ESG-friendly supply chain will 'open up' capital

Operators and stakeholders can make the industry more attractive
ESG-friendly supply chain will 'open up' capital ESG-friendly supply chain will 'open up' capital ESG-friendly supply chain will 'open up' capital ESG-friendly supply chain will 'open up' capital ESG-friendly supply chain will 'open up' capital

The key benefit of traceability will be accrued downstream, by end-users

The traceability of critical minerals is vital in helping the mining industry access investment and improve its reputation, say technology and supply chain experts.

Speaking during the Critical Minerals Association (CMA) webinar titled ‘ESG: Track, Trace and Provenance,' Jeff Townsend, the CMA's chief operating officer, said traceability can "open up" new opportunities for positive publicity and investment for the mining industry.

The issue of traceability has become more prominent in the mining industry as stakeholders look to cut carbon emissions in supply chains and abide by environmental, social, and governance (ESG) regulations.

Douglas Johnson-Poensgen, founder and chief executive officer of supply chain technology company Circulor, said the COP26 summit emphasised the importance of traceability and the technologies that enable it, claiming that it is now a necessity for investment.

According to Johnson-Poensgen, the most significant change in attitude towards ESG goals has come from the financial segment. He insisted that operators and stakeholders can make the industry more attractive to institutional investors by improving the traceability of commodities.

The importance of changing perceptions of mining was demonstrated by COP26, which Johnson-Poensgen said "lacked focus" on what the industry can offer the whole supply chain.

This will prove to be a significant driver of future traceability technology initiatives as investors and end-users expect mining operators to be able to demonstrate the provenance of their commodities, he explained.

"The engagement of the financial community in recognising its role in driving ESG is a big improvement," Johnson-Poensgen said.

"Another theme is a growing recognition that supply chains have to be better understood," he added, and then described cutting emissions within logistics processes as a "fundamental challenge" for the mining industry that digital technologies can enable.

The key benefit of traceability, according to Johnson-Poensgen, will be accrued downstream at the end-users, such as car manufacturers, that have to improve their ESG performance and prove their products are built sustainably.

He pointed to the production of electric vehicles (EVs) as an example. Despite offering environmental benefits once they are operational, they emit a considerable amount of carbon in production because manufacturers draw components from around the world.

"If you can't decarbonise the supply chain, then you might as well stick with petrol and diesel," Johnson-Poensgen stated. "Institutional investors have started to realise that scientific solutions exist and can provide real evidence of what people are doing [to cut emissions]."

These solutions, including digital twins, blockchain, drones and satellites, can take a specific commodity and measure to what extent its extraction and transportation are ESG compliant.

A digitally enabled, ESG-compliant supply chain captures data at every point of a commodity's journey across the chain; it can prove the provenance of the commodity's origins, according to Johnson-Poensgen.

"We have talked about technology and its role; these solutions are going mainstream and are no longer at the pilot stage - we need to use this technology in complex supply chains to improve ESG."

Jamie Strauss, the founder of data and research platform Digbee, agreed and said the "engagement of the financial community is driving change - you can't now invest without an emphasis on ESG".

According to Strauss, by showing its worth in cutting emissions in the supply chain, the mining industry can avoid being included in "generic conversation" and can instead be seen as a key integrator of the many factors that comprise ESG, and therefore invite investment.

Nathan Dubrich, head of sales, Source Certain International, said other industries have "moved quicker" than mining concerning ESG, but the current situation offers an opportunity to improve transparency.

Dubrich went further and said the issue of ESG isn't just about technology but also implementation and strategy, ensuring compliance and meeting end-user expectations.

"We have a great opportunity, and there is a clear need to collaborate and bring companies to together," he noted.

"There is no one solution to achieve ESG; the opportunity is today, but the end consumer will ask more questions and demand proof of where the commodities come from."