Key sustainability challenges in the Australian and ASEAN extractives sector revealed
06 September 2016

​The extractives sector is vitally important for driving economic growth globally, and specifically in the Asia-Pacific region. The extractives sector also involves significant social, environmental and economic impacts, which, if left unaddressed will hinder the rapid and inclusive growth countries hope for. 
​In light of this, GRI took a closer look at how it could increase the value of reporting for companies and their stakeholders through research on the state of today’s practice.

GRI partnered with EY Australia to look at the state of reporting among the Australian extractives sector, and with CSR Asia to look at practice across the ASEAN region. The aim was to explore and identify emerging material sustainability issues and stakeholder priorities; and options to increase the number of reporters and the value obtained from reporting. This research compliments an earlier study carried out this year, by GRI and RobecoSAM, Defining Materiality: Do companies and investors agree on what is material?, which explored how companies in the extractives sector define the issues that are material, and whether this aligns with the needs of investors. 

Here we provide a snapshot of the latest findings on the Australian and ASEAN extractives sector.

GRI framework useful in Australian extractives sector, but challenging issues are emerging 
The EY research on the Australian extractives sector found that the GRI reporting framework offers a useful tool for comparability across the sector, and it provides a way for companies to manage issues proactively. However, the research also identified emerging issues which are challenging to report and manage, including:
  • Climate change financial risk
  • Human rights, particularly in the workforce and suppliers
  • Tax transparency
  • Methodologies for measuring community impact

The research drew on analysis of sustainability reporting from 119 mining and metals and oil and gas companies; stakeholder feedback; emerging issues from industry-relevant frameworks, NGOs and media; and EY’s own thought leadership. 

The research found that sustainability reporting in the extractives sector in Australia continues to increase but further uptake is required. Reporting will also need to evolve to maintain its value as new sustainability issues emerge and develop. The following opportunities to extract further value from reporting across the sector were highlighted:
  • There is a need to address barriers to reporting and encourage more first-time reporters
  • As a globally accepted framework, GRI G4 offers Disclosure on Management Approach (DMA) which goes beyond reporting policies to demonstrate the efficacy of the management approach.
  • Case studies are a highly effective tool when balanced and outcome-focused.
  • Mapping boundaries provides stakeholders with greater transparency regarding where impacts occur and how they are managed. 
  • GRI G4 provides a valuable framework for companies to manage issues proactively. 

Further development of materiality process required in ASEAN extractives sector
The second research piece, carried out by CSR Asia, focused on three aspects of the sustainability reporting landscape: policy and regulation, voluntary expectations, and government incentives, in each of the 10 ASEAN member states. The table below shows a high level summary of the tools in each country. The ticks indicate an existing driver and the exclamation marks indicate that change is expected.

“From the research it is clear that expectations exist throughout the majority of ASEAN countries, where over half are showing mandatory disclosures either already in force to some degree or on the horizon,” explained Alyson Slater, Director of GRI Knowledge Unit. “Recent changes in policy, regulation and guidelines are contributing to the increase in environmental, social and governance (ESG) disclosures. Drivers for change include national policy, stock exchanges and civil society.” 

The research found that 58% of the ASEAN companies in the study released some form of ESG information, with greater ESG disclosure observed in the metals and mining sector (63% of companies) compared with the oil and gas sector (54%). 

The main driver of increased corporate transparency, particular for the extractive industry in the Mekong countries, is the EIA/ESIA regulations which are currently being introduced and include requirements for transparency.

Generally, it was the companies with the highest market cap that tended to disclose more information, though the benchmarking exercise also showed Indonesian metals and mining companies to be disclosing the most information in that sector. The most transparent oil and gas companies for ESG disclosure were found in Thailand, Malaysia and Indonesia.  

The research concluded that reporting companies would benefit from further developing and refining their materiality processes to get the most from disclosures – for example, biodiversity is a significant issue for mining companies however the research found that this topic is often not disclosed. Further developing the materiality process would also benefit non-reporting companies to help them establish the most important disclosures for their websites or other reporting processes.

Download the full reports here: