Environment risk management - Towards proactive sustainability

Stringent environmental benchmarks imposed by governments and successful legal challenges in the country of origin have changed the risk profile for all mining companies over recent years. In developing countries, however, where high government standards may not always be in place, direct community action has often made worthless substantial investments in otherwise viable mining operations. Real limitations are therefore imposed from these risks on all areas of mining activity, wherever they may be. Thus, the bar has been raised for all companies developing or operating mines. This paper argues real financial and global industry reputation benefits accrue when all known environmental risks, where practical, are managed. In response, among major international mining companies, as the industry moves towards greater global consolidation, senior management teams have increasingly adopted corporate governance standards including 'Triple Bottom Line' (shareholder/govemment/community) sustainability reporting. Sustainability reporting is encouraged by improved international stockholder and financial investor perceptions by contributing to lowered social, community and geopolitical risk which lowers the cost of access to funds as well as improving staff morale and productivity. New mines must not only be primarily financially viable but must operate throughout in a sustainable way. Case studies of some recent mining operations, who have not foreseen or proactively managed major environmental risks, demonstrate the dire financial and personal implications for managers, directors and shareholders from not identifying and managing these environmental risks. Merely having a corporate policy statement on environmental standards or high level Government approvals process for a mining activity does not preclude mining operations from the risk of direct action by local populations or future adverse legal implications from risks which were perhaps identified but not mitigated effectively. Methods and processes for the identification and active management of environmental risks in the global arena are discussed to add a practical element to sustainability, based on the authors recent strategy development processes with governments and major mining houses such as BHPBillition, Rio and Xstrata. Emphasis is placed on proactive, innovative yet practical solutions which, where possible, show positive contributions firstly to the financial bottom line but also the community at large.