Good as gold? How can miners avoid ESG pressures tainting the precious metal?
As ESG scrutiny of mining firms mounts, can the gold sector justify its carbon footprint and other impacts?
Pressure for companies to go further and faster on climate and ESG has been building, particularly for miners. Investors and society are demanding companies do more to reduce emissions and improve their ESG performance. Poor performing companies are experiencing a significantly higher cost of capital and some commodities, like coal, have been cast aside by mainstream financial institutions and investors in order to protect the climate. Where coal fails, metals and minerals essential for the energy transition succeed. Clear, strong arguments around the energy transition can be made to support the extraction of copper, nickel, lithium and many others. Gold struggles to make the same case.
As the future brings increased carbon taxes, tighter regulation and increased consumer and stakeholder pressures to reduce emissions from products and portfolios, will gold continue to thrive given its carbon footprint and range of other ESG challenges? Leading gold miners are now grappling with precisely this question and innovating in various ways to try and find an answer.
A hard-to-justify carbon footprint

Is gold mining in a climate hole?
Gold often has a high carbon footprint considering its limited use in the energy transition. For many climate conscious stakeholders, the continuation of gold production seems a poor use of the rapidly diminishing global carbon budget compared to the production of battery metals, for example. Whereas 1 tonne of lithium has the potential to displace 190Kt of carbon a year, the impact of an ounce of gold would be negligible. It is therefore no surprise that leading commentators and investors like Evy Hambro (Managing Director and Head of Thematic and Sector Based Investing at BlackRock) are calling for the gold sector to do a better job at justifying the environmental costs associated with mining.
The world’s gold mines currently emit an estimated 130Mt of carbon emissions annually – the equivalent of over 28 million cars. The vast majority of these emissions are generated through the operation of processing plants, haul trucks and other vehicles, making the emissions at each project vary considerably. Grade, mining technique and local energy mix are the main factors that determine the emissions released per ounce of gold mined. At the worst-performing, low-grade open pits, an ounce of gold may entail the release of over a tonne of CO2.
A limited amount of this gold is used in the energy transition. Around 10% of the gold that’s produced is used in industrial and transition technologies ranging from dentistry to increasing the efficiency of solar panels. However, the remaining 90% is used to store wealth and manufacture jewellery. A growing range of stakeholders are questioning whether there is a need to remove gold from the ground at all when the majority of it is then stored in banks and returned deep below the earth. Industrial demand could largely be met through recycling; many jewellers are already looking to more ‘sustainable’ materials and processes in place of newly-produced gold. As investors focus on portfolio emissions, consumers look for low-carbon inputs, and governments strengthen carbon taxation, there is a risk that gold assets and products will lose favour and those with the highest emissions intensities may become stranded.
Climate impacts may amplify broader ESG concerns
Climate impacts come on top of other ESG challenges confronting the gold sector. Some are shared with many other forms of industrial mining and mineral processing, for example air quality, water, deforestation, social and biodiversity impacts. As climate change intensifies, many of these factors are likely to become harder to mitigate. Competition over access to water will become an even greater source of local opposition as water stress grows and greater value will be placed on biodiversity and forested land. As the cost of capital steadily increases for companies with poor ESG ratings, poor performers will find that the resources at their disposal to mitigate, respond to and remediate these challenges, will significantly diminish.

Some practices can provoke strong community opposition
Other challenges are distinctive to gold mining and processing. Artisanal and small scale mining (ASM) activities add substantially to community tensions and increase the frequency of human-rights issues around security and, in places, the use of child labour. Artisanal mining also comes with increased environmental challenges that companies may be held liable for, due to the frequent use of mercury in ASM processing. Meanwhile many formal mining operations use cyanide in processing, another highly toxic element which, while safe if handled correctly, provokes strong fears in local populations. Occasional flagship disasters involving cyanide are a focus for NGOs, increasing scrutiny of HSE processes, water management and tailings.
Faced with these challenges, several gold companies have become world leaders on ESG. But in other cases these issues have caused gold projects to fail. Greystar Resources’ Angostura gold project in Colombia attracted significant opposition from local and regional stakeholder’s over possible impacts to critical water sources and the use of cyanide. Although not the only factor, concerns over the use of cyanide acted as a significant vector for local opposition to grow. Conflict with artisanal miners, the politicians supporting them or the criminal groups manipulating them has halted production at mines across Latin America and Africa.
Climate-proofing the industry
Continuing to thrive in these circumstances will require the sector to build on and accelerate the best practices that have been developed around ESG. The positive news on climate for gold miners is that almost all greenhouse gas emissions are scope 1 and 2, meaning that they can, at least in principle, be directly controlled. With investors increasingly wary of adding fuel to the fire, radically reducing mining emissions would take the sting out of conversations around both the purpose of and justification for gold production during the climate crisis. Reduced emissions could also provide an opportunity to sell gold at a premium price to consumers who particularly value low carbon products.

Decarbonisation the key?
Miners are already taking steps to reduce these emissions through the introduction of renewable power for processing and alternative-fuelled haul trucks. Harmony Gold, for instance, has recently announced that it will roll out 167MW of solar capacity by financial year 2025, while Newcrest and Anglo Gold Ashanti have joined BluVein’s electric haul truck development project. We are likely to see companies speed up the implementation of renewable technologies over the next decade. Companies will also need to place greater emphasis on carbon emissions when making investment decisions, especially where mine life may not justify the necessary investment to decarbonise production.
Gold miners may also wish to consider the growing attention among investors, regulators and NGOs to biodiversity. Future recommendations from the Taskforce on Nature-related Financial Disclosures are likely to demand that mining companies disclose their impacts on local biodiversity. Taking early steps to ensure that these impacts are minimal, neutral or even positive for biodiversity could moderate concerns regarding the effect of gold mining on local ecosystems and protect the sector’s future access to capital.
On other issues, the sector needs to keep building on existing examples of good practice to demonstrate and strengthen its contributions while minimising its negative impacts. Emphasising the value generated in gold production and developing innovative ways to share this value across stakeholder groups would ensure that a broad spectrum of stakeholders, from investors to local communities, share a mutual interest in the success of the sector. A good example of best practice in this area is the innovative work in benefits sharing and social partnership pioneered by gold companies such as Newmont and Gold Fields. While organisations such as the World Gold Council have put forward a compelling case for the importance of gold in advancing the UN Sustainable Development Goals, demonstrating how benefits are shared and positively impact local communities and other shareholder groups would help progress the case for investment in individual projects.
The challenges facing the gold sector in an ESG-focused investment climate have the potential to be severe. Macroeconomic and geopolitical events have triggered rising rates of inflation and stock-market volatility. Gold prices have historically been favoured by such circumstances; if the gold sector can make a convincing case for its enduring relevance and viability, there could be much to play for. The sector needs focus, ambition and drive towards positive change to reap the rewards.