/ Asia Pacific, Global, Sustainability
If you’re a mining company thinking of listing on the Singapore Stock Exchange (SGX) get your ESG house in order. The same message, in fact, could be applied to any international exchange and indeed a whole range of business sectors as ESG policies continue to emerge as the new watchword for corporate responsibility.
The ESG priority for aspirant miners was reiterated recently at a webinar hosted by global sustainability consultancy ERM in Singapore. The event examined a new onus on sustainability/ESG programmes for mining companies, both in the run up to a listing and once they have become public companies.
“For a mining company to be sustainable it needs to create and protect value for all stakeholders,” commented Trista Chen, a partner at ERM Singapore. “When you list in the public domain it means that the information you put out will be subject to scrutiny. This can affect a company’s valuation and how your sustainability is perceived by others.”
Like other international exchanges, the SGX has improved its guidance and tightened its rules relating to ESG information which is deemed material – i.e. information which could influence the economic decision making of investors as defined by the International Accounting Standards Board. For mining companies, information relating to climate risk, community engagement, and indeed tax transparency could all be deemed ESG-relevant to a listing.
“There is no universal definition of ESG,” Chen told her audience “so in this case it’s important to understand what ESG means for the mining company.” A common reference or starting point, she noted, was the UN’s 17 Sustainable Development Goals and how these were material to the business. These days public companies may find themselves coming onto the radar of any of more than 100 organisations that produce ratings and rankings for ESG. In this context, said Ms Chen, ESG disclosure has become a critical part of the process of going public.
For its part the SGX requires all listed companies to produce a sustainability report no later than five months after the year of its listing. This is an opportunity to highlight material risks and demonstrate how they are being addressed as well as set out ESG targets in the forthcoming year. It also involves deciding which ESG reporting framework to adopt – for example GRI or the climate-focused TCFD – or indeed both.
From a mining perspective, the SGX applicant must ensure they have an independent ‘qualified person’ (QP) on board who can keep the market informed about the viability of a project. “The most important factor for any mineral project that wants to list is the QP report,” said Patrick Maher, an experienced geologist and a partner with CSA Global (part of the ERM group following its acquisition in 2019). “The person writing this report must be a competent person – such as a member of the Australian Institute of Metallurgy – with a minimum of five years’ experience in the mineral which is being described.”
All agreed that a mining company should engage with a consultant early in the IPO process; a successful example being the Malaysian Iron Ore miner Fortress Minerals which listed on the SGX in March 2019 and had been given a variety of platforms by the exchange to raise its profile and demonstrate corporate responsibility. Getting the right advice was an instrumental part of the listing.
Another speaker at the webinar, Foong Chong Lek, who is head of corporate client, global sales and origination at the SGX, noted that ESG was now an important focus and that more than 40% of listed companies were from overseas, benefitting from close links to the ASEAN economies and a base in Singapore, the top ASEAN city in terms of wealth. “The SGX is not just a listing platform but a partner for both listing and fund raising and driving value post IPO,” said Chong Lek.
All the more reason for an aspirant miner to avoid the pitfalls, suggested Patrick Maher. These included not getting in a QP early enough in the process; a poor understanding of resource and reserve estimates and poor quality samples. Clearly a failure to appreciate the current importance of ESG issues and their link to the overall success of a project can be added to this list.
BY NICK COTTAM
SOURCE: Environment Analyst
DATE: May 25, 2021