Hélène De Villiers-Piaget:
Well, we'll have to see because there was not a good improvement noticeable between 2018 and 2020. And we know that companies can provide the aggregated information, so they must have the original disaggregated information. But there doesn't seem to be a habit or a culture of sharing it at the local level. And we think that's a shame, because besides the obvious reasons why it matters. And investors say to us, they want to see the disaggregated data because it's no good if you know, if you get if you have aggregated data, for example, on the level of risk in tailings facilities or other water related or problems that are really local, and that get hidden in the aggregated data. But we hope that companies will start realising it's in their interest to share local information in a disaggregated format, because it must build trust. And it also limits risks from investor perspective.

Åsa Borssén: 
And looking ahead, what's in the pipeline for RMF.

Hélène De Villiers-Piaget: 
So, this year we see that we're not going to be travelling any of us too much as one had might have thought some while ago. And so we will continue with our publications and with our contact with stakeholders around the world. And one of the things we'll be publishing in the next few months is actually a study on severe adverse impacts in the mining industry. And this is to balance out another critique that one hears that one is looking for leading practice, but what about all the adverse impacts that still occur. And so it's really to acknowledge that despite the identification and the articulation of good practice, and a lot of work being done by many companies at different levels, there's still really a lot of severe adverse impacts that happen. And this is not helpful to the industry, and it somehow cancels out all the best efforts. And we'd like to bring some attention to that.

And then, of course, we'll start working this year on the RMI report for 2022. Most of the work occurs this year. And then we'll be animating our support for the mine site assessment tool, which is a tool that we've published now in 14 languages. And that is a good entry point, a structured entry point for local people and workers to engage mining companies. And these are being used in in countries where we're not necessarily measuring companies or mine sites, but it's really to try to reach the very vast mining industry beyond what we can capture in the RMI report. And also as a response from local people in many parts of the world, who said, they really appreciate the RMI report for its detail and attention to the things that matter. But we quite often heard, please make a version for us that we can easily use in engaging with companies. And that's how the mine site assessment tool has come about.

Åsa Borssén: 
More generally, what do you think will be the ESG priorities for the industry in the coming years?

Hélène De Villiers-Piaget: 
Well, I don't know what the priorities will be. But perhaps what they should be, is to think about in very simplistic terms, how to build trust, and how to treat the stakeholders as if they were your neighbours. Because so often, there's this sort of sense of they're the other. We've seen during this time of COVID what an important role mining companies can play if they choose to act as if they were your best neighbour. And secondly, think about how they can stabilise economies because of their size. And this hopefully then carries through to more comfort in the engagement between the companies and the various stakeholders. And then lastly, I think that investors can gain a bit more courage, be a little bit more frank about their assessments of companies, and what they expect on the basis of encouraging continuous improvement.

Åsa Borssén: 
Hélène, it's been a pleasure. Thank you so much for joining us today.

Hélène De Villiers-Piaget:
It's my pleasure too.

***

Åsa Borssén: 
I hope you enjoyed this conversation with Hélène, reviewing the Responsible Mining Index, and some strong messages coming up. 

Scrutiny of environmental, social and governance performance is gaining ground in the industry. But according to the RMF actual performance still falls short of societal expectations. So how do you change performance? A key insight is that leadership matters greatly. The best performing companies start with strong commitment at the very top. A new RMI report will be coming out in 2022. Are we going to see a material improvement?

As always, thank you to our sponsors the German Federal Ministry for Economic Cooperation and Development, through BGR, and the Inter-American Development Bank. Make sure to subscribe to our channel on whichever podcast platform you are using. Next episode, we will consider the key trends emerging in the extractives sector in our debut editorial podcast. Until then, so long!