Many companies operating in the mining sector in Zimbabwe have embarked on their sustainability journey to measure and report on the most significant impact of their activities on the economy, the environment, and people.
The call for sustainability compliance is increasing in Zimbabwe from both regulatory and voluntary perspectives. From a regulatory’ perspective, compliance with sustainability reporting has become a legal requirement under Statutory Instrument (SI) 134 of 2019, issued by the Securities and Exchange Commission of Zimbabwe (SecZim).
The regulations mandate all publicly listed companies to report on sustainability matters. In 2023, the Zimbabwe Stock Exchange (ZSE) introduced core ESG disclosure metrics, which came into effect on 1 January 2024, to further enhance compliance and standardisation of ESG standards that must be used by listed companies.
There are also companies that are reporting on sustainability, but their parent companies are listed on foreign stock exchanges, which make ESG reporting a mandatory requirement just like the ZSE. These companies include Mimosa, Unki and Zimplats. They are complying with stock exchange-regulated ESG reporting.
The intention is not just about compliance but making deliberate sustainability measures to create the social licence to operate, contribute towards the achievement of Sustainable Development Goals (SDGs), reduce possible financial losses and create long-term business success.
On the other hand, the Public Accountants and Auditors Board is making inroads in enforcing the implementation of International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, which will require listed companies to adopt IFRS in their reporting process. At policy level, the government is planning to develop an ESG policy for the mining sector.
The government, through the Mines Bill, is proposing to legislate the Responsible Mining Standards to ensure that beyond submission of production returns, mining companies will be required to provide information on how they will be complying with ESG metrics.
There is also an increasing trend where mining companies are implementing voluntary ESG standards to respond to the need to meet markets and investors’ demands on responsible sourcing.
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The discovery of critical minerals such as lithium and its extraction thereof, has also amplified the issues of sustainability reporting due to its role in the promotion of green energy technologies.
There is pressure coming from customers sourcing critical minerals from Zimbabwe, as they are now demanding that producers demonstrate that their minerals are being mined responsibly with no trace of environmental degradation, pollution or violation of human rights of communities.
In fact, it is actually markets that have played a big role in terms of the development of voluntary international ESG standards which producing and exporting companies must comply with for them to secure markets.
These standards include the Initiative for Responsible Mining Assurance (Irma), Germany’s Mandatory Environmental Due Diligence and the European Union’s Corporate Sustainability Reporting Directive.
In the gold sector, the expectations is that mining companies should comply with the Organisation for Economic Cooperation and Development Due Diligence Guidance for Responsible Gold Supply Chains.
In Zimbabwe, some lithium and platinum mining companies are exporting minerals whose end products land in the EU and US markets. They are expected to comply with these market-based international responsible sourcing standards.
The EU’s CSRD is now a law, which binds on EU countries, but with the same implications on Zimbabwean companies or suppliers that are part of the value chain of these EU companies
The impacts of mining on climate change has also made issues of sustainable mining practices very important, where the focus is on minimising carbon emissions from mining operations and promoting renewable energy access.
This justified the coming on board of climate-change-related standards such as the Task Force on Climate-related Financial Disclosures which provides recommendations for disclosing clear, comparable, and consistent information about the risks and opportunities presented by climate change.
Investors and financiers are also making sustainability reporting a key requirement in investment and lending decisions. Development Finance Institutions such as the Africa Development Bank are also requesting that borrowers of private loans demonstrate that they are ESG compliant. The move by companies to comply with ESG also opens opportunities to access a number of green grants.
The evolving global ESG landscape clearly shows that it’s not business as usual as, increasingly, companies are supposed to take genuine steps to integrate sustainability in their operations and report in a transparent manner.
This calls for mining companies to go beyond local level legal compliance such as the Environmental Management Agency Act to adopt international best practices and avoid greenwashing. Companies are recommended to use the widely-accepted Global Reporting Initiative standards to structure their ESG systems and institute transparency mechanisms of reporting as a pathway to international best practice.
Chiremba is an Economist and a certified GRI sustainability professional who is working within the Zimbabwe Environmental Law Association (ZELA)’ Sustainability Unit. He writes in his personal capacity as a sustainability professional. These weekly articles are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — kadenge.zes@gmail.com or mobile: +263 772 382 852.
