Below is an executive summary of our in-depth report. Click here for an extract of that report. The full version is available to clients of Cornerstone Capital Group. 


The extractive sector is vitally important to the global economy and will in fact be critical to a sustainable future. With a market cap of over US$6 trillion, the extractive sector encompasses over 5,000 companies. It provides raw materials for everything from energy creation to high-tech manufacturing to electronics. Even as the world starts to transition from greenhouse gas emitting commodities like oil and coal, natural resource extraction will remain essential. Smartphones and electric vehicles, for instance, require metals sourced from extractive operations around the world. Yet natural resource extraction is, by its very nature, environmentally destructive and socially disruptive — and managing the risks inherent in mining is of prime concern to extractive companies and the host countries in which they operate. Extractive companies’ success will be in part determined by their ability to position themselves for this future.

Risk Assessment in Context

The environmental and social (E&S) issues we address in this report highlight strategic concerns for any mining or extractive company. Tailings risk (tailings are the effluents generated in a mine processing plant, and require long-term, secure storage), community-company conflict, contract workers and labor disputes, and management of global reputational risk (using biodiversity impact as its proxy) create event risks such as mine failures, shutdowns or license denials. They also impact longer-term operational planning because they require proactive engagement with local, global and contextual stakeholders to assure passage. We assess selected companies’ corporate governance as it relates to actively managing E&S issues, identifying leaders and laggards based on relative “attentiveness” to material E&S concerns.

Detailed analysis of E&S issues provides predictive insight. We offer a proprietary framework to assess extractive companies’ underlying values, leadership, and culture based on a bottom-up analysis of material, yet underappreciated environmental and social (E&S) issues. We then explain how the issues impact specific items within a company’s financial statements.

Key observations. At a high level, we came away with these conclusions:

  • Community influence increasingly impacting social license to operate. Concerns over erosion, loss of biodiversity, contamination of soil and groundwater, waste material management, and worker safety continue to threaten project timelines and economics.  Companies overall scored most positively in community conflict management and most negatively in managing global reputational risk from biodiversity impact. Four companies, including AngloGold Ashanti and Rio Tinto, address biodiversity using our best-in-class approach. But only two, Antofagasta and Randgold, were ranked as leaders on their management of tailings storage facilities.
  • High CEO turnover impacts performance. A change in leadership followed by fresh initiatives reflect strategic decisions and operational priorities especially in regards to health and safety. AngloGold, for example, used external groups to create new performance metrics, broadening data collection and targets for accident tracking. Among the group, outsider CEOs were more likely to be associated with best-in-class initiatives on transparency. Formative training in engineering, however well-suited to the industry, may counterintuitively increase the risk of community-company tension.
  • Employment. All else equal, an owner-operated mine is better-equipped to manage its relationship with the community than one that relies heavily on contract labor; five companies, including Tullow Oil and Anglo American Platinum, scored well on this issue while Philex and Buenaventura did not.
  • Best / Worst performers. Cornerstone identified several markers of a company’s culture, values and leadership quality, which in turn speak to its willingness and ability to address emerging risks as it executes its strategy.
    • Leaders: Antofagasta, Newcrest, Randgold, Tullow Oil
    • Laggards: Buenaventura, Harmony, Philex, South32


We evaluated companies according to seven metrics that together provide a clearer picture of their potential for long-term success in executing their strategies. These metrics are:

  • CEO leadership and turnover;
  • Management of tailings risk;
  • Community relations
  • Labor relations
  • Approach to biodiversity issues
  • Corporate reporting structure (i.e., reporting lines for environmental and safety executives)
  • E&S incentives in management compensation.

We performed our assessment on a range of representative companies, shown below. We “score” the companies on each of the seven metrics, then roll those up into an overall “attentiveness” indicator.


Sebastian Vanderzeil is a Global Thematic Research Analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.

Carolyn Trabuco is a Managing Director and Global Thematic Research Analyst at Cornerstone Capital Group. Carolyn has spent more than 25 years in the global equity investment space where she has identified dynamic secular changes, made investment decisions, developed business and industry models, valued companies, and assessed risk around global commodities, companies and industries. Previous firms include Pequot Capital, Phibro, Montgomery Securities and Fidelity Management and Research.  She is an independent member of the Board of Directors of Azul Brazilian Airlines.

Michael Shavel is a Global Thematic Research Analyst at Cornerstone Capital Group. Prior to joining the firm, Michael was a Research Analyst on the Global Growth and Thematic team at Alliance Bernstein. He holds a B.S. in Finance from Rutgers University and is a CFA Charterholder.

Emma Currier is a Research Associate at Cornerstone Capital Group. Emma graduated with a Bachelors of Arts degree in Economics from Brown University in May 2016. While at school, she worked with the Socially Responsible Investing Fund and as a teaching assistant for the Public Health and Economics departments. She spent her sophomore summer researching differences between American and Indian educational styles in Arunachal Pradesh, India, and completed a summer investment bank analyst position with Citi in the Media & Telecom group in 2015.

We extend our thanks to Fiona Ewing, Cornerstone Capital Group summer intern, for her contributions to the report.