Is Namibia’s Mining Sector Meeting ESG Standards?

Namibia’s mining sector has garnered international recognition for its economic contributions and mineral wealth.

As sustainability grows in importance, there is an increasing focus on environmental, social and governance (ESG) practices within the industry.

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

Recognised as an effective means to mitigate risks, enhance corporate social responsibility and boost returns for shareholders, ESG principles are becoming integral to the industry’s operations.

ESG principles 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, beyond their immediate benefits, ESG practices serve as vital indicators of a company’s long-term sustainability.

Thus, while international acclaim highlights the sector’s achievements, its true value is measured by its commitment to long-term sustainability and the tangible impacts on the ground.

Namibia’s absence of a formalised ESG framework has led to inadequate implementation of ESG principles across key sectors, notably in mining. This gap extends to the Namibian Stock Exchange, where companies are mandated to adhere to the NamCode, the country’s corporate governance code, as the de facto standard for ESG reporting.

However, it’s important to recognise that while the NamCode may incorporate elements akin to ESG principles, they are not synonymous. This distinction is crucial, as 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, considering the development of a tailored ESG framework.

While ESG and corporate governance principles share similarities, their scope and objectives differ.

Therefore, while compliance with the NamCode may address certain governance aspects, it does not necessarily ensure alignment with comprehensive ESG standards.

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

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

This fragmented approach not only lacks consistency, but also creates ambiguity for investors seeking clarity on companies’ ESG practices. Instead of having a unified and centralised framework, investors are left to navigate through various legal spheres in search of relevant ESG information.

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

Establishing a comprehensive regulatory framework for ESG practices would provide clarity, consistency and standardisation across the industry.

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 elements of ESG 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 situation prompts an important question: does the mining sector require a dedicated ESG framework?

Establishing such a framework could bring multiple advantages, potentially acting as a driving force for sustainable growth within the sector.

Looking abroad, several countries have successfully integrated robust ESG frameworks into their mining sectors, offering valuable lessons for Namibia. Canada and Australia have established 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 international 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 to create a resilient framework that supports sustainable development.

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

*Andi Janke is an admitted legal practitioner of the High Court of Namibia, holding an LLB honours and postgraduate diploma in business administration. She is a senior associate at Sisa Namandje & Co. Inc. She is currently pursuing an LLM in international trade, business and investment law at the University of Western Cape.

*Meameno Johannes is a distinguished Namibian economist with a Ph.D. in economics from the University of Western Cape. She specialises in ESG initiatives and has extensive experience in economic research and policy analysis. She is a senior policy analyst at the Namibia Savings and Investment Association.