Gold miners have enjoyed a sudden spike in investment interest as gold prices surged this year, but among the broader base of investors, some are demanding the precious metal producers to place greater attention on environmental, social, and governance, or ESG, issues.
According to top executives in the run-up to the Denver Gold Group’s Americas conference, ESG issues have grown in prominence this year and the gold miners sector is also seeing its fair share of ESG conversations, Bloomberg reports.
Generalists are looking at bullion because of the high prices and “the strong argument that the gold price can go higher,” Sean Boyd, chief executive officer of Agnico Eagle Mines Ltd., a top-10 gold producer, told Bloomberg, adding that those investors tend to judge mining companies through an ESG lens. “They don’t want to take a lot of risks, and a big part of the risk assessment is the ESG side of things.”
“Often it’s the first, and sometimes the only, discussion when we’re meeting with investors in Europe,” Tom Palmer, CEO of top producer Newmont Corp., told Bloomberg. At the World Economic Forum in Davos in January, many times “the only topic of discussion was around carbon intensity and the work that’s being done to reduce greenhouse gas emissions.”
Similar to many industries that dig into the earth to extract raw metals and minerals, the mining process damages the environment. Furthermore, the companies come into conflict with local communities or cause an issue with shareholders on corporate governance issues. Gold investors have also highlighted issues including executive compensation and directors who aren’t invested enough with the company.
Gold miners, though, face greater scrutiny from ESG-minded investors since gold, which is mainly used to produce jewelry and acts as a store of value in bars and coins, is not a key component in advancing a green economy.
“Gold’s an odd thing because most of it sits in vaults around the world gathering dust,” B2Gold Corp. CEO Clive Johnson told Bloomberg.
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