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Op-ed: Do we understand ESG? Or are we trying to make it fit?

The beauty of what I do is that I get to engage and exchange every week and month with incredible experts and industry professionals giving their insights and sharing their passion on, and behind the screen.

ESG has been on the cards for a while, some of us remember it as CSR, often tackled and addressed on the last day of conferences and events, considered as the cherry on the top, making it “look good” for mining companies.

AUTHOR: Elodie Delagneau Savasta, Project Director – Mining at Clarion Events Africa

How far we’ve come. Today, there is not a single investment discussion that can possibly avoid touching on ESG. Call it the backbone or the DNA of any business nowadays, but to quote Terence Lyons, CEO of TSC.ai, the reality is that “ESG is a real indicator of financial performance”.

We know how much numbers matter, as well as good scoring, sustainable ROI, consistent low credits loss but Allison Forrest, Investment Officer at Resources Capital Funds, had a point when she insisted that focusing too much on numbers, gets you distracted, and pushing for standardization of ESG principles can often hamper the meaningful results they are supposed to generate.

A few weeks ago, an article shared by a senior specialist at Principles for Responsible Investments got my attention – out of the five highest ESG rated companies, British American Tobacco was ranking 3rd, followed by Glencore.

The nature of the industries mentioned naturally brought questioning on the validity and transparency of the evaluation.

How can an industry bringing negative health externalities and a mining company, considered as disruptive for the social and environmental spheres, can possibly be one of the top 5?

Over 60 comments, something quite striking came up. The truth there is “no one ESG signal”, ESG itself does not have one meaning, it comes down to investors and the industry they are looking at to not only look good but also do good.

The tobacco and mining industry may not be in essence the greenest industries but having to integrate and change their business model and approach because of ESG, could certainly improve their contribution to the S and E that are such important pieces of the ESG puzzle.

If you didn’t get the chance yet, you should definitely take 60 min of your busy day and listen to the panel we had the pleasure to host here.