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AU - AngloGold Ashanti News Story

$23.1 0.7  3.1%

Last Trade - 07/05/21

Sector
Basic Materials
Size
Large Cap
Market Cap £6.89bn
Enterprise Value £7.46bn
Revenue £3.17bn
Position in Universe 974th / 6858

'Deeds, not words': mining firms reshape boardrooms as investors demand sustainability

Tue 13th April, 2021 6:00am
By Helen Reid
    JOHANNESBURG, April 13 (Reuters) - Under fire after a string
of high-profile disasters, mining firms are shaking up their
boardrooms in response to criticism that they are failing to
meet their own environmental, social, and governance standards.
    Shareholders are demanding change from an industry whose
reputation has been battered by deadly collapses of mine waste
storage facilities in Brazil, and Rio Tinto's destruction of
sacred rock shelters in Australia.  urn:newsml:reuters.com:*:nL8N2M05F4
    Companies are responding with changes to the structure and
skillset of their senior management - a shift investors and
governance experts say is sorely needed to mitigate risk in an
inherently hazardous industry.
    "The level of understanding and capability at board level is
insufficient at the moment in the mining sector, and it doesn't
yet in our view support the transition of these companies to
best practice," Andy Jones, metals and mining lead at investment
manager Federated Hermes, said. 
    Brazil's Vale SA  VALE3.SA  - keen to show its dedication to
safety and sustainability after two tailings dam failures in
less than four years - recently announced the biggest shakeup in
its board since it was privatized in 1997.  urn:newsml:reuters.com:*:nL1N2KO3IT
 urn:newsml:reuters.com:*:nL1N2L83CD
    Seven of the 13 members of the new board set for approval
this month have extensive experience in ESG and
sustainability-related issues, up from five previously. The
company has also added requirements for nominees to have
experience in community relations.
    AngloGold Ashanti  ANGJ.J  last year appointed as a
non-executive director a mining governance adviser to the United
Nations Economic Commission for Africa, Kojo Busia, after the
board identified the need to increase its efficacy in ESG
oversight, it told Reuters. 
    Barrick Gold  ABX.TO  also bolstered its ESG credentials
with the appointment of World Bank executive director Anne
Kabagambe to its board in November, highlighting her experience
in international development.
    Some miners have also begun tying executives' and directors'
bonuses directly to measurable ESG outcomes. Rio Tinto has
connected 15% of executives' annual bonuses to ESG metrics for
the first time.
    Bonuses for the director of Vale's executive board for
safety are calculated based only on health, safety, and
sustainability indicators.
    But companies must also improve internal reporting and
foster a culture of openness if the industry is to prevent a
repeat of past mistakes, governance experts say.
    "The remuneration is obviously key in terms of setting
incentives, but that on its own doesn't work unless the board is
getting the quality of information and there is a spirit of
independent thought and challenge," said Joanna Hewitt, a
partner at law firm Baker McKenzie in London who advises
companies on corporate governance. 
    For boards to exercise proper oversight, directors need
access to information that bypasses management, Daniel Smith, a
governance advisor with CGI Glass Lewis, told Reuters last
November.  urn:newsml:reuters.com:*:nL8N2I44A4
     To achieve that, a specialist heritage advisor reporting
directly to the board could be appointed, or a board could have
an ESG subcommittee responsible for stakeholder management,
including of traditional owners, he said.
    To help investors track their progress, mining companies
must publish more data on issues like community engagement,
water and air quality, and rehabilitation and closure plans,
said Charlotte Valeur, founder of governance advisory firm
Global Governance Group.
    As a result of investor pressure, more mining companies are
reporting so-called scope 3 emissions data, a measure of
downstream CO2 emissions by metal consumers. Data transparency
is key, says Valeur. 
    "It has to be deeds, not words," she said. "What it's easy
to do is have some fluff - but what we want is hard numbers."

 (Reporting by Helen Reid in Johannesburg, Melanie Burton in
Melbourne and Marta Nogueira in Rio de Janeiro; Writing by Helen
Reid; Editing by Amran Abocar and Jan Harvey)
 ((Helen.Reid@thomsonreuters.com; +27 66 156 5214;))
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