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.
