ESG is no longer simply a risk-mitigation tool. There’s a new expectation on business to pre-empt the solutions that are needed to improve global sustainability.

This approach is something we’ve long been advising our clients to adopt at TDi Sustainability. In this keynote webinar with our CEO, Assheton Stewart Carter was joined by David Sturmes-Verbeek, Strategic Partnerships & Innovation at TDi and Director at The Impact Facility, to take a look at why this shift is more urgent than ever, how companies should be preparing for it, and examine some of the ways we create ESG strategies that future-proof our clients – from Fortune 100 companies to start-ups, NGOs and government organisations.

David Sturmes-Verbeek   

I’d like to introduce my colleague and CEO of TDi Sustainability, Assheton Carter, who will introduce himself but is an industry veteran and has been working on sustainability-related issues for the last two decades. And David Sturmes, here on behalf of The Impact Facility, a charitable sister organisation to the TDi Sustainability team, focused on bringing prosperity to mineral communities, as I will elaborate on a bit further after Assheton has introduced himself. But Assheton, thank you for making time. Thank you for joining. I’m excited for the hour ahead. Please go ahead with a quick introduction of yourself and TDi Sustainability for anyone that has yet to learn about you.

Assheton Stewart Carter  

Right. Good morning. Good afternoon. I’m Assheton Stewart Carter, CEO of TDi Sustainability. And TDi Sustainability is a specialist management consulting company for those who don’t know us. We consult pretty much specifically on mining and minerals and raw material supply chains, working a lot in the auto electronics, batteries, and jewellery industries and supporting companies in meeting their ESG compliance requirements and helping them become or meet their goals for being sustainable for being a sustainable business.

David Sturmes-Verbeek  

Thank you, Assheton. And as mentioned, I work for The Impact Facility. We are a social enterprise slash charity co-founded by TDi and Fairphone. As such, we have very close organisational ties. And the facility maintains offices in Congo, Kenya and the UK with a team of mining engineers, sustainability, and finance experts set out to engage with, especially artisanal mining communities at the moment, has focused largely on cobalt mining and the DRC being the Permanent Secretary to something that’s called the Fair Cobalt Alliance that Assheton and I will touch on throughout this hour. And we’ve also set up a gold-centric programme, regulatory 2030, where we bring access to finance to gold mining communities trying to unleash the economic potential we see in the sector and address some of the very real issues that many of you on the call might be aware of, given my involvement with The Impact Facility. I will focus most of my insights today on the mining sector, but the framing and the wider scope of the webinar extend across the supply chain. So hopefully, we can draw learnings that scale across the different stages of the supply chain, but as we think about sustainability and sustainable business that extends from the extraction of the raw materials to the recycling of minerals at the end of it and what we do at the end of lifecycle for our product. But as I said in the introduction, you’ve been doing this for a while now, more than 25 years; you’ve been one of the first to write your PhD on minerals and sustainability. How have you seen the responsible sourcing/sustainability landscape evolve since the beginning of your career?

Assheton Stewart Carter  

Great, and thanks for reminding me I’ve been doing this for a while. In my defence, I’ll say I started very young. So you’re right. From a business perspective, we’re in the perfect storm, probably more than I’ve seen over those three decades. Companies have all these very different demands on them, coming to them all at once. On the one hand, we’re in the middle of what’s been coined a polycrisis, a theme discussed at Davos this year. The term has been cemented in dictionaries as an outcome of conferences on the idea of a polycrisis. And on the other hand, we have got increasingly strong regulations. So there’s just a lot happening at the same time for companies to have to deal with. There’s the cost of living and rising inflation. The Consumer Price Index in the UK has risen to 10.1. And that’s the point at the top end of European companies with all countries, but all countries face considerable inflation challenges. We’ve announced job losses at Google, and Amazon and Microsoft are all laying people off. We heard the other day from a business publication that something like 150,000 workers have been laid off in recent months in the tech industry. And not to mention a pending and similar trend in the auto industry as businesses, you know, prepare themselves for the headwinds of a recession and strive to cut costs. And, of course, we just passed the one-year anniversary of the war in Ukraine, the first very serious war in Europe since the Second World War and the impact on the Global Peace Index. We’ve seen a decline in global freedom for 16 consecutive years. So the world is getting a more violent and scary place, according to these metrics. And then we have supply chain issues across the board that are even hitting our supermarkets here in the UK, where you can’t get many vegetables. And alongside Biden in Europe, moving towards greater protectionism. There’s speculation, of course, or ideas that we’ve reached peak globalisation. So globalisation has been the force that stabilised our global economy, and some would say it has generated a peace dividend for the last 30 years. And people say this is now peeking as well. And so this is a change of tack in how global trade happens. The CEO of BlackRock, Larry Fink, said in his letter to his shareholders last year in 2022 that the Russian invasion of Ukraine has put an end to the globalisation that we’ve experienced over the last three decades, and this leaves many communities and businesses feeling isolated, and unsure of how to develop their strategies and the scheme of things this all happened very quickly. And companies are having to learn how to respond equally quickly. So all these factors make it generally more complex and expensive to do better business in 2023 than I have experienced over the last three decades. 

David Sturmes-Verbeek  

Do you see that as an excuse not to step in because, at the same time we’ve had the beginning of this year, we had EU regulation that was passed that was similar to the Inflation Reduction Act and its impacts were the Dodd-Frank regulation earlier on and the expectation of consumers is shifting right? 10 years ago, it was a fringe occurrence, the idea of sustainability, responsible sourcing, but the amount of media coverage that I perceived, especially around cobalt, wherever I put my most of my attention is just astounding. So there’s very much heightened consumer awareness of some of the challenges we face across the supply chain. And so, do you think companies can afford not to take action at this stage?

Assheton Stewart Carter  

You’re quite right that we have these mounting pressures from this poly-crisis coming at business from all different directions. But at the same time, we’ve got rising expectations on how businesses should be more accountable and sustainable. And this is beginning to emerge in regulations. They’re being asked to audit everything. Now where everything comes from the supply chain, make everything low carbon, decarbonise, invest in circularity, clean up their packaging trail, and provide more for their employees. But at a time, of course, when there is little money to invest, including from the governments, it’s becoming more and more difficult. So yes, these expectations are there. And not that the companies are looking for excuses, but there’s very little, there’s very little kind of space to manoeuvre, so companies have to figure out how to respond to the different crises and the polycrisis, but also demonstrate that they are also meeting expectations for corporate accountability.

David Sturmes-Verbeek  

And also for consumers, as we all are, inflation has been palpable for people across Europe and the US over the last few years. I’m based in Nairobi, and here, prices from food to mobile phones to cars, transport… everything has gone up. So how does the pressure of trying to be more sustainable to business more responsible fit from a business sense? Is it affordable or feasible to do better? Because, globally speaking, there are a lot of brands that are not facing any scrutiny or pressure. It is largely the publicly listed companies that we’re looking at, the big brands, the hero products. But can we remain competitive without huge consumer pricing increases, and is ‘better business’ actually possible from a business perspective?

Assheton Stewart Carter  

Again, I think there’s very little to no room for manoeuvre. Companies are going to have to demonstrate they can do both. So whether they can remain competitive, of course, will depend on the jurisdictional environment they’re in a competitive environment. What we do see at the moment is a jockeying between the EU and the US to become the global policeman when it comes to ESG. If we’re reading the Financial Times this week, you’ll see several articles on that, and we have seen that the US is now leading the way in setting regulatory expectations. And now we’re seeing a response from the EU, which is doing the same. This is what you see in the WIDA Protection Act for sale Protection Act and then echoed then when the EU with a recommendation on forced labour; you see the Inflation Reduction Act in the US, and then you see that in the EU as well, which is being followed by a similar set of measures, measures to and all of these have within them. ESG or sustainability, sustainability aspects, and this is only heating up. So, for sure, companies will have to compete in this environment. But what we should be looking at, I think, is whether those policy frameworks are aligned, or we will see, as we see already, companies moving jurisdictions to take advantage of more favourable regulatory circumstance circumstances. But as I’d say, there’s no getting away from the sticky ESG and sustainability expectations held out for companies. What companies can do, of course, is look to see how they can be more efficient in doing these things. 

David Sturmes-Verbeek  

And I’m sure we’ll talk about that later, as well. So clear take away that we have to do it. How is then the follow-up question? How do we meet these rising and increasingly stringent expectations, given that supply chain issues and commercial pressures exist in companies?

Assheton Stewart Carter  

Right, I think this is how we do it. I think one thing we have got to move away from is individual companies being an island and addressing the sustainability issues which they’re being asked to be asked to address. So no one company can resolve all these sustainability issues and development issues. Nor can the whole industry do it. So we have to start thinking about what is the part of individual companies and industries within the ecosystem of governments, civil society, and international trade. And I think a part of that is really about how companies can use different instruments at their disposal, one of which is their own kind of policies and codes of conduct and how they work in supply chains. And another, of course, is the philanthropic aspect as well. And can we use these two things? Can we use these two things together? And you know, talking about the ecosystem. I think one thing I’ve seen shift considerably over the last 30 years is what I would call the corporate responsibility scope. So what is it that companies are being asked to respond to? Which stakeholders are asked to engage and contribute to? Thirty years ago, this was about being inside the fence and being the employees but has shifted to communities directly outside a plant or facility, right up the supply chain to communities many thousands of miles away. And then another thing I think has just shifted, and I just mentioned really, is how lines have been blurred between what is considered philanthropic and charitable donations and what is considered to be inside the fence of a business model and the core business strategy. But I guess I’ll turn the question around to you, David: Working in an international development organisation. Where do you see that there is a bridge between the philanthropic and the business strategies of companies, especially in mineral supply chains? What do you think they should be responsible for, and how do you think they should engage in some of these problems, which are, you could say, traditionally far outside the natural boundaries of corporate responsibility? 

David Sturmes-Verbeek  

It’s quite interesting engaging with companies because, obviously, companies are sometimes perceived as a single unit, but then there are very many different departments to engage with. And for me personally, as we look at fundraising or getting support for our programme in Congo, sometimes we talk to the responsible sourcing team that is directly involved in supplier engagements and forging a supply chain. Sometimes they refer me to their corporate social responsibility team, and we talk to the marketing team, which reflects how companies perceive the value of engaging – whether it’s part of their drive to get responsible material into their supply chain, whether it’s perceived as something that they have to do because of CSR expectations or CSR objectives that they’ve set themselves, whether it’s something that they believe they can draw marketing value from. There’s a line between meaningful change on the ground and inner greenwashing. I’m observing a convergence of CSR and responsible sourcing, often as to your point about stakeholders. Often CSR projects focus on the communities around the workforce. So you would reinvest into schooling or education or programmes for the children of employees or their wider well-being in the environment they live in. But realising the complexity of our supply chains – like when someone that purchases a phone in New York or London is interlinked with people from the tin mines and in Congo. There has been a shift now, and so we see oftentimes a collaboration between a corporate foundation and responsible sourcing teams, where we try to bring in both finance or big money but also marketing or sourcing budgets to actually engage and bring about more meaningful change.

Assheton Stewart Carter  

For as long as I can remember, I started in this line of work; there’s been proclamations and conferences that say CSR is going mainstream or corporate sustainability is going mainstream. But maybe now is a time when we should be more confident about that because if a company focuses only on the compliance elements of its compliance strategy that it has at its disposal, that isn’t going to address the problem if it’s too narrow a focus. If it only focuses on philanthropy, that’s not going to be sustainable from a business point of view, either, and address the problem. So is there a way that we can bring together both ESG compliance and SDG philanthropy? And perhaps get at the root cause of the problems that created the ESG risk in the first place. I know you work at The Impact Facility with the idea of a kind of blended finance. Is this something that you’re seeing or at least something you’re trying to bring about in the engagement of the supply chain?

David Sturmes-Verbeek  

Maybe it’s good to expand on the concept of blended finance. It’s figuring out how we can have more sustainable interventions as such. If something is 100% grant financed, you’re always relying on that grant financing to continue. Whereas if it’s only commercially financed, then it makes it very difficult to make it inclusive of more vulnerable stakeholders where there might not be an immediate business case. And so with blended finance, what we try to do is mix development monies that could come from governments, institutional donors, philanthropic giving, with corporate funds, and also impact investment, trying to come up with a way that we gradually decrease the amount of donations necessary to sustain an intervention. But from the beginning, aim to build something that is self-sustaining and scalable and then practical, and that’s really important if we want to address issues at the scale that they occur. And if we start thinking about these challenges or issues as opportunities, especially when we look at artisanal mining, we talk about small and medium-sized enterprises in the mining sector that are very entrepreneurial in spirit. We can unlock, especially at scale, opportunities for larger-scale commercial engagement in the future, but we need that transition from initially engaging through a philanthropic or development-focused approach to then consciously introducing commercial and financing to do that. And the key to that is multi-stakeholder action. We cannot expect a company that is headquartered in the US or in Europe to solve the development issues of the Congo, but they have a role to play in that. And then so do obviously local actors that need to be in the driving seat and designing these interventions and helping us prioritise what is needed and governments both international and local, because without those changes very, very difficult to achieve, especially lasting change.

Assheton Stewart Carter  

If I go back to when I was at business school and looking at stakeholder theory and corporate stakeholder theory, you always used to have this image of the company at the middle of the circle and then the stakeholders surrounding them. Which I think is the wrong way around because what we’re talking about nowadays is about the root of problems, root development problems or the governance problems that are present in many countries and communities. And it’s not a company-only problem in some ways. It’s a bit arrogant to think that a company can solve all of these things. So really what we try and do when we are, you know, framing a problem is we try and put the problem in the centre of that circle. And then the company is one stakeholder in participating in trying to solve that. And I think that’s what we need to be able to distinguish between what is a compliance risk to a company’s legal standing and reputation and what is a development challenge or development problem that we have to kind of pull our resources to. When you’re approaching businesses in the supply chain and trying to get them interested in contributing in some way to addressing the issues, some of these root problems have to do with artisanal miners in the DRC or gold mining communities and their access to renewable energy in Kenya, how do you convince them? What’s in it for the companies? Why should the companies care at all? Why is it their problem? Give us an insight, David, into how you can be so persuasive.

David Sturmes-Verbeek  

From a compliance perspective, it is possible to just avoid being part of the solution. Most commodities are not located solely in one location. And so it’s easy for the people that care about sustainability to then move elsewhere and maybe they pay a little bit more, but then they get their aluminium or their cobalt from Australia instead of places where it might be more challenging, especially with cobalt – where 70% come from the Congo. And companies are not sure how to address those challenges in isolation. But consumer sentiment has shifted, and a good indication of that sort of public opinion is a book that recently was published and put on the 10 books to read by the New York Times 2023; a professor wrote a book about cobalt and paints a very dire picture about the state of the sector, much of which I would agree with. We’re all implicated in this. And rather than corporate stepping back and saying well, it’s the consumer’s fault because they’re using a phone, it’s companies that need to step in and be part of the solution. And now, with media and consumer requests for companies to showcase what they are doing to actually solve that, and looking at a longer-term horizon, regulation follows public opinion. So five to ten years from now, there might be more stringent requirements that actually oblige you to invest upstream or showcase what you’re doing. But for now, I think it’s the public pressure that puts the hero brands into a position where there needs to be action and actually be part of the solution. And if we think about it, what diligence and compliance were supposed to do is to protect the interests of upstream communities, where we find risks to human rights, and especially in the context of child labour, where we have concerns that children are being exploited in one way or another. We’re supposed to continue to engage and contribute through collective action to finding a solution and remediate child labour, not avoid, but actually make sure that if children are at the centre of our concern that their needs are being met. And this is something that is linked to artisanal mining, right? Artisanal mining is defined as very rudimentary primitive mining; it’s the equivalent of subsistence farming in the mining sector. It’s a sector that measures more than 40 million people across different commodities. And for some reason, cobalt was singled out by the media and NGOs as something that then drew a lot of attention. But the fact is that the artisanal mining sector is here to stay. We anticipate that with climate change, Sub-Saharan Africa has become more and more difficult to farm. People subsidise or substitute their income from farming by going into artisanal mining. A great example of that is Ghana, where a lot of the cocoa farmers mine on the side. And so it’s sometimes a seasonal activity. Sometimes it’s throughout the year or within the household that one person would be engaged in artisanal mining. But with those trends, climate change and commodity shortages are forecasted, especially for critical minerals that are key for the transition from fossil fuels to mineral-based economies. We expect that there’s going to be a big influx of artisanal mining activity, and so we need to think about how we can harness the potential economically speaking and use ASM as a source to meet the growing demand. But also, from a development perspective – how can we ensure that some of the challenges that we are aware of are not perpetuated or increased? And on the other side, how can we make sure that those people have dignified safe working conditions? And we actually build prosperity in communities that are often impoverished and don’t have many options other than mining to engage with. So we need to start thinking about how we can engage and build capacity, and a big part of that is investment. That’s where we set up The Impact Facility to channel investment through blended finance into these communities. And rather than imposing ESG requirements as a technical barrier to engaging in trade, we should think about how we can enable compliance with ESG requirements. Because ESG has the S for social at its centre, and that’s often dismissed. We think about governance and regulatory compliance and environmental concerns, especially about a carbon footprint first and foremost, because that’s easy to quantify and tick a box. There’s huge potential for actually uplifting the community and providing work to millions of people across different commodities. And we need to always keep in mind that compliance is there to protect vulnerable people across the supply chain in the context of artisanal mining. That means the mining communities where the minerals come from; in China, around factories, the formal and informal recycling industry and the waste pickers that are involved in that and potentially exposed to chemicals. We need to think about how we can protect their interests to make sure that the products we use that give us a lot of benefits and day-to-day life are actually done in a way that is in line with our own expectations for ethics.

Assheton Stewart Carter  

I think you made a good case, but that there’s a need and opportunity to transform a sector, especially when it comes to artisanal, small-scale mining and other informal sectors as well. But beyond the regulatory pressures, which don’t yet reach as far up as that in terms of obligations for downstream companies and corporate reputations, what is the business reason to engage? You made the case that we should engage rather than just disengage. But everything you’ve just described could be a very good reason not to become involved in these supply chains and just further expose yourself to these compliance and reputational risks. So what is the reason to engage, and isn’t part of the answer to do with a business case at the end of the day? We’re entering into the age of new minerals. A lot of these minerals are supplied or produced by informal communities. Is there a business reason to build a supply chain?

David Sturmes-Verbeek  

Probably not in the short term with many of these challenges, but in the medium to long term, we are anticipating commodity shortages, especially in the critical minerals space. In the past, look at what happened during COVID with a chip shortage and subsequent price surges and difficulties of getting specific devices or the huge increase in the cost of secondhand cars in the US car market because we were unable to actually meet demand. And the context, some of which you’ve touched on in your introduction, is that there’s been a geopolitical polarisation where it’s very much now the West against China by declaring something strategic or critical and claiming a stake and then saying we want to be able to control these parts of our supply chains that are vital to enable a continuation of the living standard that we’ve established over the last decades. And so we need to look at new sources for minerals. And we need to offer something that is of interest to the producers upstream. And at the moment, they don’t have any trouble selling any of their materials. They’re looking for a better deal, and we look for partners that can provide long-term security of supply. We need to start thinking about those as a source that has been historically ignored by Western companies but can be strategically engaged and have a huge difference to the people on the ground. But the key is collective action and not asking your company to figure this out across a wide range of several dozen minerals by themselves. Instead, see how we can engage with industries through groups and like-minded organisations.

Assheton Stewart Carter  

And it’s great that you mentioned collective action, which is a sort of segue to something that always comes up with us, and our clients ask as well: “Where do we begin? We source 50 to 150 different minerals and materials in our supply chain. Who should we respond to first?” 

When we’re framing this and thinking about this with our clients, it’s very easy to respond to the stakeholders who are shouting the loudest – the most shrill in their protestations. But this approach isn’t necessarily the best use of a company’s time and resources. So you need a way to prioritise that meets both the company’s needs and also gets to the root cause. And so we’ve developed, over the years, several methodologies and saliency methodologies which help companies look at what is the most urgent problem, something which is going to have an impact tomorrow. What is the most severe in terms of its gravity, and what is the most legitimate? And very importantly, where do we have the opportunity, as a company, to use our influence to bring about change and hopefully address both the risks of the company and also the risk to the people in the different communities and in the supply chain? Because all companies have a limited influence. Even the biggest companies don’t have a very large influence in the supply chains on which they rely. And this really comes to the collective action piece, which you might want to reflect on, like the Fair Cobalt Alliance. I’ll come to that in a minute. So you know, where companies can’t act individually to bring about change or manage the risk through their supply chains, what I found over the last 30 years is that they are more willing to come together in what people now call this pre-competitive setting. So the first one I was involved in this is something called the Energy and Biodiversity Initiative back in 2000, where the NGOs working for conservations brought together five big oil and gas companies and five large conservation groups, and we entered into a dialogue for three or four years to come up with a set of standards and actions to address biodiversity when oil and gas took place. And it was a very strange phenomenon at the time. I mean, we were always surrounded by lawyers and very concerned sort of anti-trust and so on and so forth. But now it’s become much more commonplace and almost a science and certainly a lawyer’s practice. And we’ve been involved in and led quite a few of these now. The Coloured Gemstone Working Group, for example, just started working with SolarPower Europe and Solar Energy UK on something called the Solar Stewardship Initiative. We’ve been building the lead battery 360 project, and we’re working now to develop something on pharma packaging and circularity in the UK as well. And groups like dry sustainability and the global battery lines are kind of active in our space. So I guess my question here, really, back to David, is about the Fair Cobalt Alliance, which you mentioned previously, which is a multi-stakeholder initiative. Can you talk a bit about that and how that is actually helping to address these root problems?

David Sturmes-Verbeek  

The Fair Cobalt Alliance is a multi-stakeholder initiative. So it brings together civil society and companies. We’ve got a bit more than 20 members at the moment, including some big companies, Google, Tesla, Glencore, and China Molybdenum, which are two large mining organisations in Congo. But on the funding side, we had Signify and Fairphone involved, who have a smaller stake in the cobalt industry but, as downstream actors, felt a further collective responsibility to mobilise and take action together. And some of those companies previously put policies where they said we’re not purchasing from DRC and then publicly revised and came out with segments saying that ASM is not a bad thing in itself as it currently exists. So with artisanal mining, we want to enable compliance with international norms. And as such, start sourcing is a material in the future. And so that’s a completely new turn even for large mining companies going from “do not engage” and basically negating the presence of artisanal miners to saying they have a role in enabling and empowering these communities and ensuring that everyone works in a dignified and responsible way. Meanwhile, there’s still a lot of talk about reducing or eliminating cobalt from the supply chain, largely driven by the very complex challenges that are associated with the sector. But many experts believe that it won’t be possible to completely get rid of cobalt, at least not in the next five to 10 years. And so we will continue to be linked to these communities. And because of that, there is a need to engage, and as you pointed out, do that through a pre-competitive environment. I sometimes joke that there isn’t enough misery for everyone. There is no reason for us to compete on social programmes, but we need to be transparent about successes and failures because this is not easy on a day-to-day basis. We need to showcase what works and what doesn’t and avoid the same mistakes that we’ve made. And then, we need to find ways to how we can scale and replicate successful things. And for that, you need resources. So it was really important for us to get companies to actually say they’re interested in sourcing ASM material and having cobalt in their supply chain. Part of the responsible sourcing mix is getting responsibly produced ASM material into products. And a fun side effect of cobalt is that because it’s mined through largely manual means, the carbon footprint of the product is very low compared to cobalt from other sources. And so it’s not all bad necessarily. Some of our members are small, and they don’t have leverage over their supply chain. And yet they have a role to play in leading by example, and Fairphone is great in that regard because they went from being an activist to actually setting up a business and showing the big guys how it can be done. And they’re very comprehensive and holistic concept looks at all stages of the lifecycle, including being able to repair your device. I think a week or two ago, Nokia announced that from now on, all their phones are going to be repairable, and they’re going to support consumers and do that. And that can be indirectly attributed to Fairphone, which has been banging the drum for the last 10 years and saying we need to reduce, reuse, and recycle. And so that’s hugely important.

Assheton Stewart Carter  

That’s great, and you talk about the need for investment. So at the moment in TDi, we’re working with the EU Commission to review the Conflict Minerals Act, which came in to understand its effectiveness. So there have been different pools of regulatory or soft regulatory instruments that have reached up to DR Congo and other parts of East Africa in the world over the last 10 years. Do you think that from your perspective, these aren’t sufficient that they’re not working and we still need investment? And perhaps also reflect a little bit on the work you’re doing in the Regulatory Gold programme as well and how that is working.

David Sturmes-Verbeek  

Regulation is often well intended. And sometimes, there’s been a rush to market with this. That’s especially critical that was associated with the Dodd-Frank Act that took away the livelihood of thousands of miners that worked in the 3TG sector, tin, tungsten, tantalum and gold in Congo. And so, regulation itself is not a magic bullet, and as I said, people interpret regulation in a way that is easy to be compliant to disengage. And the fact is that there are many companies across the world that are not following best practices on ESG. And so there will always be someone that’s willing to purchase the conditions that currently exist. And if we care about sustainability and increasing the livelihoods of the people on the ground, we need to step in, engage and invest. That has potential benefits. As I said, we can forge long-term relationships with these producers if we offer a better deal, meaning that we enable compliance with the standards and bring about more productive, more efficient, and more profitable ways of working. This is in their best interest as well. But there’s also a business case to invest. It is astounding to me that artisanal mining, by definition, hasn’t received any formal investment. If we only look at copper and cobalt, which occurred in the same deposits in Congo, the sector was worth more than a billion dollars in 2021. On the back of 150,000 people that engaged in the sector. For me, that’s fantastic – a bootstrapped sector that is able to provide somewhere between 10 and 15% of the global supply of anything. If we thought about investing not one or 2 million, but if we actually looked at the scale and invested $100, $200, $300 million into improving conditions, into making it more efficient, into making it better, these mines produce more than some of the largest producers in the world. So there’s an opportunity to start to step in, and that’s an opportunity that has been recognised especially by the US government recently, which entered into an MOU with the DRC to support the formalisation of the sector and then, even beyond that, look into investing in battery manufacturing on the continent to see how we can have more value addition done in the DRC. So rather than extracting ore or concentrates, they are exporting something that is closer to a finished product and can then be of direct benefit to downstream users that want to integrate that into their supply chain. And that’s across the supply chain and across the globe – we need to contextualise ESG performance. And that means we need to build on the notion of continuous improvement. It’s great to aspire to best practices, and if we source from Norway or Sweden, or Australia, we should stick to those and demand those from the get-go. But if we want to be inclusive of currently marginalised producers or producers that are part of the informal economy, we need to figure out how we can raise ESG performance over time. And that is possible from a compliance perspective that is possible as long as you’re not in conflict with the OECD and external risks (so directly contributing to the worst forms of business conduct a search); there’s an encouragement to engage and enable better performance.

Assheton Stewart Carter  

By investing in the formalisation of these informal parts of the supply chain, you then address not only the root problem of that and governance problems around poverty but also the reputation risk and the compliance risk as well. But you mentioned the challenges for reporting, and perhaps we can finish on CSR reporting and potential greenwashing, which is going to become more and more important as it becomes mandatory to have sustainability reports for all different sizes of organisations. And, of course, reporting is incredibly important. This is how a company can demonstrate that it is conformant, that it is meeting its stakeholder’s expectations, and telling its own story about sustainability. But we have become, from our point of view, obsessed with KPIs and measures, which can have a consequence that is sometimes averse. And I think one of the reasons for that is that we don’t fail to contextualise many of those data points. We focus on a particular number or a particular outcome but not on the context in which it is, and that can be misread. I’ll give you an extreme example. Years ago, we were working with a jewellery company, and we took them up to the gold mine, where they sourced some of their gold. And this was a part of the artisanal mine, and in this artisanal setting, in a Central American River, beside the river shore, there were children working in the shallow waters near to their parents. And, of course, the jewellery company said, “Well, this is a breach. This is child labour. There’s a presence of children on the site.” But if you look from a different perspective, there wasn’t any childcare in the area. The mothers had to work, and this was the safest, in fact, the cleanest area where they could work. So without that context, the measure of children being present could be misunderstood. And so one of our fears is that the attention on corporate accountability and the regulations that have been put in place to address some of society’s ills and problems could actually backfire. You can be judged incorrectly for a particular action you take, and it can lead to you disengaging rather than engaging.

David Sturmes-Verbeek  

That’s interesting and linked to the ambition of becoming carbon neutral, which is obviously imperative as we look at meeting climate targets. Fairphone astonishingly managed to integrate Fairtrade gold into their phones, so it was Fairtrade-certified gold that came from communities that received a premium and adhered to best practices in terms of macro reduction in some of the other challenges that exist around the gold mining sector. But then, when compared in eco ratings with other phones, a phone that would purchase recycled gold, which is readily available on the market, was ranked higher than the Fairphone would be because the carbon footprint of the recycled gold, for example, is lower than of mine gold by definition. 

Once we focus on a specific indicator rather than looking at the bigger picture, it’s easy to lose track of the wider objective, which is a product that benefits as many people as possible. 

Assheton Stewart Carter  

So if I look at some of the themes that have come out today, it’s ESG and SDGs. How companies can not only focus on their immediate compliance needs, with the very strong force of regulatory requirements coming to their shores, but also focus on the root causes of the problems – the SDGs.One of the things we suggested is to work in groups and pre-competitive settings so resources and knowledge can be pulled. And I think related to that, as well, is measurements. So how can we actually begin to report on the contribution to the SDGs and not just on compliance? Have we got the right instruments to do that? Or is the emphasis so strongly on the ESG compliance part that we forget about the SDGs?

This is in the face of the EU coming up with regulations on corporate reporting, regulations, greenwashing, and the investment side, including the different types of taxonomies for investing in green companies. I think there’s another theme here that we got to, which is around prioritisation in the middle of this polycrisis that we’re facing. How can we prioritise what we, the company, have discovered is the place where we can have the most influence and trigger change rather than be driven by the demands from different interest groups and rights groups? We all realise we’re in a very difficult position and figuring this out. But there are quite a few examples where there are platforms that are moving ahead and tackling some of these challenges head-on.

David Sturmes-Verbeek  

Some of the people on the call work in sustainability or responsible sourcing departments. Do you have any advice on how, at a time of limited budgets and competing requests or demands on resources, they can make the case internally? Is there a silver bullet that people can lean on?

Assheton Stewart Carter  

That’s a good question. In times of tight budgets and the recession that we’re facing now, anything on sustainability has to be accompanied by a business case. But a business case isn’t just something that you can pluck from a tree; a business case is built and persuaded. And you have to show the long-term value to the senior management and look at how the company can build value over decades, not just over the next year. So identifying what is lasting, identifying what is core, and what is the root of the problem is an easier way to build a business case than demonstrating that you’re reacting to the most shrill commentator at the moment. So work on the fundamentals. We work in the investment community, and we combine fundamental analysis with ESG to enable us to make the case to red-blooded capitalists on how ESG can be incorporated into their information set when they’re making investments.

David Sturmes-Verbeek  

What will be the priorities for TDi moving forward in this space?

Assheton Stewart Carter 

One of the priorities for this year is enabling what we call democratising corporate sustainability. So how to package what we’ve learned over the last 20 years or so around corporate sustainability and the tools, and make it available for those companies who don’t have the large budgets that some of the bigger company companies have. So we launched TDi Digital and TDi Data, which are a series of portals and platforms that provide information on voluntary sustainability standards on public issues, regulations and industry initiatives to better help companies navigate this area and have the tools they need to more quickly and efficiently put in place the corporate sustainability measures that they need to to be compliant and also to meet their own values and sustainability goals.

David Sturmes-Verbeek  

Ranjini just asked if there’s a best practice document and ISO of sorts for ESG in its entirety. And if there were two or three days of coaching that could be provided on this agenda to senior leaders in mining companies.

Assheton Stewart Carter 

Yes, so I think the ISO family of standards are good around management systems. So any one of the ISO standards can teach individuals and professionals in companies about how to put in place a management system because they help you to identify issues, anticipate those issues and put in place the protocols for managing them and resolving them over time. I did my PhD looking at mining and sustainability -and one reason I did that was because it was so complex and interesting. It has so many different aspects and facets. It is a huge topic. It’s kind of a confluence of all issues from biodiversity to indigenous peoples, to the community, to pollution and so on. There are some courses that you can do, but in some ways, it’s a longer learning. We’d be happy to point you in the right direction, and we can send you some of those courses and resources.

David Sturmes-Verbeek  

But it’s been an absolute pleasure, Assheton. Hope to see you soon. And thank everybody for joining.

Assheton Stewart Carter 

Good to see you, David, and I hope to see you when you’re over here next.