The greenwashing trap mining firms must avoid
The greenwashing trap mining firms must avoid
With impending sustainability reporting legislation soon to become law, mining companies face a dual challenge of complying with the new climate reporting standards and avoiding the pitfalls of greenwashing.
BDO's national leader of sustainability, Aletta Boshoff, said mining firms must ensure that their sustainability information is accurate, reliable, and verifiable, and that it reflects their actual impacts and practices.
“In essence, companies will be required to articulate their sustainability risks and opportunities in a thorough, efficient, and verifiable manner,” Aletta said.
“Mining firms must disclose financially significant sustainability risks and opportunities across short, medium, and long-term horizons.
“The biggest challenge for these miners is addressing their own emissions whilst also enabling critical energy transition minerals.” Mining firms in particular face a delicate balancing act.
“The mining industry faces unique challenges in balancing its role in society against environmental and social impacts.
“Companies must refrain from overstating their positive impacts while downplaying negative effects.”
Although mandatory climate reporting only applies to larger entities, Aletta said this does not exempt the need for smaller and medium-sized companies to report accurate information.
“This is due to increasing pressure from larger customers and suppliers, who need to report their scope 3 greenhouse gas (GHG) emissions and are demanding more transparency and accountability from their value chain partners.
She said this leaves small and mid-tier firms in a vulnerable position.
“Compliance with reporting standards demands significant financial, human, and technological resources, she said.
“Smaller firms may struggle to allocate adequate resources for comprehensive reporting and are at heightened risk if they lack the skills and resources to meet and integrate these requirements into their business processes.
“These firms should prioritise reporting on the most critical sustainability aspects, such as safety, emissions, and community involvement.
“Misalignment between reported actions and actual practices can damage reputations, erode stakeholder trust, and expose companies to regulatory penalties."
Failing to comply with the new standards can expose mining firms to legal action, reputational damage, and loss of trust from investors, customers, and regulators.
Aletta said ASIC continues to make clear that greenwashing is at the top of its regulatory agenda. “ASIC has been actively enforcing greenwashing claims and, as of 2024, has issued 17 infringement notices, totalling more than $230,000,” she said.
“The Australian Competition and Consumer Commission (ACCC) is also actively cracking down on misleading environmental claims through an extensive 'internet sweep.'
“Recent amendments to the Australian Consumer Law have also significantly raised financial penalties for greenwashing.”
Corporations guilty of making false and misleading sustainability or environmental claims face penalties exceeding $50,000,000 or three times the benefit gained from the deception or up to 30 per cent of the corporation's adjusted turnover during the breach period.
Individuals found violating the ACL can face penalties of up to $2,500,000.
For media enquiries:
Tate Papworth
Manager, Media
E: tate.papworth@bdo.com.au
Ph: 0433 411 189