Why trust matters for miners in advancing the global energy transition

The global transition to clean energy is creating unprecedented demand for minerals the sector produces. Minerals such as lithium, silicon, copper, and cobalt are vital if the world is to power electric vehicles, build wind turbines, scale-up solar photovoltaics, create new power grids, and energy storage. Emerging technologies in hydrogen fuel cells and carbon capture may boost demand for platinum, palladium, and other catalyst materials. 

At the same time, mining still faces challenges that threaten the sector’s licence to operate. Issues such as Indigenous peoples’ rights, impacts on biodiversity, emissions, tailings dams, social conflicts resolution and corruption.  

These are issues regulators, investors and communities care deeply about, and they must be managed to ensure mining companies can ramp up extraction without causing harm. These are issues tied to high standards of responsibility and trust. 

The mining industry is already scrutinized. But its importance to the clean energy transition will place it directly under even more of a microscope from a wider range of stakeholders. Given the scale, complexities and challenging trade-offs that need to be made, building trust in this new environment is a complicated task. But it is essential.  

It starts with responsible operations. Mining companies need to limit GHGs and minimize their impact on the environment. They need commitments and a pathway to net-zero that is aligned with the latest science and goals of the 2015 Paris Agreement. There have been a number of inroads in that regard. Many, but not enough, mining companies have articulated plans and implemented specific initiatives to achieve a net zero target.  

However, to build trust, substantial decarbonization initiatives need to occur across the entire industry. And not just operational emissions. While mining is responsible for approximately 4%-7% of global greenhouse gas emissions, that rises to around 28% if emissions linked to the use of mining products are included. Today, stakeholders increasingly expect mining companies to better understand the different carbon profiles of the commodities they sell and understand the commitments of their customers to reduce emissions from the use of their products.  

Beyond emissions, water management and tailings are also critical issues that, over the past several years, have seen mining companies invest in a range of more responsibly minded initiatives and practices. For example, dry stack tailings, one of the most sustainable methods to store filtered tailings, pose a significantly lower risk to the environment versus traditional tailings ponds. This method is now used in mining operations all over the world including in Canada, Chile, and Australia.  

Evolving expectations for business in society 

Responsible operations also mean rising to higher levels of expected ethical behaviour as well as good governance. Fortunately, businesses in general have made considerable progress on those fronts. According to the 2023 Edelman Trust Barometer, societies across the globe view businesses as the most competent and ethical institution ahead of NGOs, government and media. 

However, when it comes to climate change, the opposite is true. Edelman’s 2022 Special Report: Trust and Climate Change found — in contrast to all other issues — businesses are the least trusted institution when it comes to climate change. Nearly two-thirds believe companies are doing mediocre or worse at keeping their climate commitments. Not only that, CEOs are distrusted as spokespeople on climate — less than half of people (41%) trust them to tell the truth about climate change and what needs to be done to address it.  

There is clearly a disconnect. As the most trusted institution when it comes to everything other than climate, business holds the mantle of greater expectations and responsibility in the public’s eye. Businesses need to start rising to the occasion on climate as well.  

Demystifying the mining sector 

For many stakeholders, mining continues to be a “black box.” There is a lack of understanding as to how modern society uses mined materials, let alone how these minerals are extracted from the earth. Effective communication is the key to educating stakeholders about the industry and its role in a greener society, which can then help mining companies build and maintain support for their operations. Better education is the first step. The next step, and the real key to building trust through communication is the action that underpins it. Being seen as a source of reliable information, supported by substantiated evidence is crucial to building trust. It also helps when companies look to correct and counter sources of false or misleading information.  

To build trust, mining companies (like all businesses) need to prioritize engaging with their stakeholders in a transparent and meaningful way, to ensure they understand the companies’ overarching purposes and goals for society, and the actions they are taking to deliver on them. This means that mining companies should actively address stakeholder concerns and involve them in decision-making processes. This would help stakeholders better understand the rationale behind each mining company initiative. 

It begins by mining companies communicating the change or transformation they aspire to take going forward. And it can begin even when companies don’t have all the expected processes and systems in place. What is important to stakeholders is open dialogue and communication about the willingness to change and the resources for achieving change. For companies that are typically conservative in their communications, conveying this willingness to change is a bold step. It suggests this is a first step in a long process and sets an expectation that stakeholders will be kept apprised during the process. 

Building trust through communications also means greater specificity. As mining companies become more serious about their commitments towards the energy transition and protecting the environment, they will be expected to communicate their plans and specific initiatives. Evolving expectations are being driven by platforms like the recently launched Global Investor Commission on Mining 2030. This initiative, backed by The Principles for Responsible Investment network and representing more than US$120 trillion under management with support from some of the world largest mining companies, seeks to push miners to adopt tougher sustainability policies with the goal of improving industry practices and outcomes more quickly. The emerging rules will draw on lessons from investors and the industry’s development of the Global Industry Standard on Tailings Management. A key pillar of both platforms is the request that miners communicate more specificity. In short, communication needs to be deliberate and speak to specific actions going forward.  

Between a rock and a hard place 

The journey the mining industry needs to take over the next few decades is perhaps one of the most challenging of any sector. Demand is expected to surge as much as 500% by 2050 for the metals and minerals needed to make the clean energy transition possible. At the same time, mining companies will be under more pressure than ever to achieve this responsibly. Building trust is the key to bridging these two challenges.  

If mining companies embrace the need for change, communicate their plans and, most importantly, deliver on their commitments, they may just realize a generational opportunity to not only build trust in this industry but perhaps be viewed in a totally different light to how many view them today — not as an extractive industry but one that is helping to build a greener future.     

— Daniel Weinerman is vice-president, financial communications with Edelman Smithfield.