Is conventional ESG data failing mining companies and investors?

By Gus MacFarlane, Vice President, Verisk Maplecroft

The growing integration of ESG data into the decision-making processes of conventional investors demonstrates how sustainability really has gone mainstream. However, the process is far from straightforward. In a new white paper we unpack the main challenges facing both investors and mining companies as they try to navigate this strategic shift.

Key issues we explore:

• How differing visions of what ESG actually means can result in the misinterpretation of ESG data – and why this is a particular issue of concern in the mining context.
• The need to reconcile the fundamental tensions that exist in the ESG data market between data consumers (e.g. mainstream equity investors) seeking standardised, cross-portfolio ESG data, and data suppliers responding to a patchwork of disclosure frameworks and localised risks.
• Growing concern over the levels of divergence between different ESG ratings agencies’ assessments of companies (upon which many investors rely) – and what might be driving this.
• The reliance of some investors on relatively shallow, one-dimensional data that gives limited insight into company ESG risks, due to a lack of contextualisation, granularity and analysis of net impacts. 

In addition, we look at some of the dynamics that are likely to help investors gain better insight into mining companies’ ESG performance – and help mining companies to offer a more accurate picture of their ESG impacts and risks. This includes, for example, the potential for more localised, insightful ESG reporting (and analysis) and the potential role to be played by evolving technology.

Visit Verisk Maplecroft to download the white paper.