The underlying logic of ESG is a mature non-financial risk control system.

"ESG (Environmental, Social and Governance) is not simply 'doing good in business,' nor is it merely about environmental, social and governance matters. If it is understood as just improving the green ecology and reducing pollutant emissions, that would be far too narrow. A mature non-financial risk control system, or sustainable value, is the underlying logic of ESG." This statement was made not long ago by Xie Xionghui, Executive Director and Vice President of Zijin Mining, during an exclusive interview in Singapore at the second Global Compact Network corporate high-quality Belt and Road summit.

In recent years, the global energy transition wave has been surging, and competition for strategic mineral resources has intensified. Chinese mining companies are accelerating their global expansion at an unprecedented pace, shifting from simple trade procurement to deep overseas mineral development, entering the "deep waters" of going global in an all-round way. Against this backdrop, companies must not only face tests of "hard power" such as geological exploration and engineering construction, but also clear the threshold of "soft power" including cross-border management, integration into local communities, and ESG compliance.

Hidden Tests Under Global Competitiveness

According to Xie Xionghui's observations, Chinese mining companies have already developed global competitiveness. The first is technological accumulation and industrial integration capability. "From mineral processing design to mining and smelting as a one-stop chain, some Chinese mining companies have developed systematic integration advantages." Although many overseas mining companies also have their own "single-event champions," Chinese mining companies have achieved leading "overall scores." The second is cost advantage, backed by China's complete supply chain system. "In terms of human resources development, although composite talent who 'understand technology, understand management, and are proficient in foreign languages' remains scarce, the long-accumulated engineering culture has laid a solid foundation for talent development," he said.

Behind the leap over hard power, adaptation to the soft environment is urgently needed. In Xie Xionghui's view, the main challenge facing Chinese mining companies going global is the collision between traditional mindsets and management methods and overseas realities, which he described as "the body has already gone abroad, but the mind is still at home." This "mismatch" is especially evident when Chinese mining companies respond to various overseas risks. Taking employment as an example, everything from institutional design and recruitment processes to salary payment must be adapted to local regulations. Xie Xionghui said that although these matters seem trivial, for a mining giant with dozens of mines, numerous project companies, and business platforms, they are all risk exposures. "As long as a bubble pops up somewhere, it will bring all kinds of other problems. So ESG is certainly the hardest, most painful, and most energy-consuming thing to do," he said.

In addition to employment issues, he added that overseas projects also have to face the attention and supervision of local labor unions and various NGOs. How to carry out regular dialogue and communication is a realistic issue that local operations must face, and it directly tests a company's wisdom in localized operations.

Proposing a Chinese Approach

How should Chinese mining companies respond to these challenges? Drawing on specific practical cases from Zijin Mining, Xie Xionghui offered three suggestions. First, comply with the laws and culture of the host country. Second, follow mainstream international standards. "Some standards of the United Nations Sustainable Development Goals (SDGs) and the International Labour Organization (ILO) have gained broad global recognition. Companies should actively benchmark against them and strive to achieve a higher level of practice," Xie Xionghui said. In the face of some extraterritorially extended regulatory rules, companies should carefully assess them, adhere to multi-party communication, and actively carry out compliance responses. Third, attach importance to addressing local communities' concerns regarding the environment, employment, and other matters.

For example, in response to local communities' concerns about the ecological environment, the company established an online monitoring system for external water discharge and synchronized data in real time to third-party and government regulatory platforms, which both enhanced community trust and effectively prevented malicious extortion. Zijin Mining also established a "women's ore sorting team" because "in South America, women, often mothers and eldest daughters, are the pillars of the household." By training local women in the skills to manually sort high-grade ore, it created job opportunities for hundreds of local women.

At present, global enthusiasm for ESG has diverged to some extent. European and American markets are wavering; Chinese companies' emphasis on ESG has clearly increased, with notable results; emerging markets such as Africa and Latin America are also gradually paying more attention to ESG. In Xie Xionghui's view, corporate investment in ESG can bring long-term returns. For example, from practical experience, every 1 yuan invested in work safety often brings multiple times the comprehensive benefits, in exchange for stable production and operations and broader social trust. Second, in-depth ESG research can help companies grasp social and industrial trends and support business development. For example, through ESG research, Zijin Mining gained insight that the energy transition would drive growth in copper demand, and therefore advanced its layout by increasing mergers and acquisitions of copper mines.

According to his observations, among the overseas ESG practices of leading Chinese mining companies, many have already reached globally advanced levels. Many overseas mines generally adopt a model of concentrated ecological restoration after mine closure; Chinese mining companies are increasingly implementing the practice of "production and restoration in parallel"; and many Chinese mining companies going global value communication mechanisms in which senior executives face communities directly, with management of overseas subsidiaries maintaining regular face-to-face communication with community representatives in order to build direct mutual trust.