Filters

Mining Industry Governance: do you need to be one of the boys?

In the first month of 2019, 150 people lost their lives and 180 remained missing following a tragic and preventable mining disaster in Brazil. Because of this and other high-profile accidents in recent years, this global industry is battling increasing negative public opinion. Even industry insiders are looking for transformative change, as they recognise fundamental governance and safety challenges.

The 2017 United Nations Environment Programme report, Mine Tailings Storage: Safety is No Accident made a number of recommendations, one of which was to increase diversity and broaden the skills of people on company boards. There are numerous reports suggesting that board diversity improves a company’s performance on some metrics. For example, diverse boards tend to be more transparent and innovative.  Also, important for mine safety, female board members have been found less likely to focus on financial performance over non-financial priorities. Women are associated with a stronger company commitment to social corporate responsibility including improved governance, safety, higher standards of environmental sustainability and enhanced community engagement. 

Podcast: McKinsey senior partner Celia Huber explains how companies can build and benefit from gender diversity on boards.
Podcast: McKinsey senior partner Celia Huber explains how companies can build and benefit from gender diversity on boards.

Some countries, like Norway, have introduced compulsory quotas on corporate boards and sanctions for non-compliance, to increase the number of women on boards. Under this rule, Norwegian boards must constitute at least 40 percent women. An examination of the Norwegian experience found that sanctions were the key to success. One of the main arguments originally put forward against the quota system – that less qualified female board members would push out more qualified men – did not happen. In fact, in Norway women board members have been found to be, on average, more qualified than their male counterparts. 

Women are moving onto boards in the top mining companies as well but there is still a long way to go before parity is reached. The International Council on Mining and Metals, an industry body that includes the world’s biggest miners in its membership, supports gender diversity in governance and leadership. However, women represent an average of only 22 percent on the boards of its 27-member companies. One company, Newmont, has a female board chair. 

While things are changing slowly for female board representation, board hierarchy is still firmly in place. It pays to be a man – but if we want to use all the tools at our disposal to tackle mine safety and ensure that we stop tailings dam failures, increasing the diversity of company boards and senior management would seem to be one place to start.   

A 2018 study found having women on boards can strengthen a company’s commitment to corporate social responsibility (including safety). Its findings include:

  • Gender role socialization typically means that women are more willing to prioritize caring and community wellbeing, and overall show a greater commitment to equity and collaboration.
  • Women tend to put greater emphasis on meeting the needs of all stakeholders (not just shareholders). 
  • Women’s career trajectories mean they are often more qualified (more likely to have an MBA or doctorate than male counterparts) which is associated with greater exposure to innovative business practices and increased commitment to compliance and transparency.

Women’s increased exposure to bias and discrimination during career advancement is also likely to strengthen their commitment to transparency and fairness.

The C-suite refers to those senior roles that tend to start with the word Chief – CEO – Chief Executive Officer, CFO- Chief Financial Officer, CIO - Chief Information Officer etc.
The C-suite refers to those senior roles that tend to start with the word Chief – CEO – Chief Executive Officer, CFO- Chief Financial Officer, CIO – Chief Information Officer etc.

Credit: Kristina Thygesen, GRID-Arendal

References:

Bear S, Rahman N and Post C. 2010. The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics97(2): 207–221. 

Cook, A. and Glass, C., 2018. Women on corporate boards: Do they advance corporate social responsibility? Human Relations, 71(7), pp.897-924.

Post, C. and Byron, K., 2015. Women on boards and firm financial performance: A meta-analysis. Academy of Management Journal, 58(5), pp.1546-1571.

Storvik, A. and Teigen, M., 2010. Woman on board: The Norwegian experience. Friedrich-Ebert-Stiftung, Internat. Policy Analysis.

Torchia M, Calabro A and Huse M. 2011. Women directors on corporate boards: From tokenism to critical mass. Journal of Business Ethics102(2): 299–317.