As Zimbabwe’s mining sector accelerates ESG compliance in response to regulatory reforms and global markets demand for ethical sourcing of critical minerals

By Tafara Chiremba

The call for sustainability compliance is increasing in Zimbabwe from both regulatory and voluntary perspectives. Thus, the country has seen many companies, especially those operating in the mining sector, embarking on their sustainability journey to measure and report on the most significant impacts of their activities and business relationships on the economy, environment, and people, including impacts on human rights.

From a regulatory’ perspective, compliance with sustainability reporting has become a legal requirement in Zimbabwe under Statutory Instrument SI 134 of 2019, issued by the Securities and Exchange Commission (SEC). The regulations mandate all publicly listed companies on the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) to report on sustainability matters. In 2023, the Zimbabwe Stock Exchange (ZSE) introduced core ESG disclosure metrics, which came into effect on 1 January 2024[1], to further enhance compliance and standardization of ESG standards that must be used by listed companies.

There are also companies that are reporting on sustainability but their parent companies are listed on foreign stock exchanges which make ESG reporting a mandatory requirement just like the Zimbabwe Stock Exchange. These companies include Mimosa, Unki and Zimplats which are complying with stock exchange regulated ESG reporting and the intention is not just about compliance but making deliberate sustainability measures to create a social license to operate. Thus, the companies contribute towards the achievement of Sustainable Development Goals (SDGs), reduce possible financial losses associated with some sustainability risks and create long term business success. 

On the other side, the Public Accountants and Auditors Board (PAAB) is making inroads to enforce the implementation of International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards which will require listed companies to adopt IFRS in their reporting process[2]. At policy level, the Government is planning to develop an ESG policy for the mining sector[3]and, through the Mines Bill, is proposing to legislate the Responsible Mining Standards to ensure that beyond submission of production returns monthly, mining companies will be required to provide information on how they will be complying with specified ESG metrics.  

There is also a developing trend where mining companies are implementing voluntary ESG standards to respond to the need to meet market (customers) and investors’ demands on responsible sourcing. The discovery of critical minerals such as lithium and its extraction thereof, has also amplified the issues of sustainability reporting due to its role in the promotion of green energy technologies. For example, there is pressure coming from customers sourcing critical minerals from Zimbabwe who are now demanding that producers of these critical minerals should demonstrate that their minerals are being mined responsibly with no trace of environmental degradation, pollution or violation of human rights of communities. In fact, it is the markets that have dictated the development of voluntary international ESG standards  which  producing and exporting companies must comply with for them to secure markets. These standards include, the Initiative for Responsible Mining Assurance (IRMA), Germany’s Mandatory Environmental Due Diligence and the European Union (EU)’s Corporate Sustainability Reporting Directive (CSRD). In the gold sector, the expectations is that mining companies should comply with the Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains.

An ESG gap analysis recently carried out by the Zimbabwe Environmental Law Association (ZELA) assessing selected mining companies shows that some lithium and platinum mining companies are exporting minerals whose end products finally land in EU and United States of America (USA) markets, hence the need to comply with these market based international voluntary ESG standards. The impacts of mining on climate change has also made issues of sustainable mining practices very important where the focus is on minimising carbon emissions from mining operations and promoting renewable energy access. This justifies the coming in board of climate change related standards such as the Task Force on Climate-related Financial Disclosures (TCFD) which provides recommendations for disclosing clear, comparable, and consistent information about the risks and opportunities presented by climate change.

The evolving global ESG landscape clearly shows that it’s not business as usual as, increasingly, companies are supposed to take genuine steps to integrate sustainability in their operations and report in a transparent manner. This calls for mining companies to go beyond local level legal compliance such as the Environmental Management Agency Act [Chapter 20:27] to adopt international best practices and avoid greenwashing. Companies are recommended to use widely accepted standards such as the Global Reporting Initiative (GRI) to structure their ESG systems and institute transparency mechanisms of reporting as a pathway to international best practise.

One key element of ESG systems is stakeholder engagement, stakeholders being individuals or groups that have interests that are affected or could be affected by an organization’s activities. Common categories of stakeholders for organizations are local communities, business partners, civil society organizations, consumers, customers, employees and other workers, governments, non-governmental organizations, shareholders and other investors, suppliers, trade unions, and vulnerable groups. In this context, the focus is on communities, critical stakeholders who are directly affected by the operations of mining companies and should be engaged in setting up ESG systems and implementing a transparent ESG reporting. Their roles in the process of ESG integration by companies into their business models and operations must be met to uphold the credibility of resulting ESG reports. These roles include being involved in identification of likely impacts of the mining operations, assessment of materiality of the impacts, carrying out of due diligence on ESG risks, implementing of risk management plans to address the identified risks and participation in designing of projects based on opportunities that the companies would have identified in risks assessments. These opportunities are normally pursued by companies through Corporate Social Investments (CSI) projects.

However, findings from the ZELA sustainability integration gap analysis revealed that most of the companies that are at the early stages of their ESG journey have not adopted structured ESG systems that include effective community engagement. The problem starts at ESG governance level, where some companies do not have a stakeholder or community engagement plan which articulates how it is planning to effectively engage with affected communities in the ESG processes that eventually lead to ESG reporting. The observation is that companies that fail to hit the bar are struggling with involving communities especially on assessing the likely impacts, materiality of impacts and the due diligence  risks assessment processes. Mostly, the bare minimum that these companies do is to engage communities during the Environmental Impact Assessment (EIA) process of which it has been a known fact that this process suffers from lack of inclusive participation.  

It is important that beyond identification of impacts and materiality, affected communities should be involved in the process of conducting risks assessment that produce measurements, baseline data, mitigation measures, and monitoring of risk management controls. However, our ESG gap research findings, corroborated by what others peers in the same minerals value chain are doing, show that companies that have not adopted best standards such as the Initiative for Responsible Mining Assurance (IRMA) have struggled to carry out due diligence on ESG risks with the involvement of communities and other stakeholders. For example, if impacts or risks such as air, noise and water pollution, as well as soil and biodiversity loss are material, mining companies are expected to carry out comprehensive risk assessments or audits on these impacts. This is where the company, uses scientific approaches to provide baseline data on the risks identified, formulate recommendations for mitigation and control, develop a risks management plan, conduct regular monitoring to evaluate the effectiveness of control measures on identified risks. Best practice requires involvement of communities in all these processes. This is what is happening at Unki Mine which is certified against the Initiative for Responsible Mining Assurance (IRMA) standard, where after identifying the potential risks that the emissions from its smelting plant have on the health of the community, the company is engaging the community in regular monitoring of selected points of emissions and disseminating the results. Mimosa is also adopting similar community engagement approaches.

The importance of a community centred approach is that communities and the company are always on the same page in terms of the impacts of the mining operations before reports are shared with the regulatory authority, the Environmental Management Agency (EMA). As per EMA regulations, mining companies are mandated to submit quarterly reports, on their compliance with Environmental Management Plans, to the agency. Thus, EMA conducts inspection and environmental audits on companies’ compliance with environmental laws. It has been noted that companies that have not stepped up on environmental community monitoring comply with these EMA regulations but without effective involvement of communities in terms of collecting data and dissemination. This ultimately undermines transparency and credibility of the ESG reports from the community’s perspective when the company mentions in its ESG report that it is compliant with EMA regulations.

Another emerging best practice on community involvement is the setting up of community engagement forums which companies use to facilitate effective communication and engagement with communities on the companies’ ESG initiatives. Companies that have adopted this best practice hold community engagement forums on a quarterly basis led by company community liaison officers. Some companies that have instituted this practice have gone on to select community engagement committees which are responsible for taking up communities’ concerns on material impacts (such as community health, education, and environment) and share these concerns with the company.   Mimosa[4] and Unki[5] mining companies are examples of companies that instituted these community engagement approaches and were included in the ZELA ESG Gap analysis.

To ensure that committee members do not lose focus, periodic evaluations are done to guarantee that they are still representing the interest of the communities, and the furthest persons or vulnerable groups are not being missed in terms of information on the company’s sustainability initiatives. The community engagement forums have also become spaces for the mining companies to engage Non-Governmental Organisations (NGOs), local authorities and other stakeholders to create and evaluate Corporate Social Responsibility (CSR) projects in the areas of climate change resilience building, education and health. For example, Mimosa as reported in their 2023 ESG report[6],  is currently carrying out an evaluation of its Corporate Social Responsibility (CSR).

These spaces are also serving as platforms for communities to validate and confirm, the ESG data before it is presented in ESG reports. On the contrary, companies that are lagging behind on effective stakeholder engagement are either completely shutting out communities or are involving a few community leaders, usually traditional leaders. In the case of these companies, there are no efforts to ensure that the community leaders are representing the whole community and information about the companies’ sustainability initiatives is conveyed to the furthest or vulnerable groups.

Recommendations 

Mining companies should consider the following actions to effectively engage the communities on their sustainability integration journey and increase transparency and credibility of their sustainability reporting in line with international best practices:

• Adopting the Global Reporting Initiative (GRI) standards to structure their ESG systems, enhance transparency on the organization’s impacts and increase organizational accountability on its sustainability reporting.
• Developing stakeholder engagement plans as part of the setting up of ESG governance systems and involving communities in the development of these stakeholder engagement plans.
• Increasing the credibility of their sustainability practices by involving communities in identifying possible impacts and assessing their significance as well as measures to mitigate or identify opportunities that they can create such as waste management recycling. Communities should be engaged in due diligence risk assessments which involve the development of baseline data on risks (on key areas the communities are concerned with such as environmental protection, water, air pollution and soil protection), mitigation measures and monitoring of risk management controls and come up with recommendations for implementation.
• Supporting regular community environmental monitoring (on areas such as air, water quality, and noise), development of monitoring reports, and their dissemination. This should be part of the companies’ systems to comply with their Environmental Management Plans and international best practices.
• Capacity building should be extended to communities so that they have the skills to participate in risk assessments and community environmental monitoring.
• Companies that are at the beginning of their sustainability journey should consider setting up community engagement forums as part of the best practise on community engagement.
• Assign community liaison officers with a mandate to interact with communities on a continuous basis.

Tafara Chiremba is an Economist and a GRI sustainability professional who is working within ZELA’s ESG Unit. The ESG unit focuses on provision of ESG advisory and capacity building services to the private sector and these services include carrying out deep dive gap analysis of sustainability journey of companies, Environmental risks due diligence(focusing on water, air quality, soil and bio diversity) development of ESG strategies, development of community engagement plans, training on GRI ESG standards, setting up of governance structures, climate change risk assessments, ESG reporting and convening of information sharing platforms for the mining companies to learn and share knowledge on innovations and systems to address sustainability challenges. This article is a except from the ESG integration gap analysis conducted under the Accountability Accelerator project in Zimbabwe (AAZ).

[1] https://www.zse.co.zw/wp-content/uploads/2023/11/Practice-Note-16-Sustainability-Disclosure-Checklist.pdf

https://www.vfex.exchange/wp-content/uploads/2025/02/Joint-Statement-on-Sustainability-Reporting-PAAB-ZSE-and-VFEX.pdf

[2] https://businesstimes.co.zw/paab-develops-roadmap-for-ifrs-standards/#:~:text=The%20Public%20Accountants%20and%20Auditors,or%20after%20January%201%2C%202024.

[3] https://miningzimbabwe.com/govt-to-engage-stakeholders-in-formulating-mandatory-esg-policy/

[4] Mimosa 2023 Sustainability Report page 51

[5] https://responsiblemining.net/2024/07/22/community-perspectives-on-irma-the-unki-mine-audit/

[6] https://www.mimosa.co.zw/sites/mimosa-mining-

corp/files/mimosa/sustainabiity/Mimosa%20Mining%20Company%202023%20Sustainability%20Report.pdf