The Deloitte 2023 Tracking Trends report delves into the critical issues affecting the global mining and metals industry. Deloitte highlights the significant social, environmental, and economic value the mining and metals sector can provide, primarily focusing on its relationship with the environment.
The first trend pertains to the industry’s focus on putting purpose at the heart of mining and metals, thereby creating social momentum.
Despite mining companies taking significant action over the past decade to change the narrative surrounding the role they play within society—for example, through enhanced transparency and focusing on responsible mining methods— the industry remains undervalued.
Research from GlobeScan across 27 countries saw mining ranked second-to-last when asked how well different types of companies fulfill their responsibilities to society. However, demand for certain critical metals will outstrip supply in the near term, and to meet this shortfall, the industry will most likely need to develop greater capacity, often in previously unmined regions. As they seek to expand, companies will therefore need to put even greater effort into building trust.
Global Mining and Metals Sector leader, Deloitte Global, Metals Sector leader, said purpose has been a key movement in industries such as consumer products over the past 20 years, and it’s one that we see increasingly in energy and resources. This is not about creating a better narrative or setting out a new vision, but rather organizations actively living a wider purpose in the world.
Authors:
Ian Sanders, Global Mining and Metals Sector leader, Deloitte Global
Mike Robitaille, partner, Purpose and Momentum practice lead, Deloitte Canada
Why is purpose important?
A clear purpose is vital to an organization. It articulates why the organization exists, what problems it exists to solve, and who or what it wants to be to each human it touches. Increasingly, businesses are living out their purposes in ways that create deeper connections with customers, do more for the communities with which they work, and attract and retain talent. At the heart of this effort can be powerful collaboration across many players, and in the process, they’re achieving greater results and impacts.
Examples from the consumer products sector include Lego, Lululemon, and Starbucks. These are companies that, through their work, aim to go beyond making money to become agents of human idealism and societal progress. When brands become a force for their ideals, they give people a compelling reason to care about and contribute to their successes. And when people genuinely care about a company and the change it is bringing about in the world, that company becomes more valuable and advantageous.
Not every organization sees purpose as an all-encompassing ideal. Some consider it a tool to advertise what they do and stand for and to capture more market share. However, research from Deloitte US5 has shown that what separates purpose-driven businesses from the rest is longevity and authenticity. Purpose-driven companies can witness higher market share gains and grow, on average, three times faster than their competitors, while achieving higher employee and customer satisfaction.
For example, outdoor clothing brand Patagonia, whose ownership of which founder Yvon Chouinard famously placed into a trust for the benefit of the planet in 2022, is purpose-led. The company is ranked number one in its US$12 billion market and scores higher than its main competitor on many employee satisfaction metrics.
“Companies that lead with purpose and build around it can achieve continued loyalty, consistency, and relevance for their customers, consumers, communities, suppliers, and employees. Those that fail to identify and articulate their purpose may survive in the short term, but over time, people are likely to demand more,” said Sanders.
Purpose can help businesses navigate change
While purpose is important to every organization, it’s particularly pertinent in mining and metals because the products of this industry touch the lives (directly or indirectly) of humans in even the remotest reaches of the planet. Mining and metals providers are already influential forces for economic development in many regions, and if they can
harness the powers of their purposes, they have the chance to not only help secure their own sustainability ambitions but also drive social development and environmental restoration, too.
Mike Robitaille, partner, Purpose and Momentum practice lead, Deloitte Canada, said over the past five years, one of the biggest shifts we’ve seen, which is highly relevant for mining and metals, is away from exclusively business-to-business models. Thanks to social media and online information, organizations that traditionally had little exposure to the public are now expected to be more transparent. Almost every company now has a business-to-public model, and that requires an evolution in their value proposition.
This is not the only change that mining and metals organizations face. As discussed in trend 7, today, employees want more than a job; they want to be emotionally invested in doing something that they believe is meaningful through their daily work. This is particularly evident with Generation Z, a generation characterized by people who are highly driven to make career decisions in ways that align with their personal values.
Downstream consumers of metals also want to know what companies in their value chains stand for and expect them to create a better world for the communities in which they operate as well as deliver their own sustainability goals. Additionally, governments want to see that operators are good corporate citizens, and investors are demanding aggressive management of environmental, social, and governance (ESG) risks.
Putting purpose at the heart of a company could help to address these challenges. However, it requires more than just good storytelling, ESG reporting, or financial handouts to communities. Purpose-led growth requires new value to be created for stakeholders, rightsholders, and operations; plans and strategies to be rearchitected toward common goals; and leaders and employees to demonstrate that intention consistently. Most importantly, it requires commitment and alignment over time.
Bringing purpose to mining and metals
Due to the cyclical nature of the mining and metals industry, sustaining transformation programs through commodity cycles requires unequivocable buy-in from leadership and a commitment to their resourcing and investment, whatever the economic weather. Also, while the industry prides itself on meeting quantifiable operational metrics, such as production targets, ESG efforts in recent years have proven that it’s much harder to address nonfinancial stakeholder expectations.
The industry isn’t alone in finding this difficult; research from Deloitte Canada across various sectors found that while 86% of companies have stated a “purpose beyond profit,” only 18% showed any evidence of associated change. However, there are some early case studies that could offer valuable lessons.
Worley is investing AU$100 million (approximately US$65 million) over three years to target and develop solutions for customers in high-growth areas aligned with its purpose. The company has put in place initiatives focused on the education of its workforce, challenging traditional approaches, and identifying innovative ways to meet sustainability challenges across the company and its customers’ operations.
In FY2023, 41% of Worley’s total revenue was sustainability-related, up from 35% in FY2022, and by FY2026, the company aims for 75% of its total revenue to be sustainability-related. To date, more than 40,000 sustainability-related learning modules have been undertaken by Worley people, and the company now boasts 700 sustainability champions.
Fueling future growth and longevity
There is a tremendous opportunity for forward-thinking mining and metals companies to reorient their corporate brands and become instruments of progress and idealism, increasing their profit growth and product demand as a result. The environmental and social challenges that we see today are the harbingers of change, and society is asking more of businesses. The question is, which organizations will rise to the challenge?
