Mining: Are Namibia’s Environmental, Social and Governance Practices Up to Par?

As sustainability in Namibia’s mining sector grows in importance, the focus on Environmental, Social, and Governance (ESG) practices will become greater.

Despite the lack of a formalised ESG framework, scrutiny of the sector’s adherence to responsible practices is increasing.

We aim to explore the intersection of Namibia’s mining sector and ESG principles – to shed light on the meaning of ESG principles and challenges, and to explore opportunities for establishing a comprehensive framework to ensure sustainability and resilience.

Enhancing corporate social responsibility and boosting returns for shareholders – recognised as effective means to mitigate risks – ESG principles are integral to the industry’s operations.

ESG principles further provide a comprehensive approach to corporate reporting, extending beyond traditional financial metrics.

By disclosing non-financial aspects, ESG reporting aims to foster sustainable business practices and uphold societal values.

Moreover, ESG practices serve as vital indicators of a company’s long-term sustainability.

While the mining sector’s achievements are generally acclaimed, its true value is measured by its commitment to long-term sustainability and the tangible impact on the ground.

CHALLENGES

Given the crucial role of Namibia’s rich natural resources in the economy, the extent to which the mining sector integrates ESG considerations into its operations must be examined.

This is crucial to promote long-term sustainability and to assess the sector’s commitment to responsible practices.

The absence of a formalised ESG framework in Namibia has led to inadequate implementation of ESG principles across key sectors, notably in mining.

This gap extends to the Namibian Stock Exchange (NSX), where companies are mandated to adhere to the NamCode, the country’s corporate governance code, as the de facto standard for ESG reporting.

While the NamCode may incorporate elements akin to ESG principles, they are not synonymous. Their scope and objectives differ.

This distinction is crucial: Conflating compliance with the NamCode with adherence to ESG principles can potentially lead to misleading assessments and negative ratings.

To address these challenges, stakeholders must differentiate clearly between NamCode provisions and holistic ESG criteria, and must consider a tailored ESG framework that encapsulates environmental, social, and governance aspects more thoroughly.

Compliance with the NamCode does not necessarily ensure alignment with comprehensive ESG standards.

Recognising and addressing this distinction is paramount for reporting practices that accurately reflect a company’s commitment to sustainability and responsible business conduct.

REFORM ‘A MUST’

The current practice of ESG self-regulation in the industry warrants attention and reform.

Autonomy has created a situation where companies can selectively choose which ESG considerations to prioritise, drawing on a patchwork of environmental laws, the Companies Act and the NamCode, while disregarding others.

This approach not only lacks consistency, but creates ambiguity for investors seeking clarity on companies’ ESG practices.

Instead of having a unified and centralised framework, investors are left to navigate various legal spheres in search of relevant ESG information.

Addressing this is essential for promoting transparency, accountability and alignment with broader sustainability goals.

A comprehensive regulatory ESG framework would provide clarity, consistency, and standardisation across the industry.

It would not only facilitate informed decision-making for investors, but also encourage companies to adopt more responsible and sustainable business practices.

A WIN-WIN APPROACH

ESG criteria encompass a wide range of factors that can differ greatly depending on the industry, geographical region, and the specific interests of stakeholders. Various organisations and regulatory bodies may prioritise different ESG elements according to their strategic goals, resulting in diverse definitions and applications.

Although there is no universally accepted definition of ESG, the mining sector – with its considerable environmental impact, social responsibilities and governance challenges – clearly stands to gain from a structured approach to ESG considerations.

This prompts an important question: Does the mining sector require a dedicated ESG framework?
Such a framework could bring multiple advantages, potentially acting as a driving force for sustainable growth within the sector.

Several countries have successfully integrated robust ESG frameworks into their mining sectors, offering valuable lessons for Namibia.

For instance, Canada and Australia have comprehensive guidelines that not only enforce stringent environmental protections, but also promote social responsibility and ethical governance.

These frameworks are supported by active monitoring, transparent reporting requirements, and stakeholder engagement processes that ensure communities benefit from mining activities.

By studying these models, Namibia could tailor similar ESG standards to fit its unique environmental, social and cultural landscapes.

Importantly, this approach would involve collaboration between government bodies, mining companies, local communities, and international experts.

Such practices could position Namibia as a leader in responsible mining in Africa, attracting ethical investment and fostering socio-economic growth.

POTENTIAL

In conclusion, establishing an ESG framework within Namibia’s mining sector holds significant potential to act as a catalyst for economic development and fostering growth poles within the industry.

These benefits are likely to resonate beyond the sector itself, aligning mining practices with broader sustainability objectives and international standards.

Current ESG practices fall short of global expectations, underscoring the urgency of developing a comprehensive ESG framework.

Such an initiative is critical, not only to address current challenges, but to ensure the sector’s resilience and long-term viability in the face of evolving global standards towards sustainability.

Andi Jamellee Janke is an admitted legal practitioner of the High Court of Namibia. She has an LLB honours, as well as a postgraduate diploma in business administration.

Meameno Johannes is a distinguished Namibian economist with a PhD in economics from the University of Western Cape. She has played a pivotal role in spearheading the development of Namibia’s ESG guidance framework.