As global scrutiny intensifies on corporate environmental, social and governance (ESG) practices, the mining sector is facing increasing pressure to demonstrate that its operations are sustainable.
The resource sector is undergoing a transformation as stakeholders increasingly demand a unified standard for ethical practices. Just last year, four prominent mining associations — the International Council on Mining and Metals, the World Gold Council, the Copper Mark and the Mining Association of Canada — came together to develop a unified mining code.
This collective, which represents 86 companies that operate 700 mines across 60 countries, aims to establish a single minimum global standard encompassing environmental impact, human rights and due diligence, responding to escalating investor demands and reshaping ethical norms within the industry.
1. BHP Group (ASX:BHP,NYSE:BHP,LSE:BHP)
Market cap: US$146 billion
BHP is the world’s top mining company by market cap, and has long recognized the importance of sustainability in its operations. Central to BHP’s sustainability approach is its focus on safety. Acknowledging safety as a core value, the company prioritizes the safety and wellbeing of its workforce and the communities where it operates.
In the wake of three fatal incidents in 2023, BHP remains steadfast in its efforts to improve safety outcomes. For instance, the company has reinforced its implementation of various safety-centric programs and systems, including the Fatality Elimination Program, Integrated Contractor Management Program and Field Leadership Program.
Furthermore, BHP’s governance framework mandates minimum performance standards across its operations, with the company’s board overseeing sustainability matters. Notably, in March 2023, BHP expanded its Climate Change Steering Committee to a broader Sustainability and ESG Steering Committee. The result is a comprehensive six pillar framework — the Social Value Scorecard — that outlines the company’s sustainability goals moving forward.
By 2030, BHP is aiming for a 32 percent reduction in operational greenhouse gas (GHG) emissions from its 2020 levels. Additionally, the company plans to operationalize five low-/zero-GHG emissions vessels by 2024.
Under these targets, BHP also seeks to achieve 1.3 percent of its operational area under nature-positive management practices. The company plans to publish context-based water targets and complete crucial biodiversity and ecosystems baseline mapping exercises for all land and water areas.
2. Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO)
Market cap: US$114 billion
Rio Tinto’s ESG strategy hinges on six key pillars: environmental stewardship, social inclusion, governance integrity, climate action, resource circularity and community prosperity.
The company conducts an annual materiality assessment to gauge the significance of ESG issues. Climate change, human rights, biodiversity and water management have emerged as high-priority areas.
Rio Tinto is also aiming to decarbonize its operations with a focus on Scope 1 and Scope 2 emissions. Its target is to achieve a 20 percent reduction in GHG emissions by 2025 compared to 2018 levels. The company is committed to promoting resource circularity, intending to achieve a 50 percent increase in the use of recycled materials in its operations by 2030.
In 2023, the company showed that it is on its way to achieving these targets. Rio Tinto achieved a 5.5 percent reduction in Scope 1 and 2 GHG emissions below its 2018 baseline.
“Many 1.5°C climate change scenarios rely on significant deployment of carbon dioxide removals to get to net zero, which may not be realistic,” said Chief Executive Jakob Stausholm. “No single company or country can halt the course of climate change alone, so partnering to reduce emissions is vital.”
Also last year, the company achieved zero fatalities at its managed operations, and surpassed its target for the all-injury frequency rate, achieving a rate of 0.37 compared to the targeted rate of 0.4. With 1.53 million critical risk management verifications conducted, Rio Tinto’s dedication to ensuring the wellbeing of its workforce is evident.
3. BP (LSE:BP)
Market cap: US$107 billion
In 2023, BP made strides toward its ambitious net-zero goals, showcasing progress across key metrics.
With a focus on reducing operational emissions and enhancing renewable energy production, the firm demonstrated a 41 percent reduction in absolute emissions against its 2019 baseline, surpassing the previous year’s 15 percent.
Notably, BP’s net-zero operations reached 41 percent, while net-zero production saw an improvement, achieving a 13 percent reduction. These accomplishments underscore BP’s continuous efforts to sustainability and align with its broader aim to transition to a net-zero company by 2050 or sooner.
One of BP’s achievements in 2023 was the reduction of methane intensity by 0.05 percent, a vital step in mitigating GHG emissions. Additionally, BP’s focus on renewable energy was evident through initiatives such as the acquisition of Archaea Energy, a leading US producer of renewable natural gas (RNG). Furthermore, BP continued to invest in transition growth, allocating US$3.8 billion to support initiatives aimed at accelerating the energy transition.
The company has also invested significantly in the electric vehicle (EV) industry. In the UK, BP subsidiary BP Pulse, in partnership with the EV Network and NEC Group, opened a Gigahub at the NEC campus in Birmingham. The site is the UK’s largest public EV charging hub, capable of charging about 180 EVs simultaneously.
Moreover, BP Pulse announced a global mobility agreement with Uber Technologies (NYSE:UBER) to accelerate the transition to zero-tailpipe emissions mobility, aiming to support Uber’s commitment to zero-tailpipe emissions in the US, Canada and Europe by 2030, and globally by 2040. Also on the EV side, BP has a joint venture with Iberdrola (OTC Pink:IBDSF,BME:IBE) to accelerate EV charging infrastructure deployment in Spain and Portugal. The partnership plans to invest up to 1 billion euros and install 5,000 fast EV charge points by 2025 and approximately 11,700 by 2030.
In the US, BP Pulse has an agreement with Tesla for the future purchase of US$100 million worth of ultra-fast EV charge points, facilitating the expansion of the BP Pulse public network across the US and supporting EV fleet customers.
4. Southern Copper (NYSE:SCCO)
Market cap: US$88 billion
Southern Copper, an indirect subsidiary of Grupo México (BMV:GMEXICOB), maintains a rigorous approach to sustainability and risk management, aligning itself with Grupo México’s best practices. It emphasizes prevention and responsible operation to minimize risks to employees, communities and the environment.
Southern Copper addresses environmental risks such as ecosystem impact from chemical substance release, acid drainage, air quality degradation and mining waste release.
The company also sets corporate sustainable development goals aligned with the United Nations’ targets, including goals related to: occupational health and safety, diversity and inclusion, community development, climate change, biodiversity, water and effluents, mining waste management and supply chain sustainability.
Moreover, Southern Copper integrates climate change considerations into its risk management and prevention approach, aiming to ensure the resilience of its operations and neighboring communities.
The company also focuses on mitigating risks associated with transitioning to low-carbon economies, positioning itself as a key contributor to the green economy. In 2022, Southern Copper updated its climate change strategy in alignment with Grupo México’s overarching strategy. This involved setting new goals for GHG emissions reduction and developing a Climate Change Policy for the entire organization.
While also addressing transition risks through regulatory analysis and carbon pricing assessments, the company identifies opportunities associated with climate change, including revenue growth and cost competitiveness in electricity.
5. Freeport-McMoRan (NYSE:FCX)
Market cap: US$72 billion
Freeport-McMoRan emphasizes the importance of thriving environments in its mining operations.
The company integrates environmental awareness into its daily operations, with employees implementing actions that advance environmental protection. Freeport’s environmental policy serves as the cornerstone of its environmental protection efforts, guiding its approach to safeguarding natural environments across operational regions.
Beyond regulatory compliance, Freeport seeks to minimize adverse environmental impacts throughout the mining life cycle, focusing on areas such as climate, water, biodiversity and waste management.
In 2022, Freeport continued its implementation of the Global Industry Standard on Tailings Management, prioritizing high-priority tailings storage facilities. Additionally, the company intensified its climate strategy, particularly emphasizing improvements in Scope 3 emissions data and the relationship between water and climate.
Freeport also acknowledges the dual challenge and opportunity presented by climate change. As one of the world’s biggest copper producers, the company recognizes its role in the low-carbon energy transition. Through its climate strategy pillars of reduction, resilience and contribution, Freeport aims to manage and mitigate GHG emissions and other climate-related risks while supporting global decarbonization efforts.
Efforts to reduce emissions also focus on decarbonizing electricity supply, electrification of equipment, energy efficiency, and process innovation. These initiatives are aligned with Freeport’s 2030 GHG emissions reduction targets, which cover nearly 100 percent of its Scope 1 and 2 emissions.
Water stewardship is also a critical aspect of Freeport-McMoRan’s sustainability strategy. Recognizing water as a fundamental human right, the company emphasizes efficient water management, respecting the rights of local communities and Indigenous groups, and minimizing adverse impacts on water availability and quality.
As of 2022, the company had recorded an 84 percent recycling rate with 89 percent water use efficiency, totaling to 1,526,886 cubic meters of water reused. That year, the company used five times more recycled water than new water in its operations. This strategy is particularly vital in diverse operational environments ranging from arid deserts to humid tropical regions, where water availability and quality vary significantly.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.