Natural Resources Forum ESG Week: The challenges faced by NEDs

Hudson Sandler was delighted to host a panel during the Natural Resources Forum’s annual ESG Week conference in October 2021.

Moderator Charlie Jack, Partner and Head of Natural Resources at Hudson Sandler, chaired a panel alongside a leading panel of experts working in the natural resources sector, exploring the unique difficulties facing Non-Executive Directors (NEDs) in navigating and advising on ESG policies and strategies, compliance and safety. Topics covered included the importance of understanding where the company sits amongst its peers on reporting matters, setting robust standards as well as stretching targets, and tracking progress.

The panel included Yulia Chekunaeva, Director for Capital Markets and Strategic Initiatives, En+ Group, Director, Clean Growth Leadership Network and INED, Nordgold plc, Michael Rawlinson, Chairman of Adriatic Metals plc and SID at Hochschild Mining plc, and Rupert Krefting, Head of Corporate Finance and Stewardship, M&G Investments.

The role of the NED in ESG

Charlie Jack opened the discussion by questioning panellists on the role of the NED in shaping the broad ESG strategies that companies adopt, dealing with how to utilise robust ESG frameworks to narrow any perception-induced discount and the challenges in navigating political developments in countries of operation.

Yulia Chekunaeva emphasised the responsibilities of the NED in being aware of fiscal risks and changes linked to a challenging political landscape, adding that whilst there’s only so much a board can do when faced with political risk, the best responses are when a company adheres to best standards and keeps stakeholders engaged.

Rupert Krefting outlined the importance of investors quizzing management on all the governance behind decision making and to ensure that, despite jurisdictional laws lagging behind in many places, investor expectations are met in terms of responsibility being taken for any actions.

Michael Rawlinson added that, in a culture of compliance, the key is to invest in people and empower employees at all levels to speak up if something isn’t right; if whistleblowing isn’t up front and centre of H&S, how can the board determine its importance to the management team? The optics present the culture.

Risk and H&S Governance

The panel agreed that executive remuneration should be strongly tied to ESG metrics and KPIs to ensure they’re being implemented both in the short and long term. When it comes to delivering on metrics, Yulia Chekunaeva commented that, unless you set a KPI that specifically measures a certain deliverable, as with zero harm workplaces in the resources sector, then the person will not be delivering on it. The focus will be on the publicly discussed KPIs and those should not only be profits.

Opening the floor to Q&A, the panel discussed some engaging questions from the audience, covering topics such as the role of the NED with the issue of a lack of diversity and whether miners should strive to have more environmental experts on their boards.

Watch the full video below:

Credit: Natural Resources Forum