Socially-minded Investors and Energy & Materials

Satisfying socially minded investors

At the outset of 2020, major global investors were putting environmental, social and governance (ESG) performance front and center of their decisions about which companies to support. Underlining this trend, world-leading asset manager BlackRock announced early in 2020 that companies wanting to secure investment must demonstrate that they are mitigating their impact on the environment. Will this trend continue post the COVID-19 crisis? If indications from some government’s plans for investment in environmental sustainability to boost economic recovery post crisis, such investors could look to get an assist, which could add fuel to their momentum.

In a resource- and emissions-intensive industry like Energy & Materials, that brings intense pressure for organizations to prove their environmental credentials – in fact, a recent study by EY found that 44% of global mining and metals executives see losing social license as the number one threat to their business.

To satisfy investors, companies need to prove not only that they’re working to reduce their own emissions, but also that they’re helping their customers to reduce environmental impact across the supply chain. For example, when Teck Resources shelved its plans to build the largest oil sands mine in Alberta’s history, it also pledged to cut its carbon emissions to net zero by 2050 and emphasized its commitment to environmentally friendly production of energy, including oil and steelmaking coal. Meanwhile Rio Tinto has signed a memorandum of understanding with its downstream customers to explore ways to reduce key emissions – a commitment to its investors that it will help improve environmental performance across the steel value chain.

Commitment to change is the first step to satisfying investors. But how can companies put that change into practice and prove that it works?

Redefining profit

Investors and society have redefined the notion of profitable business to encompass social and environmental, as well as economic impact and they expect companies to provide greater transparency and accountability in each of these areas. To those demands, companies need to go beyond basic compliance and report on how they create value for the communities and environment around them.

Digital technology can help them achieve that. By leveraging innovation, analysis, technologies and business processes re-engineering, companies can ensure they deliver socioeconomic impact while fostering competitive business and operational efficiency.

Sense market sentiment

Understanding what matters to communities and investors is the starting point for companies to prioritize actions that create true value for society and the environment. The internet is full of articles and conversations about the latest issues, including discussions about the organization and its projects. By tracking these conversations, the company can identify and monitor trends in sentiment to make sure its responses are always on point.

Using an advanced digital platform to follow those trends and visualize them through a social sensing dashboard enables the company to see not just the words on the screen, but the underlying sentiment of markets and communities.

Innovate for industry-wide impact

Extracting and producing materials has an undeniable impact on the environment, but as we discussed in an earlier post just a small change can make a big difference across the industry. What might that change look like? It could be the development of a new catalyst to speed up chemical production, identifying more efficient ways to use heat in the iron and steel industry or finding ways to eliminate the use of cyanides and other destructive chemicals in minerals processing. Or maybe it will take the shape of scheduling improvements to enable more efficient movement of materials onsite, bringing big reductions in energy use. Innovation is the key to achieving these results, but to find the best solution you need the freedom to create and test new methods without adding more waste and emissions to the environment.

Modeling and simulating new processes in a virtual environment is the only way to unlock truly agile, environmentally responsible innovation. It enables globally dispersed teams of leading experts to work together in real time, to come up with new ideas and then engineer and prototype them in the virtual world before deploying them. It can empower entire ecosystems of suppliers and customers to more efficiently, providing crucial support for cross-collaboration between producers, customers and even between entire ecosystems.

Spread the word

Communicating the value of innovations to investors and communities is essential to gaining investment support. In today’s Energy & Materials industry, it’s crucial that companies build communication with investors into the whole planning process through the design, execution, operation and decommissioning phases.

With a system that integrates data in one place, that communication becomes a natural extension of the innovation process. For instance, a simulation enables investors to see the evolution of Key Performance Indicators of a processes in operation at every stage of the project’s lifecycle, including the results of testing to confirm environmental impact. This means the company can be sure it has satisfied investors and regulators before it puts its plans into production.

Transparent reporting

ESG performance is a whole-lifecycle issue, and investors want to see that companies consistently live up to their promises. By applying analytics to centralized data, the company can track performance consistently and comprehensively across its operations. Advanced visualization capabilities such as multidisciplinary dashboards and systems simulation are invaluable in helping the business to report on priority areas, demonstrating where they have achieved the improvements investors are looking for.

Dassault Systèmes works with companies across the Energy & Materials community to enable responsive and responsible innovation that supports the industry’s social license. Visit https://www.3ds.com/industries/infrastructure-energy-materials to find out more.