Building trust through ESG: Community engagement in the mining sector

The mining industry, historically linked with significant environmental and social impacts, faces increasing pressure from stakeholders to demonstrate responsible business practices. This pressure is not just regulatory or market-driven, it comes from the very communities where these companies operate. This is where a robust Environmental, Social, and Governance (ESG) strategy comes into play, serving as an essential tool to build community trust and secure a social license to operate.

Engaging communities through ESG

ESG is an essential aspect of business strategy, especially in industries such as mining. Active community engagement forms a critical part of the 'Social' pillar of ESG, facilitating open dialogue, fostering understanding, and creating shared value.

Mining companies can leverage ESG for community engagement with:

Open and transparent communication

Sharing information about the mining operations, including potential impacts and mitigation strategies, builds trust and enables informed discussions. Transparency is fundamental to meaningful engagement.

Community involvement in decision-making

Including community representatives in key decision-making processes fosters a sense of ownership and mitigates the risk of disputes. This could involve decisions around land use, environmental conservation, or community development initiatives.

Shared value initiatives

Developing programs that benefit both the community and the business, such as local workforce training or community infrastructure development, can help bridge the gap between corporate objectives and community welfare.

Matthew Hall, Executive Director of PKF Perth, shares his insight: 

"Successful community engagement is not about managing community reactions, it's about involving the community in the ESG journey. By integrating their insights into ESG strategies, mining companies can turn potential obstacles into shared successes."

The power of trust and social license to operate

The social license to operate (SLO) extends beyond regulatory compliance. It is an unwritten social contract, a trust earned from the community, which allows the mining operation to function harmoniously within its environment. Here's why this trust is crucial:

Risk mitigation

Community opposition can lead to costly delays and reputational damage. Building trust through ESG practices helps to reduce these risks and fosters a supportive relationship with the community.

Enhanced reputation

Being recognised as a responsible and community-focused entity strengthens the company’s image, both locally and globally. It can attract investors and partners who value responsible business practices.

Long-term success

A social license to operate ensures ongoing community support, essential for the longevity of mining projects. It aligns the company’s goals with community welfare, promoting sustainable growth.

As Peter Sinclair, Partner of PKF Perth, puts it:

"In the mining industry, community trust is a currency that's as valuable as the resources being extracted. It’s about building relationships that last, through transparent and responsible actions."

Building a future together

The mining sector's relationship with communities is evolving, driven by a shared commitment to responsible and sustainable growth. Through strategic ESG practices, mining companies can build trust, secure their social license to operate, and forge lasting partnerships with communities.

Matthew Hall concludes:

"Building trust through ESG is about community partnership. It’s the path towards a more sustainable mining industry, and a more inclusive and responsible business environment."

By aligning corporate goals with community well-being, mining companies can turn potential challenges into shared triumphs, shaping a future where everyone has a stake and everyone benefits.

Contact your local PKF advisor to explore how we can support your resources project, at every stage of its asset lifecycle, to deliver integrated and sustainable solutions for your business.