Too many ESGs, too little clarity: Challenges to Africa’s critical minerals sector

In the heart of Africa, a cobalt exporter in the Democratic Republic of Congo (DRC) strives to meet the growing global demand for critical minerals essential to the energy transition. To access international markets, the company aligns with the OECD Due Diligence Guidance to satisfy European buyers, reports under the Global Reporting Initiative (GRI) to meet lender expectations, discloses climate risks through the Carbon Disclosure Project (CDP) and prepares for new International Sustainability Standards Board (ISSB) reporting requirements to attract future investments.  Despite these extensive efforts, the company continues to face accusations of community displacement and unsustainable practices. The issue is not a lack of environmental, social, governance (ESG) standards, but the overwhelming abundance of them. Rather than providing clarity, these frameworks often create confusion, duplication and increased costs; undermining the very sustainability goals they are meant to advance. ESG standards are designed to guide responsible business conduct and sustainability in global supply chains. However, in Africa’s critical minerals sector spanning lithium, cobalt, graphite, rare earth elements and more, the sheer number of overlapping and sometimes conflicting ESG frameworks has created what many now see as a bureaucratic maze.  These frameworks include the Global Reporting Initiative (GRI) that offers broad stakeholder-oriented reporting; the Sustainability Accounting Standards Board (SASB) which focus on financially material issues for investors and the Task Force on Climate-related Financial Disclosures (TCFD) that provides a model for disclosing climate risks and opportunities.  Other prominent standards include CDP for environmental data, the ISSB’s new IFRS S1 and S2 for consolidated sustainability disclosures and the OECD Guidelines for Multinational Enterprises that set expectations for responsible sourcing in high-risk regions. The Equator Principles guide social and environmental risk management in project finance while the EU Taxonomy for Sustainable Activities and Corporate Sustainability Reporting Directive (CSRD) impose legally binding sustainability classification and disclosure requirements for companies operating in or exporting to the EU. The coexistence of multiple ESG frameworks has created challenges for extractive companies in Africa, says Monica Gichuhi, Minerals Governance Consultant at Quadz Consulting in Nairobi, Kenya.  “The standards for most ESG frameworks are designed in the global north to be implemented in the global south,” Gichuhi says.  “The metrics and lens for analysis and measurements are not realistic in the African setting or at least not in the way they should be reported.”  GRI emphasizes stakeholder materiality focusing on the real-world impacts of business activities such as forced displacement, labor rights or gender inequality. In contrast, SASB and ISSB focus on financial materiality associated with the ways ESG issues might affect company performance. This creates a fundamental divergence in priorities. A mining company might be compliant under SASB or ISSB while overlooking significant social harms that would be highlighted under GRI. Similarly, many companies report emissions, water use and biodiversity impacts to multiple frameworks that each require different methodologies and documentation. The result is duplication of effort, higher reporting costs and sometimes contradictory messaging. There are also inconsistencies in enforcement and credibility. The OECD Due Diligence Guidance requires rigorous supply chain audits and verification particularly for conflict minerals from high-risk areas such as the DRC, Rwanda or Sudan. Yet companies can remain signatories to the UN Global Compact that promotes similar values without undergoing any external review.  This creates a landscape where some companies are penalized for transparency while others gain reputational benefit from symbolic compliance. Meanwhile, EU frameworks such as the Taxonomy for Sustainable Activities and CSRD are redefining what counts as a green or sustainable investment. However, classifications such as the exclusion of natural gas from the green category clash with the energy realities of African processing facilities that often depend on gas for power. A project that meets African environmental laws and contributes to local development could still be classified as non-sustainable in Brussels. These contradictions represent a heavy burden on extractive companies agrees Ismet Soyocak, ESG and Critical Minerals lead at SFA, Oxford. Large multinational corporations with the resources to manage compliance teams and ESG consultants may navigate the maze more easily while micro, small and medium sized enterprises (MSMEs), including many African-owned firms, often lack the financial and human capacity to meet multiple overlapping standards. The result is a growing barrier to accessing ESG-sensitive markets and finance.  These frameworks often fail to adequately capture local social and environmental risks. Artisanal and small-scale mining (ASM) that employs approximately 14 million people in Africa according to the World Bank, is often excluded from ESG frameworks designed for industrial-scale operations. Issues such as gender-based violence, land tenure insecurity and community consultations are difficult to quantify and frequently ignored or underreported, according to Ezekiel Opoku, Lead Environmental Consultant at Wiseoak Limited, Environmental Consultancy in Ghana. Another major constraint is the lack of reliable data. ESG frameworks such as the Science Based Targets initiative (SBTi) and CSRD require granular emissions inventories, lifecycle assessments and scenario modeling.  Many African companies operate in data-poor environments that lack geospatial tools, digitized asset registries or consistent utility records rendering accurate reporting almost impossible.  Some companies, especially small enterprises, spend more time reporting on ESG than delivering it agrees Jennifer Hinton based in Entebbe Uganda working as the Group Manager on ESG with Jervois. The frameworks are imported, expensive and often misaligned with what actually matters on the ground. Efforts to harmonize ESG frameworks are underway. The ISSB, established by the IFRS Foundation in 2021, is consolidating standards such as TCFD and SASB into a global baseline. This is a positive step, but it must be accompanied by mechanisms for contextual adaptation. African countries face distinct challenges relating to infrastructure deficits, weak institutional capacity, informal economies and complex land governance systems.  ESG frameworks that ignore these realities risk reinforcing exclusion and greenwashing. There is a growing call for African-owned ESG frameworks aligned with initiatives such as the African Mining Vision (AMV) or developed by regional bodies such as the Economic Community of West African States (ECOWAS) and the African Union (AU). These frameworks could better account for social risks, local participation and benefit-sharing ensuring ESG do not just tick global boxes, but deliver local impact. ESG standards are essential for promoting sustainable practices and securing long-term investor confidence. Without harmonization and adaptation, ESG standards risk becoming obstacles rather than enablers. African extractive companies, especially those essential to the global energy transition, need ESG frameworks that are streamlined, coherent and responsive to their operational contexts.  Christopher Burke is a senior advisor at WMC Africa, a communications and advisory agency located in Kampala, Uganda.  Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com