Mining investment: portfolio strategies, working through COVID-19 and ESG risks and opportunities

Charles Bond:Thanks and welcome to our panellists and thanks very much for taking time out. I know the people who are watching this video will be really grateful, especially fuel insight at this very unique time in the market. I suspect none of us have really seen a market like this before, despite our collective age, so I know that it really does present some disadvantages, but also no doubt there are many opportunities out there, and I guess that's what we're all interested in.

So with that in mind, we've put together some questions for you, really just to gauge your feelings. And the first one is where do you see the risk of reward in the market at this point in time. 

I'm conscious that last year, private equity group investment was relatively down compared to the previous year in 2108. There may have been various reasons for that, it may have been that there was quite a lot of fundraising going on and by the funds but the general feeling is now that the funds have got significant amount of cash behind them, so in theory you all should be in a good position being cashed up, ready to make investments, an opportunity, opportunistic investments at this point of time.

So I guess the question to all of you is, is now the right time to grab a bargain and if so, where do you think those bargains might be.

So maybe if I'm just because of the shape of my screen, I'll start with David first and maybe David you can comment on where you think we are in the market and what are those opportunities.

David Street: Oh thanks Charles. Look I think it is a very unusual time as you said, and I think more broadly across equity markets, markets have bounced back actually in quite a resilient way, given the amount of central bank and government impetus that has been put in place.

I think it's difficult to generalize across the mining markets because obviously gold shares have performed pretty well this year, and the gold crisis looks to be on an upward trajectory, it's doing well gold stocks are doing well, partly because of the gold price, partly because of ethics, sort of currency effects as well which is helping a number of companies and low oil prices, which obviously also helps a number of companies.

I think there's probably, you know, whilst I am actually very bullish about the gold price at this point, I think there's probably more interesting things from us on a longer term, for us on a longer term perspective, in terms of some of the base metals and other metals at the moment.

I think broadly over the next sort of medium-term period of time, we would be pretty bullish across the commodity complex. I think we're going to see a lot of stimulus from governments and whilst I think overall markets and pricing in a sort of v-shaped recovery at the moment, I think in the medium term I wouldn't be pretty bullish across most metals at the moment. So I think it's clear there are some opportunities around.

And from your point of views, are you similar bullish. I mean one of the things I was reading this morning, was the drop in consumer demand, for example it's going to have a big impact on copper, so do you see that all the different metals are going to be on an upward trajectory, or is it only a handful.

Verne Grinstead: Well I'd agree with David regarding gold and gold certainly is having one of its periodic good moments. Both investors buying the metal as well as gold equities which could be in an outperform phase which happens every now and then and which the Canadians, the Sprotts and the others tend to try and catch those particular waves and generally have done pretty well out of it.

But certainly base metals, China's back on stream, the economy's opened up. Copper, the red metal is broadly of interest, including for EV's and battery storage and the like, and so I think the continuing love affair with copper will continue. 

Some of the other base metals are a bit more problematic, in terms of supply and demand but nickel has its day from time to time. Lead zinc etc. come into and out of focus, but we should also remember fertilizer type products - potash, phosphates and the like which are relevant to agriculture and are growing global population.

I would basically agree that right now is not a bad time to be in mining PE. It's surprisingly good actually compared to other sectors out there which are - because of COVID on their backs, except for of course the big momentum driven tech-fangs and similar stocks, where Tech is having a big day in the Sun at the moment.

Charles: Yeah and Vera, from your point of view I know you look all of African investments for example, but do you feel that there's a similar trend?

Vera Ivanova: Yes and no, You asked if it's a good time to grab a bargain and grabbing a bargain, it implies acting very quickly and getting something really quickly, I think typical private equity model assumes at least a few months of due diligence, and given where we are in the market it's quite unpredictable what's going to happen in the two/three months, so we have to almost pretend like nothing is happening and believe in long-term fundamentals of demand and supply and look at what was hot before COVID and believe that this will continue so that goes back again to copper which both of my colleagues here have discussed already and the battery metals of course will remain to be fought.

World Bank just issued a report saying the demand for the basket will go up five times until 2030, so these metals will, of course, remain very interesting.

But however, again our good assets are never a bargain and they are not the bargain now after COVID.

So there's still a lot of people piling up and doing their investigations on their good assets, so they are never cheap and they are never under-priced unfortunately, so that's one observation.

In terms of - the only one newcomer real newcomer I see after this new reality, again is actually iron ore and related commodities such as ferrite ores and that comes from - well the fact that there's 12 trillion plus, of stimuluses which are coming from every direction and a lot of it is going to be spent on infrastructure.

So I think this is one of the only metals that I can see that might have this systemic shift caused by COVID-19, specifically and that systemic shift might last longer than short-term V-shape sort of kind of reaction, so I am bullish on iron ore believe it or not.

Charles: What about one of the other metals, I've heard on various conference calls with people, having a bit of a resurgence is uranium.   Do you think that's just a short-term reaction to the shutdown of the various producers, or is that more of a long-term trend.

Vera: Look, it's tough for me to say because we don't have uranium on our target list and in my mind again it's probably short-lived. We never invested in uranium due to certain complexities which come with owning an asset, you know invest in developing and operating  so it's difficult to comment on the rest of the market. This is not - uranium is not on our target list.  

Charles: Verne/David do you have a view on uranium?

Verne: Well a couple of years ago they floated in London this uranium company, what's it called?  'Yellow something'? Yellow K. Yeah I haven't looked at the price recently but for a while after, it seemed to perform quite well.

There are a couple of U.S. listed uranium companies as well. Amir Adnani is the CEO and founder of one of them. They come and go but it's not a sec typically which private equity looks at, in terms of mining private equity - they tend to look at precious metals, base metals, perhaps you know potash and fertilizer type minerals, if you look at most of the portfolios.

But perhaps one day uranium will have its day in the Sun as it were.

Charles: and Verne mentioned - I think it's a very good point - about the speed at which private equity can move. Does that mean that if - it's often not the case I think with miners - someone said the other day, or one of the podcasts that the junior miner community are like cockroaches. That they hang around for ages, really difficult to get rid of them - even in a financial crisis.

So is the likelihood of you seeing any distressed assets, for example, that you can move on quickly. You're not seeing anybody in particular distress or where there's a fire sale.

Vera: Well the thing is I think. Assets that are distressed now were probably becoming distressed before COVID-19 and - for reasons other than COVID-19 - which is mis-management, it's not very good assets, running out of funds anyway so there's no buffer to go to the storm. 

By definition then, you probably wouldn't want to invest in distressed asset now, because there are reasons other than COVID which brought them to this state. Companies that I see that are really really distressed in this situation - they were in this situation before - New Year for instance.

Verne: I mean you could imagine some deals that were advanced and had gone through - I see at the PE funds and COVID may of course, some downward ratcheting of the valuations and the PE firms might try to take advantage of that and the sellers may be nervy about the future, given the very significant economic downturn that we're all going to be facing shortly. So you could imagine some re‑pricing occurring.

But as Vera says the IC process of a private equity firm is to not just be based on price and rapidity. It's like this, but our charter, will it generate our returns, and have we professionally and correctly gone through all the DD to result in a final sale and purchase agreement or investment.

David: Yeah. I think that's right. I think the difference between their current events in the market and the period after the credit crunch. I mean obviously the mining company balance sheets are in a much more stable and stronger position now than they were then and so you're not seeing kind of distressed sale of assets really very much at all in from what I can see. 

We have seen a few things which are kind of mid-ramp up or coming into production which is a difficult time in the life of most mining assets and that's it's obviously unfortunate I think if company's been halfway through building a project and this this happened now I think that's a difficult spot. 

I think where companies are doing feasibility studies and things like that, it's obviously much easier to scale back spending a little bit and do remotely and add value to things remotely, so I agree with Vera, I don't think we've seen the kind of levels of distress that we have in previous crises.

Yeah, the point you make about feasibility is a good one. I mean from when you're looking at companies and doing your due diligence at the moment, how are you dealing with the practicalities of that in the current situation.

Charles: When you can't do site visits, so it's all desktop analysis at the moment in relationship investments?

Vera: Yeah it's very - I can answer - They have a very good example. One of our company's portfolio is finalizing a BFS and we cannot get some of the tests work, which has commenced before the lockdown in South Africa. However, the contractor can write pretty much all of the upfront section of report and including doing a financial model and all that comes with that. 

Now the only thing which is remaining is to slow them the results which will be available pretty quickly now that the lockdown in South Africa is lifted. So certainly it was possible to front-load some of the desktop analysis which was acceptable to desktop analysis. 

And then the lockdowns being lifted in some of the jurisdictions, we are just sort of finalizing work streams which we're supposed to - which cannot be done desktop.

Charles:  I guess moving a little bit. We're talking about investments, but when you're looking at the lifecycle of funds, some of the commentators say that now you may be five, six, seven years into your original funds from when they started. As well as looking investments, are any of you also looking at the disposal round or other funds out there. Is this a time to be disposing of investments?

Verne: If I could touch on that. Some funds have deal by deal carry exit arrangements others, have a European-style where it's at the end of the fund life. So certainly the former, but maybe the latter as well are always in salvo - you know, PE firms exist now to exit and so, I think there's a constant level of interest in what you can exit at, provided it achieves your target MOIC and ORs and if you happen to invest pre-IPO and the company IPOs, you're going to exit or if you can achieve your return multiples or if you can't, you'll bide your time.

But it may be that that funds that are rear-ended in terms of carry payment, they may be more patient and may time their exits, or have more luxury to wait for better markets to exit. Whereas those that are deal by deal are looking all the time at can they get when?

David: Yeah I think that's right. I mean typically funds have different vintages of funds. We've exited some investments from our first fund, for example Torre Gold, last year for example, was sold too and resolute. So we've been, I think, quite active and quite successful on the exits that we've made over the last few years but as Verne said, you're perennially looking at new things and exiting things as time goes along.

Verne: And obviously if you can get some successful exits and multiples that helps your case when you go to fund two or three or fund four. In a sense you have to have had at least one or two decent exits to go from fund one to fund two and then so on.

Charles: Is now an easy time to raise money or do you think people will be looking to put more money into funds at the moment.

Verne:  well I'll defer to David on that he's more live than I am on that front.

David: Yeah. I think it's that period of the market where all the investors are looking at their portfolios and what their positions are, but I think there are some good opportunities around so, I think it will be possible to raise money in the current market. 

Yeah well I think everything going to be slower isn't it? Yeah, yeah.

I think project development will be slower, pretty much everything across the board.

I looking at the real acid bucket that the LPs - look at mining and metals versus oil and gas versus agriculture versus Timberland. I think there's significant backing off from PE investments related to oil and gas and fossil fuels. If you look at PreQuinn's most recent natural resources review, something like 90% of private equity funds raised in the natural resources sector has gone into energy.

And so mining in some respects is a niche industry it's like 3% of the funds raised. So it's quite possible that LPS may transfer to the mining and metal side, some of the fire power and lessen the oil and gas fracking investments that they made to date.

Yeah, renewables returns ironically in the private equity sphere have not been that stunning at all, but a lot of money is looking to go into it and I'm aware of at least one African targeted PE fund that's raising right now to invest in African renewable energy and they've got some good cornerstone investors for that. Big well-known names.

But another theme is, indeed, ESG/ impact investing which has become pretty big and whereas perhaps the old ESG page used to be the third loss page in your slide deck, it's now perhaps the third page in your slide deck and LPS are wanting evidence that the metals and minerals that you're producing is going into end-user applications that could be viewed as impact positive, impact outcomes and it can be such as components of wind turbines, components of solar panels etc. but they're more focused on that than they used to be.

Verne: I attended a webinar recently where they were focusing on this topic and something like thirty trillion dollars of LP money has gone into sustainable/impact investing in the last couple of years. Ten and a half billion dollars has gone to 300 ESG funds in the US alone in Q1, so it's happening and so the question and challenge for mining PE is how do you position yourselves rather than just pay lip service to it. 

It's not just building a local school and a village water pump, it's more than that.

Vera: I think now, as you said Verne, it's actually a prerequisite to even get through the door to make sure that you are ESG compliant, that you have full cognisance of the need to decarbonize etcetera. But in my mind LP still have - well because a lot of the funds which had went into ESG and into various technology wave -  actually a lot of them are oil and gas related and LP communities are yet to wake up to the carbonization of the mining industry and ESG over mining industry. 

A lot of a focus so far and funds available so far, related to oil and gas and renewables. So for mining there are plenty that - Valley had a very interesting presentation - it is available publicly and they have a whole page on considering multiple technologies to clean up their the entire value chain from - obviously from safety of the operations to autonomous working to ESG, but also the carbonization type of technologies in iron-ore processing.

I think it's going to - still LPS need to - a lot of education to make up for that, because most of it, the education has been done towards an oil and gas sector.

Verne: But they're also interesting geopolitical elements here - where China produces and consumers over 90% of rare earths of the relevant economically viable rare earths - magnet metals etc. and the environmental impact of those productions are receiving increasing attention from Chinese authorities as they should, but it's interesting how in the U.S. in particular, they're beginning to look to try and become somewhat self-sufficient having run down their rare earth stockpiles dramatically.

As US/China tensions develop, an interesting thing will be with this impact, this focus of 30  trillion dollars on impact investing and ESG in mining - in due course will get its focus as well from these investors, is if you need a certain type of rare earth and it can only produce in pretty bad environmentally impacting ways. What do you do? Is there such a thing as Blood Diamonds in metals? Where investors want to shy away from them?

Charles: Well I guess we saw this week didn't we, the Norwegian - they're big oil and gas funded - have now pulled out of a lot of the major, so I think Glencore, Anglo - because the cold-related thresholds were being hit so maybe we'll see some more of that type of action.

Verne:  Yeah they're all out of the big oil and gas stocks. The largest cap U.S. listed oil major has a market cap below where it was a quarter of a century ago. 

David: It will filter down definitely from the big companies who are already seeing a lot of scrutiny on this on these types of issues, but I think, importantly for us, we need to make sure that the companies that we're investing in that we're advancing projects, that they are attractive from an ESG and footprint point of view, because ultimately one of the exits that maybe we're looking to down the road is that the asset might be bought by a bigger company and those facets are so important now for the big companies that it's crucial that you've done the right ESG environmental work and studies etc.

Charles: Yeah, that was one of the questions for the corporates listening and looking - or already have, and looking to supplement their investments from private equity investors. Is that ESG slide got to be the first one in their deck and they have got to be able to convince you pretty quickly that they're going to meet certain standards. What do you look for in those types of corporates?

Vera: I think it's not necessary first slide. I believe it just now assumed it's all in order, so it's one of those prerequisites - you have to have it to present to us. So it goes without saying, I think the fundamentals of the asset - addressable market, the position on the cash cost curve still remains, of course, number one factor to choose from.

Compliance of ESG is, for us, it's becoming a given. Right? So we don't even - it's not going to be - it's a tick and we need - it's not a tick, it's more than that, but they have to have it to even come to us.

Charles: What would be your kind of typical ESG? What would really pull you in for a company? We talked about CSR and building schools, hospitals etc. but most of the juniors and the mid-caps are kind of doing that already. What more do they have to do to step-up to the mark. Is it about decarbonisation? Is it about having solar on site? What really gets you excited on the ESG ticking the box?

Vera: For instance I get quite excited, if you like, about appropriate waste disposal and that's on everyone's forefront - sort of thinking. Making sure that they're the pilings are not pumped in the middle of nowhere but they are dry stacked according to all the best industry standards. 

Rehabilitation - that that I think is quite fundamental and yes, it's more expensive, but I think as David said, then you try to exit this asset something that - the tailings disposal, for instance, is going to be something that any mining company will look at very carefully.

It's got to be a best practice. You line the dam, you don't just not line it. You pay the extra to   potentially gold-plate whatever you're doing in terms of remediation and impact on the local environment and water sources and the like. But for most of the PE firms now subscribed to the UN PRI, as well as the World Bank IFC criteria - they sign up to that and they are audited on that, which is good, certainly at the UN.

And those set out basic principles which are kind of logical but if you sign up to them and you're audited and you have to produce a half inch they report every year to a UN body, it focuses the mind.

Verne: It's good for business if you're in some Central African country, you want to make sure that you're good for the local community and that you're producing tax for the country and that you're a good corporate citizen. It's not like some major new discovery – ESG.

Charles: yeah it's just been rebranded more important.

Verne: Some years ago, Anglo American was viewed as gold plating everything? and then a new management came into Anglo American to try and cut costs and  improve margins and that led to maybe some slippage and people used to say, Oh Anglo they always gold plate stuff unnecessarily, in fact probably they were doing the right thing! 

Charles:  okay I'm going to move on a little bit from ESG and just move on to the financing side and just to see whether the types of structures of financing that you're looking at have changed at all because of the situation we're in? Or whether it's a mixture of equity - I don't know if any of you have debt funds or if you're looking at royalties or alternative streaming arrangements. Is there any particular favour at the moment or is it very much asset dependent?

David: It is asset dependent really but I think we're largely, as before, we're strategic equity investors -public and private companies. We're quite like a convertible boat. We may look at other types of structures - maybe at asset level - but it's the same type of equity approach.

We don't have a debt - sort of straight senior debt fund - so much more on the equity side.

Vera: I think we are very similar strategy and we work across very similar spectrum as David's firm. I personally quite like convertible debt because you sort of have best of both worlds. We don't do pure debt.

I think royalties will become a more frequent way of getting our return and especially when you look at exits and if the oil industries are staged and so that can be all incorporated. It's sort of a back-end of life cycle of investment, so we definitely would look at royalty now. But overall, the private equity fund.

Verne: Yeah I mean there are quite a number of mining finance firms now - Orion Taurus etc. are okay and certainly the large listed royalty companies' trade at significant premiums to mining companies. It's clearly an attractive investment for investors to get good royalties and then streaming.

And interestingly on the on the debt side, Sprott have recently closed an 850 million dollar Sprott lending, mining lending fund too. I think they targeted a billion but they closed it at 850 and in that they brought in for the first time ever, a well-known West Coast LP who'd never done any mining type commitment with a couple hundred million of commitment there.

And then Sprott have also launched a royalty and streaming fund. Perhaps for 4/500 million dollars, which was cornerstoned by another well-known high-profile, but never investing in mining before, West Coast institution.

There's plenty of firepower now for credit and royalty and streaming for mining juniors, although typically the target is a listed entity rather than a private entity.

Charles: I noticed – is it Franko-Nevada have put a hundred billion into solid gold this week. I'm assuming that's by way of a royalty.

Verne: mm-hmm.

Vera: I guess a flipside of credit funds is that this is very - quite expensive funding and again there is competition - as we discussed - good assets in a rare and for this good assets, these credit funds will be competing with your BMP Paribas, SOCGENs. The type of institutions who will lend at much lower margins. This new crane funds may also - they will have to join the race let's put this way, for from the margin.

Verne: Yeah.

David: Yeah, I agree with that that's right.

Charles: What would you - I guess the one-to-one certainly, as normally as every year there'll be a lot of juniors out there. Some will be Greenfield, some will be in development. How do you see the kind of post COVID landscape for the juniors? Is it going to continue to be a very difficult time for them to raise capital? Or do you think now is actually not a bad time to be entering the race?

Verne:  well interestingly the equity markets are relatively open for juniors at the moment   You see Hanneman partners just raised 14 million in a placing for that phosphates company as crops. And there been other placings in the last month or two in in the gold and junior areas, so they seem to be having not a bad time in the Sun at the moment.

How long that continues we'll see but the   juniors still trundle on.  I suspect a handful will go to the wall in the next three to six months because there have been a number of listed juniors that just are long-term viable. That probably will happen or they'll be absorbed in other companies that are using this opportunity to expand a bit. 

David: Certainly quite a bit invested in gold at the moment and you're seeing a number of gold juniors raising money. There's been a few royalty, small royalty companies that have IPO'd in the last little while here. And certainly there's a lot of activity on the gold side and as Verne said, you're starting to see some investors who've not been traditional investors in mining they're looking at gold particularly, I think of money.

Verne: Yeah now I've heard of a number of Canadian specialist funds and some generalists that have been costing bread on the gold waters and buying bits and pieces of a range of different mining juniors, particularly gold – specific in fact. I don't know how much that's driven by Bammel talking about a three thousand dollar gold price in the next 18 months but that got attention that's for sure.

Charles: Yeah certainly a lot of the juniors attending the one-to-one, I know are gold based and from our own experience we're seeing a lot of activity in the M&A space around gold as well, so you could imagine with two companies coming together they need more funds, there's going to be likely more fundraising in that space. 

Vera: Definitely gold but I think times will be tougher for smaller niche commodities - graphite's, tungsten, vanadium maybe not. So I think if you are in the gold sector it probably - chances are you'll race if you have a half-decent asset. Well I think smaller, more niche noble metals, they might struggle and that's just because a lot of investors are distracted by gold now. That's number one. Yes.  

I think generally I can't see junior sector disappearing, it just will adapt like everybody else and the budgets will get stretched to the unimaginable length - which we're already seeing, it's possible. Which is actually positive - cost control and discipline, is something we welcome at all times. Yeah watch that space.

Charles:  For the juniors who are not listed companies yet, I know what you're going to say to this one, but is your advice still, that companies should prefer private capital over public markets?

Verne: Well sometimes you don't have a choice. I mean there's such a thing as a London mining-focused, junior stock-broking firm. They're in the business of doing public raises for the mining juniors and it's not that easy to persuade these hard-nosed private equity investors, who ae have lots of skin in the game and co-invest commitments themselves, to easily cut a check so fortunately, despite Miford two and all that, the London stock-broking community supports and researchers and raises capital for the juniors, is still around and a lot with them - their fellow travellers, such as the corporate law firms and so on, who actually put the whole thing together.

Interestingly, an example of this sort of plant - pond life if you like that keeps reinventing itself, is that Stifel, for example, who were not in the mining sector at all and were very big in the oil and gas sector in terms of equity research corporate broking and fundraising, have now gone back into mining and are very actively putting out mining equity research anew.

Charles: Yeah yeah.

Vera: Public to private dilemma, which a lot of the juniors are facing, I always felt that on junior miners often go to the public markets too early and the big funding comes toward the end and we need anchor investors and so what we often see is a goal green shoes for goalies, we can't attract private equity money, you can't attract proper development money to advance them to the construction phase d-list in Huntley's together yet, so it's a very typical sort of trend that we see.

Verne: So in my mind, sure listing is a fantastic option, but do it at the right time.

Collective: Yeah.

Charles: Well I mean, as private equity groups, will you look at taking a hundred percent of a company private and putting it under your own wing and developing it, then IPA'ing it at a later date, for example. Is that a business model that attracts you?

Vera: Yeah we've done it several times. At the right price.

Charles: Yeah. May be some comfort to those watching.

David: Yeah, we'll invest in both public and private companies Charles and we've had a few of our companies over the period, who at different points have IPO'd because it was the right time for them to do that and I think we don't have one at the moment, but if we were invested in a private gold company and we'd advanced it to a certain stage, you might think about listing it now, for example.

Charles: Well I guess we should probably just about wrap it up now I guess. Any final comments for where you see the market in six months' time? Are we all going to be still gold bugs or will you've turned your attention to something else? 

Vera: I'm really hoping for V-shape recovery definitely.

David: Certainly I would be positive on precious metals and in 12 months' time I'd be positive on most metals actually, across the board, particularly copper.

Verne: Yeah I'd agree with that. Precious metals are having a going to have a good six months and then after that copper, nickel etc. I think we'll come back into focus.

Charles: Perfect. Well thanks everyone for your experience and advice, for those watching is very grateful and have a good time at the conference if you're seeing people over the next few days.

Collective: Great thank you. Thank You Charles.

Adam Thompson: Welcome everyone to another one-to-one money investment virtual content session. Today we're focusing on the important topic of ESG which has become one of the defining issues for investors and asset owners across all industries and we certainly will be a driving force for the mining industry over the next decade. Today I'm delighted to be joined by a fantastic line-up of investment and mining industry stakeholders who will be helping us to better understanding the risks and opportunities facing all stakeholders when it comes to ESG.

So I'd like to welcome then our esteemed panel of speakers.

Mr Alan Knight a general manager for sustainable development and corporate responsibility at ArcelorMittal.

Adam Matthews who is director of ethics and engagement for the Church of England Pensions Board as well as co-chair of the transition pathway initiative.

Jessica Fung, Vice President, Investments at Pala Investments.

Jon Samuel, Group Head of Responsible Business Partnerships at Anglo American.

Kieran Laird, Partner in public law and regulations team at Gowling WLG and with that I'm pleased to hand over to our host anchor, Carole Cable, Partner at Brunswick Group to lead us through today.  So Carole, thank you and over to you.

Carole Brunswick: Thank you Adam and welcome to all my to my panel members. I would like to start off the session looking at ESG in a COVID-19 world.  We've obviously, our mining companies and investors are dealing with, well everybody is dealing with this this global pandemic and I'd like to turn to Adam Matthews just to get Adam, to get your view on, have we, we're temporarily seeing a move from the E to the S right now for obvious reasons in the COVID-19 world that we currently find ourselves in.  Do you think that it is temporary and do you think that the emphasis for investors will go back onto the E part of ESG soon?

Adam Matthews: Thanks Carole and it's good to be participating in the webinar. I don't think it's either/or.  For me clearly how companies responding to the COVID crisis is absolutely critical particularly in this sort of immediate time and in terms of the recovery and obviously wanting to have assurance from companies that they are putting in place strategies to manage the risks for their workforces and also the communities that they operate in. Likewise how that plays into their supply chains etc., all of that is incredibly important and that does speak to the S in ESG and obviously wanting to see good practice and we've been very encouraged by some of that good practice.  

So I think you've got a couple of companies here that we understand are doing things very actively in that space, but there's also poor practice and I think it's important investors understand that and identify that and challenge it where they see it but in terms of the E, I mean environmental issues, it's not gone away. The lesson from the COVIDS-19 crisis is not to ignore the other major systemic threat to us which is climate change.  

So my sense is that that hasn't gone away and I think if you look at the oil and gas sector in Europe you've seen a raft of major announcements from those companies related to climate commitments and I think that those have been made during the COVID crisis and that's indicative that they recognise that their strategies for recovery are intimately linked with how they address the other major systemic challenge of climate change.

Carole: Let's just turn to Jon Samuel.  Jon, as a mining company you're having to deal with the realities on the ground at your mine sites with this terrible pandemic that we're seeing across the world.  Do you see, or do you take the same view as Adam that it's not an either/or?  The focus on the E and the S should, it is always equally important and will continue to be so.

Jon Samuel: I agree yes and the G as well because I think good ESG management, you know fundamentally it's about good management of risks and opportunities and both of those sides of the equation need to be looked at well. So I think it is striking, the FT for example has reported on a number of occasions that high-performing ESG firms are outperforming their sector peers in terms of share price at the moment and I suspect that is to do with good risk management and from our point of view, at the very local level, we're very much a part of the communities in which we operate and if those communities are not functioning we cannot function effectively and vice versa.

So we are, we spend a lot of time looking at the sorts of systems we need on the environment, health, safety, community side of things and those systems were put in place over the last few years, over the last 10/15 years really, have really stood us in good stead in terms of managing this pandemic even though this particular challenge we're facing is obviously quite a unique one.  We've never had one that’s affected the whole world in this way before in our lifetimes, but I agree, I think ESG, different things become important at different times but you need to be able to manage that whole suite of risks and if you are not ready to manage any particular aspect of it you can still come a cropper.

Carole: So I guess Alan, is it short term versus long term?  You know we're dealing with a pandemic, that is our current reality right now but do you have to keep your eye on that long-term risk as Jon was talking about and specifically for ArcelorMittal as a steel producer, the impact to the environment is critical.

Alan Knight: It is always a balance when you lead the sustainability function for a big company, your focus is the long term and almost the rest of the business sort of runs the business and we look at the long term trends.  There is no reason why that should change because of COVID and in fact over time the science, well what were the underlying reasons behind COVID and a lot of the conventional SD because we raised loss of biodiversity, globalization, you know all of those questions will have a new focus point because of pandemics. Short term yeah probably half of my working day at the moment is devoted to the short term challenges for such a pandemic.  I'm on loads of internal committees around the world on this but that's fascinating because I'm drawing lessons to how this will impact on the more conventional job outside a pandemic.  I think the biggest thing I'm seeing people now talk about how will it impact on our agenda? Our agenda at the moment is a lot about sustainability how do we respond to long term trends but I'm sure all of us on this call have seen the word resilience sort of it was around before but it's now got a new sort of resonance about it and to what extent do things such as climate change, pollution, biodiversity to what extent are they about long term being ready for nine billion people on a planet in 2050 or to what extent are the same issues and the same science driving we need to look after biodiversity and keep our air clean etc. also about short-term resilience. You know will I be the head of resilience in two years’ time or resilience and sustainability and I do hope that we take that questioning really seriously because the content is very similar there's massive overlap.  We need to look after the climate for sustainability and we need to look after it for resilience but I think resilience now is going to have a far higher sort of resonance let's say with our leadership than sustainability and we can easily manage both so it's not a threat, it's about adapting.

Carole: And it's a good point about the word resilience you're right it certainly is a word that has been bandied about during this current crisis and rightly so and we're you know we're seeing the miners respond accordingly.  Jessica you're in the enviable position of being an investor as well as an owner of mines so I guess you can see both sides of the equation and what's your view on the resilience that either your investments have seen or challenges that you've seen. I think you're on mute.

Jessica: Sorry about that thanks Carol yeah I think resilience is important for any business obviously not just for mining it's also important for our investment fund because the last thing I think anybody wants when we think about our portfolio of assets is to have a stranded asset at the end of the day and sustainability in terms of the mining assets that we do own is so important to us because you know at some point as an investor we do want to exit these positions and we don't want to end up with stranded assets or assets that lose a lot of value because they are not resilient through cycles. There's a growing recognition that how important this is and so that's why it is a focus for us. I'm going to leave it at that.

Carole: Okay thank you and Kieran just turning to you before we sort of move on a little bit. Just love to hear your views from you know your side of the fence which is very much around that regulatory and that that legal framework.

< a href="/en/people/kieran-laird">Kieran Laird: Yes I mean I think different countries will be putting different laws in place to deal with this sort of thing but just to take a step back from that and just to take ESG in reverse order I mean I think that we're seeing very much that from a governance perspective ESG management is absolutely seen as a proxy for good governance so lots of investors and lots of other stakeholders will be looking at mining companies and looking at the way they're dealing with this crisis from an ESG perspective to see who has robust governance in place and then drawing wider conclusions from that. I mean this is a really good opportunity I think for mining companies to come out of this with some really good stories to tell about the social value that they can bring. I mean I know for example at the International Council of Mining and Metals is talking about some of the practical measures that have been taken by lots of companies to support local communities, things like donations of PPE and sort of community field hospitals, making sure people have clean drinking water, educational programs. So I think that the companies that are going to come out of this well will actually come out with some really strong ESG stories to tell but I also do think that it is going to push environment a bit further up the agenda possibly. We have seen over the past couple of weeks various climate benefits that have come from the crisis and I think a lot of stakeholders are going to be really keen to try and hold on to the benefits that this has given rise to so I think we might see the E sort of edging up the agenda even a bit further after this.

Carole: That's a good point and just today we heard some news from India about you know the co2 emissions dropping like a stone over these past few months.  Allen, what do you think about this because as a steel producer do you feel like there's going to be more social pressure on you as a business to be reducing co2 emissions even faster as a result of the pandemic actually producing cleaner air and cleaner water and that perception and reality that society is actually seeing.

Alan: I think on climate change it's fair to say as one of the largest carbon emitters in the world that the pressure hasn't gone up or down because the pressure was pretty intense before this started.  The important thing it's very clear now that there's no way this debate is going to go down and trust me some of my colleagues said well look with so many other priorities and with survival now one of the things we have to think about, maybe it will go down and there's so much evidence that it won't go down I think the debate is going to get more sophisticated which is why I was talking about resilience earlier so I think it will carry on growing but I don't see it growing anything more because of how fast it was growing anyway. What I think it is interesting in your question you talked about carbon but then you threw in water and air pollution and quality of air, you know these are big issues for a steel maker too and those issues existed even if carbon wasn't a problem.  I think for us it's going to be what about the other issues you know people sort of say climate is the biggest issue it is but there are some other big issues as well and they are challenging, they're technically complicated, they're expensive to resolve and if you see in this quite a lot of science which is showing about how quality of air and pollution, lung disease, COVID you can see where that narrative can go. So it might be not so much will climate get any more intense, will some of the other environmental and social issues become as intense.

Adam Matthews: I have to agree with that I mean I think you're absolutely right and it's the sort of question of do we recover out of this and taking the best parts of what we've noticed and what we've seen as possible and enabling that sort of transition to happen quicker. Are we also going to acknowledge that relationship between air pollution and sort of lungs and I suppose the other thing is taxation which clearly you're going to need very well-funded health systems and those countries that have got the best equipped health systems are the ones that have been able to respond perhaps more effectively. Now it's early days but the relationship with tax and society in that regard for companies and individuals is going to be a key aspect to this too but for me it's really do we recover better and are we able to ensure that we learn the lessons from this in terms of addressing the other systemic challenge which picks up on many points also Alan's making.

Carole: Do we recover better do we recover quicker? Jon Samuel is it possible to speed up the recovery? Mining companies are notoriously slow in adopting new technologies and innovation but certainly Anglo American has got you know very sophisticated partnerships and is doing a lot in that area. And you're on mute as well.

Jon: Yeah so I mean we're starting to turn to recovery now. We've sort of had a three-phase response one is prevention and that's looking at things like you know the right operating protocols but also making sure that house communities for example have water supplies. We've increased the number of communities well households we're providing water to by hundreds of thousands over the epidemic for example.  And then there's been a response phase which is around testing the workforce, keeping the workforce safe but also providing a lot of support into those communities and building up a lot of the partnerships we'd already developed so we're at about 27 million dollars' worth of committed spend at the moment in our house communities and you can't really do that very easily unless you've got a good network and existing partnerships to work through you know so to give you a couple of examples in South Africa we had a community health outreach program run for us by the University of Pretoria and that sends sort of clinical assistance to house communities to do the basic diagnostic work so that people get referred to doctors surgeries or hospitals if they need that and that's what we've built a lot of our community response to COVID-19 on so they do have some clinical training they're not as well trained as doctors for example but they are able to do basic diagnostic tests. So that is actually something we're rapidly scaling up of an existing partnership and then more broadly around the group we've been working with the London School of Hygiene and Tropical Medicine over the last two years to do community health baselines in all of our house communities worldwide. Literally from Australia to Zimbabwe and all the other countries in between on the alphabet in support of our health stretch goal and our sustainable mining plan which is to help our house communities meet the SDG three targets for health. And again that's been really useful because through that work we actually have an enormous amount of knowledge of what the health priorities are. Is it water and sanitation or is it actually advanced diagnostic equipment and different locations have different priorities of course. And then more on the livelihood side we have a global partnership with TechServe which is an enterprise and agricultural value change development NGO and again we're working with them to start providing support through to small businesses in our house communities both those businesses on the program but in South Africa for example there's quite a lot of assistance being put out there both by government but also by philanthropic organizations you know people like the Oppenheimer family and we're working with our suppliers and with host community businesses to access the funding that's available to them which we think realistically they probably wouldn't know about perhaps absent our outreach to them. So again I think you know the foundations that companies put in place in advance of these sorts of crises are the ones that are most likely to take you through effectively and most likely to give you a good chance of coming out. You know I think none of us expect to be better off coming out of this but at least if we can keep the businesses and our house communities you know keep them ticking over at least through the pandemic and then at least they'll be well placed to respond once our economies starts to open up and people start to spend again.

Carole: Do you think it has you know by reacting so quickly and do you think that it has helped strengthen your relationships with some of your partners be it society, be it local government, be it federal government, and be it the NGOs?

Jon: Yes I think that will be the case. I mean we have to be conscious that there are also risks around mining operations so movement of people is clearly a risk factor for transmission of COVID so we will be very mindful of that. So there will be concerns out there in communities but we're doing a lot of community education both in terms of how communities should be responding to the epidemic themselves as individuals but also about what we're doing and what support'’'s available so I think at the local level we believe that will stand us in good stead and then definitely at the government level you know both at regional and national government level we're seeing a very positive response. So for example in some other countries we're in we're providing quite a significant chunk of the testing capability. We've been able to source that through our supply chain you know and we're obviously a very sophisticated supply chain organisation that's been able to access equipment more quickly than some of our host governments can and we can access the right personnel to operate that equipment as well perhaps more quickly than some of our host governments too. So we do believe that you know there are some risks that we need to be careful to manage but we think by demonstrating that we're there with house communities, taking them through the pandemic, helping them prepare to avoid infection, helping win infection strikes we are hopeful that that will build stronger relationships and allow us to have a better understanding of the places in which we operate as well.

Carole: Often we see a two-speed response depending on the size of that of the company. Jessica do you think that you know some of the work that Anglo American is doing and ArcelorMittal or do it doing is fantastic but they have the luxury of being a big you know multinational business. Do you, do you see for some of the smaller miners the response is so positive and they are yeah and they're having a positive response and doing the right thing and are able to do the right thing?

Jessica: That's a good question. I think part of it has to do with the size of the company so of course if you are a larger company you also have shareholders and stakeholders that matter a lot more as well so they are beholden to larger investors, they can make headlines they can be I don't want to say targets but you know they can be made an example of in major media and so of course you need to have that ability to respond in a big way. But the smaller companies as well when we when we look at, if I put my investment hat on and we take a look at some of the smaller companies you know one of the first questions we ask them is do you have someone who is responsible for sustainability and it doesn't have to be a global expert and it doesn't have to be you know their 100 percent full-time role but we want to know that there is at least somebody there who can think about it, who has the ear of senior management that can deal with this and if they do then that already puts them in a pretty good position. Now in terms of how the smaller companies are responding through COVID it is a little bit more difficult to say, particularly for the private ones but in general another thing I will say about the mining industry is that in order to receive permits and all sorts of things like that that are absolutely necessary for operation the mining sector has always been very good on the social side so in the S part right, health and safety matters a lot, community relations matter a lot, we've known that for a long time and so the mining industry is actually pretty good at this already not across the board, not 100 percent of companies of course we'll never get a hundred percent but in general it's interesting that you know a lot of people say we've moved from the E to the S. E is very big for extractive industries but S is also important and I think you know as we go through this we will actually realise as investors how good the mining sector is on the S side because they've had to do it for so long, it's been so necessary for them and it's actually a very, very good example I think for other industries going through this right now.

Carole:  Let's leave the COVID macro environment for a minute and just and lets focus on broader ESG and some of the corporate risks verses the investor demands that we're seeing and let's talk a little bit about that. I'd like to talk turning to you Kieran just on future litigation risk for example. So setting the scene, investors are putting pressure on companies to have a pathway to Net Zero or certainly to low-carbon transition. With companies and Jon and Alan we'll turn to you to hear exactly the sort of what you're doing on scenario planning and then obviously you speak to you Adam on sort of for you know what you're demanding but for any scenario planning, for any target, for any sort of real sort of strategic view about your business and what it may look like in 20, 30, 40 years’ time arguably there's you know there could be some sort of litigation risk in the future. Are you having these discussions with your clients at the moment?

Kieran: Well the litigation risk is always is always a big one on environmental issues because you're always going to have some very sophisticated and some very well-funded environmental NGOs for example, who are always quite keen to take on especially sort of large mining companies because they're seen as a very good and very productive target. The nature of the litigation risk will always depend on the nature of the legal obligations that a company has. So one of the first things that we would look to would be the legislation that applies to a company and where do the legal obligations lie on a legislative basis and I mean one of the things I would say there is that we're seen increasingly a move from soft law to hard law in this space. Only at the end of last month for example the EU came out and said that it was planning to legislate in 2021 for compulsory due diligence across a range of sectors. So there is another legislative obligation put on companies that can lead to, can lead to legal risk. One of the things that I would say about that type of legislative obligation however is that it might be less likely to lead the litigation where a claimant brings a claim against a company. What it's more likely to lead to in terms of legal risk is action by a regulator. So I think one of the, we should never lose sight of the legal risk of the rises from regulation by governments and by regulators together with litigation risks from third parties. To be honest I think the litigation risk from third parties in relation to things like net-zero targets will lie more on governments than it will on companies and that is simply because a lot of the binding obligations at the moment are placed on governments rather than rather than companies themselves. It's going to be interesting to see however if we, if we see NGOs or shareholders starting to take action against companies and it's going to be interesting to see whether companies factor that litigation risk into their development policies for example. I know for example that there was a case in the States where a company was taken to court about pretty much over promising in one of its in one of its public pronouncements and the idea that this may have misled investors for example, now that settled out of court and there was no decision made on the merits, but it's something important to bear in mind whenever companies are framing these sorts of policies.

Carole: Mmm that's a very good point. Jon, Jon can we turn to you and just hear, sort of your view on you know what is, what is Anglo American doing regarding the scenario planning, are you - are you taking these changes and future changes of, of the regulators into account and also do you know what importance are you, you placing on communications in this regard?

Jon: Are you looking specifically with respect to climate issues Carole?

Carole: Oh yes sorry the transition to a low-carbon economy yes.

Jon: Yeah and Adam talked about this earlier about you know these continuing announcements being made even during the, the pandemic and you know we ourselves made announcements at our virtual annual general meeting last week.  So we've committed to having carbon neutrality for scope 1 and 2 emissions by 2040 and to have eight of our assets carbon neutral by 2030. And then on the on the scope 3 emissions which also are obviously incredibly important, we announced that we will be divesting our thermal coal business in the next 2 to 3 years if all goes according to plan as well. So we have already halved our output of thermal coal. So these, these issues you know they are important. On scope 3 emissions we have more work to do to understand what the opportunities for reduction there are. So clearly a lot of our products go into processes, including steelmaking and there we don't make steel ourselves, so we have limited control over that, but we are now starting to look at what partnerships we can have with, with customers and downstream sectors more broadly, to try and look at the carbon - the scope 3 carbon emissions from that. But certainly as far as scope 1 sand 2 now we have set ourselves a 2040 target to be carbon neutral on that front and you know that, as I said, that was something we announced last week which I think is indicative of the points already made about you know the, the pressure is not going away. We have additional pressures to cope with at the moment but these underlying ESG pressures remain because the, the underlying logic behind them remains compelling, you know we have to get on top of carbon emissions as a society and big companies need to play a leading role in that.

Carole: Ok. Thank you. Adam would you, would you like to chip in here?

Adam Matthews: Yeah absolutely. I mean clearly this is, this is a critical issue for investors and engagement continues with, with companies and welcome the, the further steps that Anglo have taken and the transition pathway initiative which is a tool that investors use very widely now and underpins a lot of the engagement, but also underpins an index for our passive funds. That, that initiative is really trying to decipher which companies are genuinely setting themselves on pathways to Net Zero, how they're doing it, how transparent their commitments are and how do they compare to their peers? And we do need to compare across sectors and it's difficult in the diversified mining sector because of the complexities of those, the different commodities that many of those companies have. But it is going to be a key feature of engagement now and it'll be a key feature of the recovery as well and I think we're entering a phase where companies that are very much putting forward those public strategies, that investors can test, look at independently, and have confidence in, are the ones that are putting themselves in conversations with investors around the transition in key pathways, in key sectors. And I think there's a, we have a discussion with the steel, a steel roundtable led by investors in the next week where we're looking at the whole value chain from purchasers of steel, to steel manufacturers, to the suppliers of energy into the steel sector, and can you start to knit together the partnerships there with investors supporting (be that through their holdings in companies or through creating of additional finance incentives) to enable those pathways to be established. Now I think it's early days but those companies that are, that are setting out those sort of commitments understanding the landscape of NetZero, are the ones that are putting themselves proactively into those conversations and we will increasingly differentiate between those companies that aren't doing that. I think it really is for me part of the recovery, part of the opportunity, to sort of play a much more sort of collaborative role in engagements and partnership with companies through those value chains. And I think you've got Anglo, you've got ArcelorMittal, those kind of companies as part of the solution here and I think investors need to engage with that in mind.

Carole: And Alan can we turn to you…oh sorry.

Jessica: Sorry. Can I just add to what Adam was saying because I think it's important that we recognise that ESG will be ongoing, because ESG is simply another framework for us to, to look at these companies and engage in the companies? You know we're very used to looking at financial statements and I think it needs to be very clear that ESG is simply another framework for us to assess company performance, and at and at the end of the day it does matter for the bottom line. As investors that's what we recognise. You need a license to operate, I'm talking about the mining sector. You need health and safety, because that allows you to continue to operate and, as you pointed out in future you, if you can achieve these environmental targets, you are also avoiding litigation, you're avoiding potential fines that might be put on these companies in future. And so that's why I think it's so important for mining companies large and small to engage on ESG, not because it's some specialised way of looking at a company, because it matters so much for the underlying business as a whole. And that's the way that we look at ESG. It's not something separate that needs to be considered and gets a separate report done by separate analysts, it needs to be part of the entire analysis and consideration for companies

Jon: And if I could add as well, I mean probably worth remembering that the transition to green economy, particularly low-carbon energy, is going to be one of the biggest boosts for the mining sector in generations. I mean the demand for metals that will be required for all the renewables technologies, all the low-carbon technologies, you know it's going to be a significant boost for the diversified mining sector and for those companies specialised in those commodities as well. So we shouldn't overestimate the resistance of the mining industry executives. It's a very big opportunity for us, and you're seeing the big mining companies shifting their capital allocation in light of those opportunities that are arising.

Carole: I'm going to come back to that in a second Jon because that's a really good point. I want to stick with the sort of ESG framework, because I think Jessica you bring up a really good point. You know as an, as an investor we're used to, we're used to looking at you know the financial value that is created. I think now the world has moved on beyond that and it's not an either/or as, as Adam said, looking at social value is, is just the same - the opposite side of the same coin I guess. So you've got social value and you've got financial value, but they are, they have to be integrated and it's up to the companies to explain to the investors how that, how that is integrated, how they, how they behave and how they integrate that into their business. I guess what, what I'd like to touch on with all of you now is just, you know, how you do that as an investor? How do you engage with companies? How do you find out what companies are actually doing? There's a plethora of standards out there, there's a plethora of rating agencies out there, there's a lot of noise going out there in the marketplace about ESG that creates a big challenge for mining companies. Number one to be able to report the, the metrics that are important to them and that actually define exactly what they're doing. And then there's also a real challenge from the investment community's point of view because they're getting, they're comparing apples and oranges and it's quite, quite difficult to navigate. Adam talked about the transition pathway initiative tool you, you know another, another very useful tool to use. But how do we. I'll start with the investment side. So I will start with you Jessica and then turn to Jon and Alan. How do you navigate all of, all of these different standards and rating agencies and tools?

Jessica: I think it is it is difficult to measure it because we want, as an investor you, you want to be able to do this, and you want to be able to quantify it. And I think that's, that's the biggest challenge and there are a lot of standards. At some point I think we will settle on a standard. I don't, I don't know what it is but, but I think we will get there at some point. There are some things though that can be measured, especially on the environmental side. Things like GHG emissions, water use, and these things matter a lot and they can be measured. And so I think, you know, how you are dealing with waste and tailings. I think there are some things that need to be disclosed. Just like financial statements, you can have different quality of disclosure, you can also have different quality of disclosure on these metrics as well. And so we just as investors we need to be demanding and we need to engage and we need to understand exactly what is being reported. I think on the social side assessing it is a little bit trickier. You do have statistics on health and safety, for example, that you can measure and I think that is important and I think generally mining companies are very good at doing this as well. But you know I also think on the social side, assessing the company's performance is almost like assessing other qualitative issues, like corporate strategy. Is there a way to quantify that? Not really but you have to assess it anyway. The quality of the management team and, and senior management, is there a way to quantify that? Not really but it's something that needs to be done. And so again there are some things that can be quantified, some things that cannot that need to be qualified but, as you know, as an investor you're used to having to do that anyway. And at some point there, there will be better standards but you know I think we just we need to continue to push for it and, and continue to measure it in the ways that we can. And at some point I think we will get to a standards, but it's an evolution. But we will get there.

Carole: Good. Okay, we're running out of time guys. So I'm going to sort of wrap up quite quickly and I'm going to turn to you Alan and just, you know, picking up Jessica's point about I guess investability and engaging with, with investors. What do you think that mining companies need to do to be investable for generalists?

Alan: They need to obviously embrace these issues that goes without saying then they need to be good at telling their story. I feel for this challenge about different standards, lots of metrics, lots of indices because a lot of people are sort of looking for a single algorithm which can separate the good from the bad. It's not that simple and so the storytelling is important but then also the investors need to be receptive to hearing the story rather than just seeing what the algorithm says, so the better the quality of the dialogue rather than the algorithm I think is really important and we need to sort of concentrate on two or three of the indices or schemes which actually do a really thorough job. Jon and I are both involved in IRMA which is an initiative responsible for mining assurance you know which is a very sophisticated model written by many different stakeholders which has captured the qualitative and the quantitative aspects of mining very well. My sites can certify against them, investors and customers can choose to favour my sites which have got that standard so there are one or two models out there which really work. Less is definitely more but nothing beats a two-way dialogue where you really talk about the qualitative stuff and rather than just focus on the quantitative stuff because the quantitative stuff alone doesn't tell the story, sort of no story without numbers and no numbers without stories. We need to be good at handling both without…sorry...

Carole: No thank you that's, that's really helpful. Jon turning to you….about a quality dialogue…sorry Adam

Adam Thompson: Sorry I just had to announce Alan dropped off in case you wondered where he went, he has to go for another call so he's signed out now.

Carole: Okay great um so turning to you Jon just talking about a quality dialogue and you mentioned earlier that the demand for metals, metals are needed for this transition to a low-carbon economy, do you think that's where that you know where this the story, the future mining story is?

Jon: Yeah I think that's where a big chunk of our future demand will come from you know I agree with what Alan was saying about having to tell a broader story about ESG narratives and I think it's also we need to remember who we're talking to as well so investors are clearly really critical. I think it's something like a third of funds under management now have some sort of ESG screen for example so that's really significant in the capital markets but we also have other constituencies so in, you know in our business like every other business, we have to think about what customers want so and the other initiative that Alan mentioned for example is really primed to focus on customer expectations who themselves are responding to broader societal expectations about how the products they consume and use are produced and you know mining is not unusual in that, you've seen that in textiles, agricultural commodities for example so yes so I think that story's really important and understanding who your stakeholders are whether that's host communities or governments or customers or investors and being able to talk to the things that matter to all of them which brings us back to the whole ESG point of course which is that different things matter to different people so you need to have responses to all of the issues that are material to your stakeholders because in our sector if they're material to your stakeholders they'll become very material to you before too long.

Carole: Yeah very good point um Adam I'm going to turn to you for last word just on engagement, I mean we're talking about having dialogue and understanding what matters to your stakeholders you, you're one of you know the mining industry's biggest stakeholder.

Adam Matthews: Well look I mean I think we're, we're entering a really exciting phase of partnership with those companies that are on trajectories that investors have been asking for in relation to climate change but as Jon says and Alan noted that there's a whole raft of broader issues that we're also focused on from health and safety, tailings dam, management etc. and on issues like tailings dam we're still, still very much working on that issue and hopefully we'll have a global standard shortly but my sense is that companies that have the good governance, have the understanding in place are the ones that position themselves so the next phase of engagement which will be very creative and really knitting together through value chains partnerships and I think investors will be looking to form those kind of, sort of pathways and working with them and, and doing so in a pretty creative way so my sense is that it's key that the engagement continues on this sort of very individual company to investor, individual company to individual investor and through initiatives like Climate Action 100. That'll be essential but equally that we're going to be looking at much broader kind of sort of value chain pieces coming forward and I think companies like Anglo that have a sort of broader worldview and understanding of their role in the world are companies that positions themselves both attractively for the perspective of us wanting to remain a shareholder in them but also as a partner in sort of working for regulatory change and in driving NetZero pathways and dealing with challenging issues like tailings dams.

Carole: Last word from you Kieran.

Kieran: Um yes I think engagement's pretty important. I would just highlight of course, not that anyone's forgotten it but the need for engagement right at the bottom as well with the communities in which the mines are actually operating. I mean for example you know Sustainalytics did a study in 2015 and between 2008 and 2012 only 30% of precious-metal projects were delivered on time and that was because 42% of those delays was community opposition. I mean one of the constituents to whom companies should be talking the most is communities in which they operate and that then has impact further up the chain, that then will help with conversations with rating agencies, with investors and with everyone else and with customers but if you can get it right, right down at the foundational level in the communities in which you're operating, it does… you'll reap the rewards further on up the chain I think.

Carole: Great, thank you. Thank you all to panel members, it's been a really, really interesting conversation and discussion and I'm sure others will think so too and I, we've covered a lot of ground here but I you know I think the bottom line is you know engagement and dialogue and as Jessica said there's no reason why any of us should treat ESG any differently to any financial decision that we make around our investments so again thank you to 121 for putting this all together and thank you to our panel.