As the global energy transition accelerates, Environmental, Social, and Governance (ESG) principles are no longer peripheral concerns for mining companies - they are core to operational integrity, investor confidence, and long-term resilience. While ESG discourse tends to spotlight decarbonisation and social upliftment, it is governance that acts as the binding agent.  Strong governance structures ensure that environmental and social ambitions are not just public relations exercises but are embedded into corporate DNA.

In Southern Africa, the region’s heavy reliance on coal and other carbon-intensive resources complicates the ESG equation, yet these minerals remain economically essential.  The resultant paradox is that to extract and process the minerals necessary for a greener future, we remain dependent at least in the short to medium term on a fossil fuel that global ESG agendas increasingly seek to phase out.  South Africa’s Critical Minerals and Metals Strategy (2025) add another layer of complexity, as to retain more value domestically it aims to advance the exploration and beneficiation of its critical minerals.  These industrial processes demand significant and stable energy input.  Until scalable and cost-effective storage solutions are widely available, coal remains a practical energy source for the region’s development agenda.

A more nuanced approach to ESG, grounded in ethical governance, is therefore required - one that can support local socio-economic imperatives while still aligning with international sustainability expectations and providing the structure and integrity to manage both the opportunities and contradictions of a transitioning mining sector.

Strategic governance towards a just transition

Boards, executives, and operational teams are increasingly being called upon to embed considerations of ESG risk and opportunity into all levels of decision-making from strategy to site operations, and across the value chain.  This includes formally recognising coal and other high-emission minerals as "transitional assets" that require time-bound sustainability targets and detailed Just Transition plans.  These strategies must go beyond compliance and must address the impending challenges of a just transition, articulating how companies will diversify local economies, reskill labour forces, and rehabilitate mining-impacted landscapes. This must be reflected across every level of the organisation.

At the highest level, company boards must set the tone for ethical and sustainable stewardship of carbon-intensive assets.  That means clearly defining the role of coal and other high-emission minerals in a company’s transition strategy, acknowledging them as transitional assets, subject to time-bound ESG targets.  Boards should adopt comprehensive policies for the full lifecycle of mining operations, from exploration through closure, and require public ESG reporting including for high-emission or legacy assets.  This approach embeds Just Transition principles into strategy and operations, and can be reinforced by incentivising executives in relation to the ESG performance of all assets, signalling true commitment to sustainability. 

On the ground, departmental managers are responsible for embedding ESG considerations into daily operations.  For example, a procurement department may implement responsible sourcing policies that apply to vendors, ensuring that supply chains meet the same ethical standards demanded of green operations. 

At the operational front line, engineers, environmental officers, and geologists are key to executing ESG objectives, from redesigning tailings storage to align with International Council on Mining and Metals' (ICMM) best practice, to implementing progressive rehabilitation while operations are still underway.  Innovations such as dry tailings technologies, real-time environmental monitoring, and even early-stage carbon capture pilots can meaningfully reduce the impact of mining operations. Just as importantly, these initiatives help companies report credibly on their progress and adapt where necessary.

ESG Frameworks as Tools of Transparency and Discipline

In support of strong environmental and social governance practices, international reporting frameworks play a pivotal role in shaping the ESG landscape. The Global Reporting Initiative (GRI), and the ICMM Principles, including the Global Industry Standard on Tailings Management and the Consolidated Mining Standards Initiative (CMSI) have become key instruments in aligning company behaviour with stakeholder expectations in the mining sector.  The Task Force on Climate-related Financial Disclosures (TCFD), Task Force on Nature-related Financial Disclosures (TNFD), and Taskforce on Inequality and Social-related Financial Disclosures (TISFD) similarly guide businesses on reporting impacts, dependencies, risks, and opportunities related to climate, nature and people.

Generally, ESG reporting frameworks are important in guiding executive and operational leadership on their ESG governance and strategy, as well as setting the ESG metrics and targets against which a company should report.  The sector-specific frameworks such as the CMSI take ESG governance further by reducing complexity across mining and metals practices without compromising on performance standards.  Once implemented, the CMSI is expected to be adopted broadly across the industry, with independent oversight.  The harmonisation of reporting practices across the industry will provide clarity for technical and sustainability teams, encouraging transparent and ethical practices through a clear disclosure framework.

The root of ESG: regulatory compliance

While ESG disclosure is a strategic imperative for the mining industry, regulatory compliance underpins many of the relevant obligations, disclosures and metrics within those frameworks, and remains the foundational measure of effective governance and operations.  Environmental law frameworks are continuously evolving in South Africa, to meet crucial environmental protection, conservation and sustainability commitments and requirements.  For the mining sector, key legislative and regulatory developments which are likely to shape and reshape mining strategies include:

• the planned overhaul of water use and management legislation, through the National Water Amendment Bill, 2023 and the National Water Amendment Bill, 2023;
• the coming into effect of the South African National Water Resources Infrastructure Agency SOC Limited Act, 2024, which will allow the Agency to raise commercial and development finance, which unlocks opportunities for increased infrastructure development and finance in the water and sanitation sector;
• the coming into effect of the Climate Change Act, 2024, which will enable the development of an effective climate change response and a long-term, just transition to a low-carbon and climate-resilient economy and society for South Africa in the context of sustainable development. On 17 March 2025, various provisions of the Act came into force, with others being deferred (to be phased in over time, once draft regulations, intended to be published for public comment shortly, have been finalised).  Companies should also prepare for changes to the carbon tax regime under Phase 2;
• the Presidential signing of the Upstream Petroleum Resources Development, 2024, which will separate the regulatory framework for the petroleum exploration and production sector from that of the mining sector;
• the publication of the draft Mineral Resources Development Bill, 2025, which seeks to address (among others) illegal mining by proposing to regulate small-scale mining operations, and establishing a Ministerial Advisory Council to advise the DMPR Minister on sustainable resource development, transformation growth, beneficiation terms and conditions and other ministerial referrals; and
• the publication of the draft National Environmental Management: Biodiversity Bill, 2024, which will (among others) set these scene for regulating activities and duties impacting on the well-being of animals.

South African courts also have a part to play in progressing the sustainability agendas of both the public and private sectors.  The Cancel Coal case judgment delivered on 4 December 2024 declared the government’s plan to procure 1,500MW of new coal-fired power as part of the 2019 Integrated Resource Plan (IRP) unconstitutional, unlawful and invalid, and ordered its removal thereof from the 2019 IRP. Government was also compelled to re-assess energy policies in terms of constitutional obligations.  While the Deadly Aircase heard on 11 April 2025 ordered the Minister of Environment to prescribe regulations in terms of the NEM: Air Quality Act and to implement and enforce the published Highveld Priority Area Air Quality Management Plan (AQMP), where coal-fired power plants are a major source of emissions.  These regulations have since been published in final form, as has the Second-Generation Highveld Priority Area AQMP, imposing emission reduction obligations on identified companies operating in the Highveld.

These legal updates may have an impact on a mining company's ESG strategy and just transition plans, and both executive and operational management teams should remain agile in response.  While coal remains a critical mineral in the South Africa context, the government strategy around coal mining, beneficiation and energy use is evolving. 

In this context, ethical governance grounded in regulatory compliance, transparent and strategic decision-making and consistent ESG reporting allows companies to position themselves as credible agents of change even as they navigate legacy challenges and an evolving regulatory and policy landscape. In Southern Africa’s mining sector, the future will not be shaped by the cleanest mineral alone but by the companies most willing to govern all of their assets, green or not, with integrity and foresight.

Written by Nomsa Mbere, Paula-Ann Novotny, Partners & Emily Gammon, Knowledge Lawyer at Webber Wentzel