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Member Musing – Encouraging positive workplace culture in mining

Culture is widely acknowledged as a critical element that can either catalyse or undermine business success. But it is complicated to manage for a company, let alone measure as outsiders.

 

There is limited guidance for investors to properly assess culture and integrate it into their investment practices. Equally, there isn’t a guideline – a SASB or GRI equivalent – for companies to report appropriate psychological safety metrics to their stakeholders.

 

Created by investors for investors, Alphinity shares our workplace culture assessment framework in the hope that the investment community will make use of its principles to engage more meaningfully with mining companies.

 

Australia is a unique market where the collective voice from a relatively small number of asset managers and owners can support consistent disclosures across the mining sector and, ultimately, improve psychological safety in the mining industry.

 

The concept of safety in the Australian mining industry goes beyond the physical and requires immediate attention.
In 2022 we completed a significant engagement and research project following Rio Tinto’s confronting investigation that found sexual harassment, bullying and racism to be widespread and pervasive.

 

Similar concerns have been raised by the media and mining peers such as BHP and Fortescue.

 

The Western Australian government’s recent inquiry echoed these findings – sexual harassment is generally accepted or overlooked at fly-in-fly-out camps and, unfortunately, there is poor industry understanding of how to manage this issue.

 

A perspective on company culture can be obtained from the outside in.
Initiated at first to engage with Australian mining companies and deepen our understanding of psychological safety, the project quickly evolved into developing a workplace culture assessment framework.

 

 

 

We identify eight criteria and a number of specific metrics that can, together, be used to form a wholistic view of workplace culture.

 

These include remuneration tied to people and culture, the development of a strong ‘speak-up’ culture – i.e. a willingness to openly and frankly raise issues, concerns and ideas – supported by transparent reporting of issues to stakeholders and the board, progress on the diversity and inclusion programs, and engagement metrics that include both employees and contractors under the same approach.

 

Driving a speak-up culture and improving transparency is the first step.
Through the 10 company interviews we heard first-hand perspectives of those with the day-to-day task of managing workplace culture and psychological safety. Driving a speak-up culture was at the core of the conversation, and already we are seeing more transparency in the market.

 

Fortescue Metals Group and South32 have both disclosed sexual harassment and misconduct issues in recent ESG disclosures. Newcrest Mining has committed to address psychological safety and integrate these into its physical safety program, and disclosed sexual harassment and behavioural grievances raised last year.

 

Disclosures vary considerably, but all companies report against the framework in one way or another.
While assessing the workplace culture performance of the 10 companies we observed that disclosures varied considerably. With the exception of the number of employee dismissals due to misconduct, which is yet to be shared by companies, there was a wealth of information relevant to most criteria in the framework.

 

But only one company reported against all of the criteria. This leads us to believe that the companies’ understanding of the information investors seek is unclear, rather than commercial sensitivity being the reason for withholding disclosures.

 

Additionally, investors can be confident to encourage reporting against the framework metrics, as leading disclosures have done so already.

 

What next?
Poor culture and an unsafe work environment have significant implications for the long-term success of a business. We believe that this framework can help investors gain a wholistic picture of cultural health and ensure that psychosocial safety is fully understood and managed by companies.

 

Although improved disclosure is a step in the right direction, we will remain focused on holding companies to account to achieve safer operations. Moving forward we encourage other investors to utilise the framework to encourage stronger transparency and, ultimately, deliver positive change in the mining environment, for minority groups especially.

 

 

 

Moana Nottage is an ESG and sustainability analyst at Alphinity Investment Management who contributes to active integration of environmental, social and governance factors into the investment process. She conducts research and data analysis on typical ESG topics, and also considers the implications and opportunities of various sustainability issues related to the UN Sustainable Development Goals. Moana takes part in thematic research (e.g. modern slavery), product development, company engagement and monitors ongoing ESG risks with a focus on global stock and sector analysis. She has an active role supporting the Sustainable Share Fund Compliance Committee and assists in the governance and research associated with the global and domestic sustainable strategies. Moana has a Bachelor of Science and Commerce from the University of Sydney, with majors in Biology, Environmental Studies and Finance.