Sprott has partnered with the Royal Canadian Mint (RCM) to provide investors with an ETF that only sources gold from companies and mines that meet Sprott's ESG screening criteria. Initially, gold will be sourced from Canadian mines operated by Agnico Eagle Mines and Yamana Gold. Both miners are partners in the Canadian Malartic mine in Quebec.
Sprott said the new ETF will provide a convenient way for investors to own physical gold that aligns with their ESG values. Sprott said it will identify world-class North American gold mining companies with proven, highly transparent ESG track records with additional due diligence at individual mine sites to ensure they are meeting local ESG best practices.
"We created SESG to fill a gap in the marketplace with a gold fund focused on trust, transparency, and traceability. Our goal is to answer a number of key questions for investors: where does my gold come from, who produced it and was it produced sustainably by recognised ESG leaders?" said Sprott Asset Management CEO John Ciampaglia.
The fund is expected to consist primarily of fully allocated unencumbered physical gold bullion held by RCM on behalf of the fund that qualifies as Sprott ESG approved gold, plus from time-to-time gold in unallocated form.
In addition to meeting Sprott criteria, the gold mining companies and mine sites from which the fund sources its gold must also maintain compliance with the RCM's responsible sourcing requirements including its responsible metals programme. To ensure the provenance and integrity of ESG approved gold, the RCM will segregate its supply chain and refining activities.
Aside from broader recognition of their ESG performance and bragging rights, it appears there is little additional benefit for the gold miners, as they do not appear to be receiving a premium for gold they supply to the ETF.
Whilst ESG encapsulates many of the good things that mining companies do, ESG effort is not translating into additional market or increased investor interest.
"There is very strong support in Canada for companies to invest in greener operations, but it has not led to any competitive advantage in the market from what I am able to see," Alamos Gold president and CEO John McCluskey told Mining Journal in July.
"Miners are good at ESG but they are not recognised for the work they do. Now it becomes a matter of not only doing it, but measuring it and that is where it becomes a problem as the mining ecosystem is not really sure what its supposed to do and they are going in six different directions (with more than 20 different standards which can be followed). It means investors don't know who's actually good," a Toronto-based precious metals analyst told Mining Journal.