Most mining companies are guilty of
not adhering to environmental, social and governance (ESG) standards, which are
principles that mandate them to be environmentally friendly and fair in their
dealings with their employees, partners, clients in the locations where they
function.
These companies must adhere to these
standards because they determine their social credibility rankings during the
process of producing a mineral. If they are high, they will, in turn, encourage
investments from venture capitalists and others through various instruments
like mutual funds. In addition, they also play a key role in exhibiting to
governments all over the world and civil society how responsible these firms
are being to the planet Earth by implementing sustainable growth strategies.
Though some mining companies are
striving to be socially responsible, they are facing hurdles, especially due to
supply chain issues, causing them to view their value chains in a manner that
is not very transparent. This is largely due to the fact that it is unviable
for them to put in place tracking mechanisms.
From time immemorial, mining
companies have been not able to keep track of their sellers and sources of
minerals. Moreover, if they want to gain ESG compliance, the process involved
is tedious and, at times, too expensive.
But such issues cannot be an excuse
for these companies to overlook ESG compliance. They have to show themselves as
ethical and respectful of citizens’ rights in their supply chain management in
order to achieve enduring success and to be deemed trustworthy.
With the mining industry worldwide
becoming aware of the importance of complying with the improved ESG standards,
transparency in reporting here may soon become the norm. Besides, it would help
companies in this sector to move ahead by cutting costs significantly and
improving productivity, leading them to benefit immensely. To achieve wholesome
success, it is, thus, necessary for mining companies to invest money and
resources in the supply chain.
ESG compliance in the mining
industry will also ensure that all minerals will henceforth be priced as per
the carbon emissions they release during their making. The least harmful of the
minerals will then be priced higher than those that are not. Such a practice
will enable companies to make only those products that are eco-friendly.
Right now, climate change is a major
problem that has to be addressed. It is causing a lot of damage to our
ecosystem and is leading to earthquakes, tornadoes, melting of ice cap
mountains. In an upshot, it is disrupting our routine climate cycles.
Climate change is /caused by emissions of carbon dioxide, methane, nitrous
oxides and fluorinated gases. Among these, carbon dioxide emissions alone
account for 81 percent of greenhouse gas (GHG) emissions, according to the US
EPA. Since the mining industry is one of the main GHG emissions contributors,
it has to shoulder the responsibility of cutting them down significantly
The cause of carbon dioxide
emissions can be both deliberate and inadvertent in most industries. They are
inevitable when manufacturers use heating or cooling procedures, combustion
equipment, vehicles, industrial discharges, etc. These emissions are classified
as globally as Scope 1.
Falling under Scope 2 are GHG
emissions occurring at the premises where generation of electricity, cooling or
heating takes place.
Scope 3 encompasses all emissions
from sources that neither possessed nor directly under the control of the
companies under question.
How blockchains come to the
rescue
It has now been proven that
blockchain plays a pivotal role in ensuring that ESG criteria are being met. If
ESG data is connected to blockchain, it removes opacity from sustainable
processes, moving companies to embrace best practices.
This is because blockchains prosper
in backdrops where many stakeholders with diverse and disparate interests
operate, even though there may be challenges to their partnerships due to
incompatible interests.
As blockchains can gather data from
diverse sources and databases, they can optimally be made use of across various
reporting requirements of an industry. Moreover, this technology enables the
data layer to be assigned with time and date and makes it resistant to
interference.
Cryptography is used to connect all
transactions taking place in blockchains. Owing to this, it is possible to
establish the clear origin of data across the product life cycle to ensure
clarity.
Using blockchain, companies have
begun tracking minerals, like gold, diamonds, cobalt, etc., to certify that
they are being made using ethical practices. So, during that process, there do
not affect the interests of any human on the planet.
As blockchain technology advances,
the logic that is inherently more complex can be inserted into transactions
that can be recorded and verified. Then, by automating commercial logic where
different parties are transacting, it is possible to finalize instantaneously
transaction logic to facilitate any number of transactions. As any logic can be
embedded into transactions, so can be sustainability data. Later on, the same
rule can be used as a standard for transactions to be executed
automatically.
Associates in the network certify
all blockchain transactions because they are recorded, allowing the data to be
validated publicly. It can be determined how reliable data is by ascertaining
the origins of the data documented on the blockchain.
By using automation along with the
Internet of Things (IoT), blockchain will be able to come up with a completely
trustworthy data source, without leaving any room for ambiguity.