The Mines and Money conference held at the end of last year – Europe’s largest mining conference – was notable for two separate, but connected events.
The first was the winning, by Royal Road Minerals, of the inaugural Mines and Money (Exploration and Development) ESG award, sponsored by Digbee Limited.
The second was an anti-mining protest that took place outside the event, and which targeted the activities of a particular Canadian company with activities in Ireland.
These days, a high-profile protest like that is enough to derail investment sentiment towards any project, and rightly so – a conversation with the protestors showed them to be genuinely fearful of the effects that a new mine was likely to have on their community.
Whether they were right to be concerned is perhaps moot. The fact is that they were, and in part the fault for that lies in a failure at the level of the Environmental and Social Governance policies of the company in question.
Will the project ever get going? Not if it doesn’t have the support of the local community, it won’t.
This is a tricky road for investors to tread, and just not retail and high net worth investors either. Even the institutions know it’s crucial to get the ESG right, and to get it right from day one, if a project is really going to succeed.
But how can you really know a company has correct, meaningful and successful ESG procedures in place?
That’s where Mines and Money’s ESG award comes back into the picture, or more particularly its sponsor, Digbee.
Some of the most senior figures in the mining investment community in London and Canada, among them Evy Hambro at Blackrock, as well as influential decision makers at Orion, BMO and Dundee, recognised some time ago that in order for mining investment to continue as a meaningful activity in Western capital markets, ESG would have to take centre stage.
Luckily, there was a man and a company ready to step up and take on that task.
Digbee was founded by old mining hand Jamie Strauss a couple of years ago, partly as a research house, but primarily to bring ESG in the mining sector into an orderly and useful state, to provide a degree of aggregation of all the varying standards and to establish a recognised certification of ESG status.
The award Digbee gave to Royal Road in December, recognising that company’s work on the ground with impoverished and war-ravaged communities in Colombia, represented something of a coming of age for the company.
No longer was Digbee itself just another start-up.
It’s now in a position to give out awards, and to show companies the way forward in ESG.
During the Mines and Money conference itself at least one company chief executive approached Strauss and asked him directly whether he should be using the Digbee product.
When you’re in business, you know you’re on to a good thing when your customers come to you looking to buy, rather than the other way round.
But, apart from the fact that Strauss is well known in the mining industry, Digbee is in any case capable of selling itself, precisely because it’s so simple and because the benefits are so tangible.
Is there a conceivable downside in a mining company becoming legitimately certified and rated on an ESG basis? It’s hard to think of one.
On the other hand, the positives are legion.
With a Digbee certification investors are given comfort that a mining company has commenced a journey of embracing a more sustainable operation, putting itself up for an independent assessment and a commitment to ongoing improvement across the entire ESG spectrum.
To coin a phrase, they can take that to the bank. And if the big names like Blackrock and Orion are doing that, then why shouldn’t other institutions and investors lower down the pecking order do it too? The answer is that increasingly, they will.
Already, SP Angel are partnering with Digbee, and so now are Peel Hunt. These are some of the leading names in small to mid cap mining in the UK, and they are likely to be followed by others.
The great advantage of Digbee is that it’s online and it’s easy to use. It’s mapped and aligned to over 30 global standards and incorporating core Paris protocols, such as raising the responsibility of ESG to board level.
Naysayers may argue that that takes up valuable management time. But consider also the increasing benefits being recognised through adoption of ESG parameters and that companies are increasingly appointing dedicated ESG specialists to board positions. For those people, Digbee will be just up their alley.
To complete the Digbee certification process, the appointed director just needs to fill in a set of surveys that are expertly cross-referenced. But this is an information gathering exercise rather than a test.
Thus, it may be that some parts of the survey will throw up issues that had not previously occurred to the company in question. Or it may be that in the final analysis the company does not score that highly in its ESG performance. Fear not, although Digbee does eventually publish all scores, there is a time delay of a year, which gives any underperformers plenty of time to start getting their act together. Digbee in this context is acting as a wake up call, and is no less a valuable tool for that.
Strauss reckons that a principle area of use for the Digbee tool will be in mergers and acquisitions, and you can see why. When you haven’t worked an asset up or built a company yourself, but you’re interested in buying or transacting on it, how can you know whether or not there are any ESG issues on it that aren’t immediately apparent? Larger companies are increasingly concerned about their ESG scorecard as it impacts cost of capital and reputation.
If an asset comes with an already existing Digbee certification, it provides a means to access critical information to address due diligence questions and the deal-makers can get back to what they do best: talking about value.