Companies listed on the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) will, starting January 2024, be required to report on sustainability issues as part of their financial disclosures.
This move by the regulator, titled Practice Note 16, is a welcome one that I have been advocating for since 2020. In doing so my main drive has been mandatory sustainability reporting across the mining sector for both listed and unlisted companies due to the inherently destructive nature of mining operations.
However, this does not take away from the work that has been done by the regulator and gives us a good start as we have about four mining companies listed on the ZSE and VFEX jointly.
The question we need to grapple with is whether the minimum disclosure requirements effectively cover ESG topics relevant to the mining sector and secondly, if they push listed mining companies to develop ESG strategies that they deliver on. My brief comments on those issues are as follows:
Globally recognized sustainability reporting standards
Firstly, the regulator did a good job by not reinventing the wheel and opting to use the existing globally recognized sustainability reporting standards, namely, GRI (Global Reporting Initiative) and IFRS (International Financial Reporting Standards) albeit that most, if not all, of the standards reference GRI while only some refer to IFRS- which I mention merely as an observation and not to point out a fault or objection.
Practice Note 16 goes further to categorize the disclosure metrics into Economical, Environmental, Social and Governance which will make reporting easier for the listed companies but I will focus on the latter three which comprise ESG.
Social
On Social: Sustainable Community development through CSR and CSI has been a longstanding heated issue when it comes to mining companies and I am pleased to see local community listed as a metric that requires companies to disclose their contributions towards communities as well as the SDG goals contribution. The SDG element is particularly clever because it forces companies to re-evaluate their CSR/CSI strategies to reflect real issues outlined in SDG goals such as water and sanitation or healthcare for instance. We know of many reports of companies donating t-shirts to soccer teams or money to a church and calling it CSR. While these are not bad things, they are not the standard of activities that contribute to sustainable community development or truly bettering the lives of local communities beyond the lifespan of a mine.
The Gender diversity metric can promote the hiring of more female employees and of course, contributes to SGD goal 5 as well as our NDS1 strategy which looks at women empowerment. On a practical level, mining is largely a male-dominated industry and having more female employees can ease the pressures of the workplace that many women in mining currently face.
Lastly, on Social, the Occupational Health and Safety metric is a big one here due to the hazardous nature of mining and may push companies to take HIRA and other HSE issues seriously by developing or implementing policies and ISO standards.
Governance
On Governance, the Board composition metric also pushes the women empowerment agenda as companies may appoint more females on the board as key decision makers.
On the Environmental side, I’ve identified 3 metrics that have the potential to influence some change. Firstly, material metrics can help the supply side of the economy by showing what materials are used and possibly boosting the local availability of those materials/chemicals used in mining. As well as highlight the more harmful materials that have been outlawed or could be substituted for less hazardous materials.
Second, the Waste metric can assist EMA to cross-reference the waste reported and waste management as well as provide an opportunity for waste reduction, recycling and ultimately zero-waste operations which may contribute to technological advances around waste management.
Lastly, Emissions metrics help us to monitor our NDCs ( Nationally Determined Contributions), as well as provide the opportunity to adopt mitigation and adaptation strategies such as renewable energy.
While this is a move in the right direction, it’s no secret that some mining companies already greenwash and misrepresent issues in their annual reports. SECZ is the responsible regulator for listed companies and penalties for greenwashing or misrepresentation of sustainability reports are still unclear an issue that needs to be rectified if any of this is to be taken seriously and for the integrity of the disclosures to be kept intact.
Finally, this new development is a bold move in the right direction and highlights once again how important ESG is and cannot be ignored. Mandatory ESG disclosures must be adopted across the mining sector not only due to the destructive and disruptive nature of the activity but also as a catalyst to drive for sustainable community development and contribute to SDG goals. To this end, ESG matters as well as issues around greenwashing should be incorporated into the Mines and Minerals Act and given criminal offences for noncompliance.
Alexandra Mliswa is a lawyer by profession who has been working in the mining space. She is an ESG enthusiast and has GRI certification in sustainability reporting which her consultancy Alteri Consultants (https://www.alteri.co.zw/ ) offers as well as services in developing and implementing ESG and CSR strategies.