Responsible investment in the wake of Marikana

| Delphine Pedeboy
Panel at the UNPRI. Photo Jean du Plessis.

For the first time since its inception in 2006, the United Nations Principles for Responsible Investment (UNPRI) conference was held on the African continent during the first week of October. This event brought together a wide variety of stakeholders, from banking groups to mining giants, as well as consultancy and investment firms from around the globe.

Over 200 participants came together to discuss the future of ethical investment, this year with a special focus on Africa. Created with the support of former UN Secretary General Kofi Annan, the UNPRI guidelines promote socially and environmentally sustainable investment.

With 320 trillion ZAR under their stewardship, signatories have an opportunity to create positive change on a large scale by using their power to push for more sustainability in business along environmental, social and governmental (ESG) lines. Popular themes at this year’s conference were employee relations, water management, corruption, inequality and governance.

A panel on the mining industry in South Africa helped shed light on the relevance of the UNPRI framework for ethical investment in this country.

South Africa’s recent history testifies to mixed results with regards to ESG compliance. On the one hand, leaders like the Johannesburg Stock Exchange (JSE) pioneered ESG compliance in 2010 by requesting sustainability reports from listed companies, an initiative no other exchange had up until then implemented. On the other hand, last year’s Marikana tragedy testifies to the social problems prevalent in the mining industry.

Social issues are strongly correlated to economic inequality, which is a big problem in the mining industry. As Martin Kuscus of Mineworkers Provident Fund explained, ‘bonuses grow bigger every year, drawing on the pension fund of workers which feeds these big salaries’.

The median wage for a South African mine worker is just under R4000 per month, which comes nowhere near to the six or seven-figure monthly salaries of the CEOs. Not only is this grossly unfair, but it has adverse effects on productivity.

Indeed, the level of productivity growth in SA mines is comparatively worse than in other mining countries such as Australia. The main reason for this has been poor skills and safety, which decreases productivity in the long run. Underinvestment in human capital is one of the main reasons for decreasing levels of productivity, and in turn, tighter wages and low investment in sustainability.

Mike Davies of Kigoda Consulting, who along with other mining experts was part of the 2006 talks on UNPRI in New York, says, “Profitability and sustainability are two sides of the same coin. In fact, sustainability is no longer an option: it is the new business paradigm”.

Because mining is still vital to economic growth in South Africa, and due to the pressing ESG concerns raised by recent events at Marikana, the debate over sustainability cannot be shirked. The UNPRI conference made some headway in fostering discussions amongst stakeholders, encouraging them to share their experience, and helping find innovative solutions to the challenges faced. The 2014 Mining Charter, which is primarily a BEE initiative, but also aims to increase sustainability in the industry, was mentioned as one such way in which the industry can work towards ESG compliance.

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