ESG CASE STUDY: HARMONY GOLD
natural resources by improving water efficiencies through re-use and recycling. The company has also rehabilitated areas of land, grown sorghum as part of a biodiversity project, and uses water generation pumps at some sites to turn wastewater into potable water for surrounding communities.
“We have focused our activity on implementing key tenets of our new sustainable development framework – from growing our portfolio of assets towards profitable ounces, to managing and mitigating our water and climate risks. We continue to embed our proactive safety and healthcare strategies while building trust in the communities in which we operate,” explains Steenkamp. “Over the next five years we aim to strengthen our delivery on key sustainable development indicators and adhere to the UN’s 17 Sustainable Development Goals as they apply to our business.”
Harmony is also planning to reduce its carbon footprint by consuming renewable energy and is building a 3x10-megawatt solar plant in the Free State with the ambition of ultimately increasing its output year-on-year.
On the ‘G’ of ESG, the company has adopted a corporate governance and compliance policy and framework underpinned by the principles of the King IV Code (the governing guidelines for listed entities) on Corporate Governance in South Africa. Based on these principles, the roles of the CEO and the Chairman are separate and the board composition is diverse and varied (see Figure 1 on page 72). The Chairman also has a Lead Independent Director to ensure independence and avoid conflict of interest issues.
Managing the trade-off Given its sustainability experience, Harmony has been able to proactively address ESG concerns. “Despite the environmental impact of mining, ESG issues have always been core to a mining company,” says Steenkamp. “Our social labour plan is government and union-approved and we know that in order to protect our licence to operate, we have to have these local economic development and corporate sustainability plans in place.” A top rating from risk management company Risk Insights in terms of ESG disclosure and recognition in the Bloomberg Gender- Equality Index go some way towards validating the corporate’s sustainability
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measures, and Harmony continues to work on set targets regarding its sustainability key performance indicators (see Figure 2).
Going for gold? Going forward, in addition to stakeholder management of ESG issues, a commodities supercycle could present further ESG challenges for Harmony.6
Steenkamp
is unfazed, however: “We’re not price- chasers but price-takers,” he says. “We can’t control the gold price, but we focus on what we can control and that is our production, costs and commitment to ESG regardless of where we are in the cycle. We are a resilient company that can add value through our existing operations and asset mix, integrated ESG practices, astute acquisitions, and green investments into South Africa.”
With a focus on sustainable gold, the company’s share price has increased by
305% since 2016 (as at 31 December 2020), when it introduced its strategy of producing safe profitable ounces and increasing margins. And, with increased production from surface operations over the past years, it has been able to de-risk while benefiting from the wider margins that those operations have delivered. “Ultimately, we’ve been able to demonstrate that we can provide value throughout all cycles, so while we can’t control commodity pricing, we can focus on being a sustainable business that will still be here for many decades to come,” concludes Steenkamp.
Sources 1
See
https://bit.ly/2QQNTcN at
forbes.com 2 See
https://bit.ly/3sAhtkR at
gold.org 3 See
https://bit.ly/39s3uWw at
flow.db.com
4
ADRs allow US investors to hold shares in non-US companies
5 See
https://bit.ly/3sASBsV at
harmony.co.za 6 See
https://bit.ly/3rALVK7 at
flow.db.com
Figure 2: Sustainable development performance is measured by group aggregate targets
Indicator Ownership People empowerment Socio-economic development Training and development
Number of fatalities Silicosis
Noise-induced hearing loss 2022 target
Minimum of 30% ownership of company by historically disadvantaged South Africans
50% representation of historically disadvantaged South Africans in management by 2018
Maintain 1% profit after tax for investment in socio-economic development
Group aggregate: 6% human resources development expenditure as percentage of payroll
0 fatalities 0 new cases, based on current diagnostic testing
No deterioration in hearing greater than 10% among occupationally exposed individuals Total noise emitted by all equipment in any workplace must not exceed 110dB(A) at any location
Significant environmental incidents
Aggregate group target to reduce electricity consumption per tonne treated
Aggregate group target to reduce greenhouse gas emissions per tonne treated (incl. slimes)
Biodiversity action plans (BAPs) to be implemented at all sites by 2022
Aggregate group target to increase affected water consumption per tonne treated
Aggregate group target to reduce freshwater consumed per tonne treated
Aggregate group target: Land available for rehabilitation
0 5% reduction by 2022, based on 2017 base year 5% reduction by 2022, based on 2017 base year 100% of sites to have implemented BAPs, as planned 7% improvement by 2022, based on 2017 base year 4.5% improvement based on a 2017 base year by 2022
2% reduction of land available for rehabilitation year-on-year
Source: Harmony Gold
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