6 Ways Environmental, Social, and Governance Principles Influence Security
Environmental and social concerns topped Ernst & Young’s annual Top 10 Business Risks Opportunities for Mining and Metals for the first time ever in 2022.
What started as investor terminology to measure environmental and worker relations transparency has drifted into something quite different: environmental, social, and governance (ESG) is now synonymous with creating the most sustainable, socially conscious, and progressive brand possible.
Global public opinion—as well as boardroom excitement—is largely responsible for creating such ambitious ESG targets.
Professional services firm KPMG’s Global Mining Outlook 2022 report canvassing the views of 301 mining executives put environmental considerations, community relations, and political instability in its top five risks, alongside commodity prices and global trade conflicts.
Ernst & Young also wrote that ESG is the second most important trend driving oil and gas in 2022. So, why is there boardroom hyper-focus on ESG?
Supply and Demand
With governmental and social pressures to reduce emissions, decarbonize across the globe, and provide meaningful contributions to local communities, it’s no surprise that mining, oil, and gas companies have become some of the most ESG-conscious organizations.
For example, a new copper mine in Peru was required to meet several conditions to obtain its license to operate (LTO), including construction of a new water reservoir that provided farmers with a reliable water supply, creating a development fund, hiring local workers, and utilizing local suppliers.
In Egon Zehnder’s ESG Report 2021, one mining executive said, “One of the unions wanted to know where we stand on climate change before agreeing to work with us. And this made a huge difference.”
As Carly Leonida wrote for Engineering and Mining Journal: “Companies serious about ESG are now graduating to the next phase outlined in the Sustainability Initiative model of becoming ‘consciously reactive’ as they translate vision into action.”
The unique nature of their global operations and the direct impact said operations have on the physical security of staff, assets, and communities force energy companies to be consciously reactive. While the focus at the moment is on extractive companies, they are not the only ones affected by the call for ESG initiatives, and these security considerations can impact all sectors.
(Very) Remote Working
Many commodities—oil, minerals, other natural resources—are found in countries with challenging human rights records (top-down) and problems with monitoring isolated business/social practices (bottom-up).
The Economist estimated that more than 50 percent of the potential windfall from the clean energy transition will go to (supposed) autocracies. On the global level, the ESG impact is obvious. The Democratic Republic of the Congo boasts 46 percent of global cobalt reserves, producing 70 percent of total global output. But, according to the Wilson Center, there are 40,000 children working in the mining industry there.
Ernst & Young noted that “LTO is evolving fast as expectations change around mining’s contribution to communities, economies, protection of heritage sites, and engagement with Indigenous and First Nations people.”
In many parts of the world, mining, oil, and gas companies are the local source of income—the ones to thank and the ones to blame. The ones to get a freshly minted LTO or become nationalized.
How oil companies and mining companies behave—from water management to site closure—has a direct impact on the local community.
Local communities are not limited to organizational outsiders. Employees are also part of the story.
Employees come from the local towns and villages, which have often been purpose-built for an extraction project. If you harm the community, you harm your workers—and potentially organized labor and regional political influence.
Employee well-being is critical, and complaining about workplace conditions is becoming more protected. To date, voluntary disclosure and engagement has been the main mechanism through which complaints about work culture and breaches occur. But there is a push for compulsory disclosures, such as with the European Union introducing the EU Whistleblowing Directive aimed at providing uniform protection for whistleblowers.
Drawing the Perimeter
Environmental campaigners will continue to target the key assets of natural resources companies, which is a security concern for protective services teams.
But, again, local market forces are just as—if not more—powerful. Whistleblowing and the immediate social impact of those actions can rapidly drift into security risks to the organization.
Workforce unrest, coupled with an isolated site and unpredictable public security coverage, presents board-level problems. Just look at the Marikana Massacre of 2012 where 34 people were killed in South Africa after they walked out of a platinum mine on strike.
Safeguarding ESG is identical to safeguarding employees, communities, and operations. The perimeter fence extends beyond the refinery or mine and into the world of public opinion and political narratives.
Misinformation is also a challenge that security leaders will need to contend with. One of the most prominent global COVID-19 conspiracy theories wrongfully claims that the virus is spread by 5G mobile phone technology.
In June 2020 in the Andean community of Chopcca, eight telecommunications workers were sent to Huancavelica, Peru, to repair an Internet antenna in the area. They were captured by a group of villagers who falsely believed that a 5G antenna was being installed and that it would spread COVID-19. The technicians were later released unharmed.
Isolated communities with low levels of Internet penetration may still be susceptible to misinformation—perhaps even more so when coupled with lower rates of media and digital literacy. Likewise, conspiracy theories that may appear outlandish cannot be dismissed as they can take root in popular consciousness and have a real-world impact.
Countering disinformation requires direct engagement with representatives of such groups and visibility over digital trends.
Metrics on Momentum
In the coming years, attempts to codify ESG will rapidly accelerate. All things qualitative like social impact and environmentalism demand quantitative metrics eventually, even within security.
For security leaders, ESG impacts various responsibilities:
- Tactical ground intelligence. Measuring impact of local influencers and political momentum or threatening or abusive content about isolated sites and executives.
- Narrative investigations. Persistent, targeted, physical threats and intimidation from groups; potential insiders; criminal gangs; or orchestrated activism. Also, underlying sources of misinformation.
- Sensitive exposure. From doxing isolated workers to violent intent, triggering group security or health and safety’s duty of care.
ESG is such a priority that it needs to be driven by continuous, live insights and data-driven visibility.
Perception is Reality
ESG alignment demonstrates a strong positive relationship with business outcomes, like stakeholders' willingness to buy, work for, recommend, or trust a company to do the right thing.
Corporate security cannot dismiss itself from the ESG conversation, especially when more than 90 percent of companies studied saw that ESG efforts did not match the public's perception of said ESG efforts, according to RepTrak.
Remember: perception is reality. If the effort put into ESG is not being reflected on the outside, the feedback loop needs to be put in the spotlight. Protective services—based on their proximity to local community duty of care, crisis management, and remediation—are that feedback loop.
ESG is not going anywhere, and neither are inevitable business attempts to force KPIs on all areas of a business.
Corporate security teams should examine ways to hybridize security:
Prevent physical threats in advance.
Embed open-source intelligence (OSINT) into corporate security functions.
Examine underlying societal and environmental causes.
Maximize visibility across exposed company data used for site points of entry, employee impersonation/harassment, and obtaining site secrets or raw material theft.
Create and champion hybrid protective services for employees, including digital near-misses.
Reinforce governance in ESG with digital duty of care to align with health and safety near-miss metrics.
Investigate real sources of disruption or criminality for efficient law enforcement liaison.
Understand impact of political movements (was an incident a drive-by shooting or a more systemic existential threat?).
Extend duty of care to all stakeholders to align trade unions and workers with company goals.
Rather optimistically, corporate security can attach itself to the business bottom-line in extractive industries. Preventative measures against physical attack and production stoppages involves addressing ESG head-on, and group security functions can become the true go-to subject matter experts.
Lindsay Whyte is a member of the ASIS UK Chapter and regional director at Constella Intelligence. He is ex-British Army Intelligence Corps and moonlights as one of the intelligence officers on the Channel 4 TV Show “Hunted.”