Sustainable development

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Value of Sustainability Project

Value of Sustainability Project
Mogalakwena mine, site of one of the value of sustainability pilot projects Jack Stosa (left) and Dakki Chaoke at Platinum’s Mogalakwena mine, site of one of the value of sustainability pilot projects.

In May 2010, the S&SD Executive approved the ‘value of sustainability’ pilot project to develop and test an approach that enables the  value that can arise from sustainable development to be identified in the early stages of a project, and to assess the potential impact that this will have on key project decisions. Options and future scenarios are then developed and the financial impact of sustainable development aspects is calculated. For each option, the potential net present value (NPV), or ‘value at stake’ range, can be calculated.

The underlying goal of the project was to assist business leaders to make better-informed decisions by ensuring that sustainable development issues are effectively integrated into the decision-making process throughout the project development lifecycle. Informing this study was the realisation that the business context in which we operate has changed significantly in the past few years, with sustainable development issues playing an increasingly important role in the profitability of our assets.

Two separate pilot projects demonstrated that the value of sustainability could be articulated and that the process of applying this structured methodology added value to the project process. For both, we trialled the four-step methodology and refined it between pilots. The methodology entails: understanding the project context; generating the options, factoring in sustainability issues for selected key project decisions; quantifying the value at stake; and communicating the choices. The assessment includes consideration of nine key ‘value drivers’ relating to water, greenhouse gas emissions, energy, climate change adaptation, biodiversity, land stewardship and waste, safety, health, and licence to operate.

Both pilots identified the need for a multi-disciplinary team to think through the potential sustainability implications at early project stages, and both recommended that the financial quantification of sustainability should be used to inform decision-makers about the value at stake of key project decisions and options. The pilot projects illustrated that the most attractive options, from a purely traditional positive-NPV perspective, may become the least attractive option when the value of sustainability is included. By adding the value of sustainability considerations, we gain a better understanding of which option will deliver the best outcome in the long term.

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