Community Relations are among the most complex issues facing mining companies.
Sustainalytics’ research shows that a large proportion of mining companies under our comprehensive coverage fail to adequately manage community related risks. With increasing competing needs on regional resources, from land to water, companies are facing higher pressure to reduce their environmental footprint while contributing to job creation and sustainable local development. Even when best management practices are in place, given mining’s large environmental footprint, opposition to mining persists and is on the rise.
Assessing the Unmanaged Risk of the Community Relations
Sustainalytics’ ESG Risk Rating looks at overall risk exposure and the proportion of risk that companies fail to manage. The wider the gap between risk exposure and management, the higher the overall unmanaged risk assessment.
The Community Relations risk exposure relates to the impact that companies have on communities and, in turn, the community opposition challenges to business continuity and profitability. Incidents and controversies, indicate both background risk related to regional characteristics as well as potential gaps in management implementation. Sustainalytics found that 60% of the total 171 mining companies, in our comprehensive coverage of diversified and precious mining industries, have experienced controversies, of which half, or 31% of total, have been evaluated as significant in terms of negative impact on the communities and potential negative impact on mining operations expansion.
The Community Relations management assessment evaluates corporate human rights policy and programs, indigenous people rights policy, and community engagement and local development practices. The chart below shows Sustainalytics’ Community Relations ESG Risk Rating Score distribution across the Precious Metals industry.