How does sustainability and financial performance link at Gem Diamonds and inform your planning?

Sustainability requires continuous balance between capital investment, sustainable growth, reducing the unavoidable impacts of operational activities and creating stakeholder value. These considerations are increasingly integrated into our business and financial planning, which has enhanced our ability to determine costs and benefits at an early stage of deliberation. 

Our financial performance supports the broader goals of the business to leave a positive legacy for generations to come in terms of sustainable CSR protects, responsible environmental stewardship, opportunities for decent work, skills development, training programmes and driving forward our six UN SDGs.

Across the industry, we have seen increased interest from investors in ESG performance and we’re pleased to be able to respond by demonstrating our work over the past several years and our future planning in this regard.

How has your funding strategy evolved, and how is sustainability and climate change concerns from funders impacting this?

We have historically maintained numerous funding facilities across the Group with varying expiry periods. Although this provides flexibility, we decided to consolidate our funding position and expand our funding partnerships. As a result, Rand Merchant Bank has joined Nedbank and Standard Bank in a consolidated funding facility, which increased our revolving credit facilities to $77.0 million. 

An exciting aspect of the funding is that a portion of the facility is linked to sustainability performance targets. This is a first for our Group, and it marks a milestone in terms of our commitments to ESG and the way ESG commitments are embedded in our financial models.

How are climate change considerations being incorporated into financial planning and strategy? 

Our work to understand and mitigate the effects of climate change is not new but the degree to which it has been explicitly embedded into business structures and financial planning has increased significantly. In particular, to enhance reporting on the financial and strategic considerations related to climate change, Gem Diamonds is integrating the recommendations of the TCFD into the Group’s governance and risk management structures, strategy and reporting platforms.

The processes to plan for and deal with the effects of climate change are therefore increasingly embedded, as are the results of the climate change scenario analysis, which allows us to mitigate risk more effectively. How we implement our investment decisions and take our decarbonisation and climate-change impacts into account is becoming more sophisticated. However, it remains a complex and rapidly changing focus area by its nature. 

For example, just two years ago, the persistent drought encouraged discussions about building supplementary dams to ensure our sustainability from a water-availability perspective. This year, we saw severe rainfall and flooding. These extremities of weather events are expected to become more common, which makes forecasting and budgeting a complex task. We are, however, making progress in our ability to do so, especially by ensuring that these considerations are included at the beginning of planning processes and involve all affected stakeholders in the business.

Climate change has become a priority in our planning from the Board down to the operational level, and we start from the position that efficiencies are desirable not only to reduce costs and increase revenues but to reduce our carbon emissions, mitigate any climate risk and enhance the sustainability of the business.