Fair Finance Cambodia Launches Study on ESG Compliance in Gold Mining

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Fair Finance Cambodia (FFC) has recently published a comprehensive study on Environmental, Social and Governance (ESG) compliance in the Gold Mining Industry in Cambodia. The study aims to enhance understanding of the existing ESG-related policies, regulations, and practices employed by gold mining investments in Cambodia. It further aims to offer practical recommendations for taking appropriate action to address any challenges pertaining to ESG performance in the mining sector. These challenges include concerns related to human rights, gender, health and safety, and the well-being of the indigenous people. The study also seeks to identify financial institutions that provide funding for investments in Cambodia’s extractive industry. Given that the extractive industry plays a central role in generating national revenue, it becomes increasingly important for Cambodia as it aspires to transition into an upper middle-income country by 2030. It is crucial to ensure that economic growth does not come at the expense of the country's natural resources and environmental well-being. Consequently, the adoption of ESG practices in this expanding industry is of utmost significance at present. 

The report provides an overview of the state of labor rights during a specific period focusing primarily on working conditions, labor laws, health and safety regulations, environmental management, and any community-related concerns that may arise from gold mining operations. In Cambodia, there are established legal requirements that cover various aspects of ESG practices including labor rights, health and safety, environmental protection, impact assessment, human rights, child rights, gender equality, and private corporate governance. Although ESG may not be explicitly mentioned, its concepts and practices have been widely adopted and implemented. Several policies and sub-decrees, such as the Environmental and Natural Resource Code, , the Law on Mineral Resource Management and Exploitation, and the Law on Forestry have been effectively implemented. The Ministry of Mines and Energy (MME) has reported significant progress and growth in mineral management and revenue collection, while taking steps to mitigate for risks and impacts.   

“We appreciate and encourage the responsible government agencies, particularly the Ministry of Environment (MoE) and the Ministry of Mines and Energy (MME), who have legal and institutional obligations in managing, monitoring, and auditing gold mining practices and companies. It is essential to ensure strict compliance with regulations and standards to protect both the natural and human ecosystems. Embracing ESG principles is a globally recommended approach that can assist both the government and private sectors in internalizing the associated impacts and promoting responsible practices.” said Mr. Soeung Saroeun, Executive Director of the NGO Forum on Cambodia.

The study presents five broad policy recommendations for government and regulators:

• Enforcing regulations is crucial for the Ministry of Environment (MoE), MME and other authorities at national and sub-national levels to address irregularities and non-compliance, especially in problematic mining projects.
• MME and MoE should work together to develop a comprehensive policy and guideline for integrating ESG in Cambodia's mining industry. A minimum standard should be established for gold mining to ensure compliance with labor rights, community rights, gender equity, and environmental considerations. MME should create a publicly accessible database of gold mining companies, including corporate profiles, licenses, reports, and financial statements. Exemplary practices of Renaissance Minerals (Cambodia) Ltd. (RNS) and Angkor Gold served as models for other companies.
• MME should develop a more effective grievance and redress mechanism to address issues and concerns raised by stakeholders, particularly local communities. 
• Similarly, MoE should continue to update and disseminate information about the Environmental and Social Funds associated with gold mining projects to all relevant parties through its website or periodic announcements.
• MME should enforce strict requirements for the declaration or reporting of funds or capital investment in gold mining operations in Cambodia.

The study concludes that ESG has been quite well implemented for RNS in its advanced mining stage, Angkor Gold in its exploration phase, and Mesco Gold in its early but paused mining phase. For the other three corporate entities covered by the report, this is quite the reverse. Numerous attempts to access those corporate contacts and information were unsuccessful, which limits a detailed critical analysis. Best practices have been investigated, but it has been proven that they are still in the early stages of implementation, especially for RNS, which has only been operational for about two years. In an effort to address these gaps, the study proposes several practical recommendations outlined in the report.

Co-published by the NGO Forum on Cambodia and FFC, this report will be launched at “the Launching-Dialogue on Research Study Findings” in Phnom Penh on December 13, 2023. The dissemination of findings and recommendations was supported by Diakonia, the Swedish Embassy, and Oxfam.