An approach for prioritising environmental, social and governance (ESG) water-related risks for the mining industry: The case of Chile

Abstract

Mining projects interact with diverse concurrent environmental, social and governance (ESG) risks inherent to the local hosting context. These risks known as "situated risks'' usually have a relevant influence on the dynamics between operations, environment and communities. The appropriate assessment of these risks requires a multi-disciplinary approach. This research aims to propose a novel ESG-W-RISK approach to prioritise water-related ESG risks areas for the mining industry at a national scale. In contrast to similar approaches at a global scale, it uses tailored indicators and more detailed datasets for the country, which are selected based on an initial analysis of the national context. Indicators are assembled to create risk maps. Mining locations are overlaid with the risk maps to identify mining areas of high risk. ESG-W-RISK aims to support decision-makers by helping them identify the relevant water-related risk areas, and ultimately it can provide insights for developing country-level mitigation strategies. ESG-W-RISK was applied to Chile, a country with an important mining sector that faces relevant water-related challenges. The results show that 43% of current mines and 44% of future projects are in high-risk areas, and 93% of both mines and future projects are in areas of high or very high risk of water scarcity. Particularly, the risk levels in the Chile's lithium and copper mining areas are more concerning than the previously published global-scale ESG risk levels.