Leadership messages
Letter from William H. Heissenbuttel
President and Chief Executive Officer
Reflecting on Royal Gold’s efforts in 2022, I see meaningful progress related to our ESG journey alongside a steadfast commitment to continue to bring value to investors. Our key investment principles guide us and help us advance this journey through deliberate and thoughtful planning under four ESG pillars, as outlined in the “Pillars, progress and priorities” section of this report.
Informed approaches, disciplined processes and the high standards of integrity and due diligence are the foundations of our pillars of Governance and Culture, Investment Strategy, Stewardship and Transparency, and these are detailed throughout this report.
In 2022 we took the pivotal step of strengthening our performance in Governance and Culture (and across all of our ESG pillars) with the hiring of our first Vice President, Investment Stewardship. This role, integral to our progress, will enhance our ability to analyze ESG risk in our business operations, communicate on ESG matters with our Board and stakeholders, increase our ESG engagement with our investors and Operators, better adapt to reporting and regulatory changes and enhance our review of ESG issues in connection with new investment opportunities.
We remain carbon neutral with respect to our direct corporate emissions and are proud of our achievement of tracking and reporting on 98% of our portfolio’s Scope 1 and Scope 2 emissions, which we refer to in this report as our Scope 3 Investment Emissions. Developing strategies to determine the most appropriate way to classify Scope 3 Investment Emissions is ongoing. As we work to access more information from the Operators of the Properties where we hold metal streams and royalties, we have also strengthened our commitment to all four of our ESG pillars (further discussed in this report), and, as a result, to our overall ESG program. Because we have relationships with many of our Operators, we can also look outside of operations for ways to support them, such as helping them achieve their own commitments to the SDGs in areas such as water, community healthcare and biodiversity, which are critical to their regions. Our work in 2022 with Project C.U.R.E. and the Khoemacau mine in Botswana (as discussed in the “Supporting our Operators” section of this report) is one example of how we can have a positive social impact as a metals stream and royalty company.
2022 marks a significant milestone in our climate-related reporting. This was the first year that Royal Gold disclosed under TCFD guidelines, with the completion of a climate scenario analysis that addresses questions relating to climate-related risks and opportunities for our company. We are also disclosing for the first time our alignment with the GRI and our support for the SDGs. We will continue to calculate and offset our own direct corporate Scope 2 and Scope 3 emissions and investigate considerations of realistic mitigation measures for our Scope 3 Investment Emissions, given our business model (e.g., understanding the pro rata amount of carbon generated at mining properties associated with our interests).
We are fortunate and grateful to have a small team with infrequent turnover; however, when we do seek new talent, we’ve been faced with the reality that there is a limited pool of highly experienced technical personnel from diverse backgrounds in our key locations. While we might not be able to affect the current talent pool in our particular local markets, we can aim to influence future generations, and so in 2022, we initiated three scholarships at three academic institutions known for their mining programs. These scholarships are directed to women and other underrepresented students, and we will continue to look for similar opportunities that will help build the next generation of talent in the mining industry.
I am proud of our team and our progress in 2022, and I thank you for taking the time to read this report.
Sincerely,
William H. Heissenbuttel
President and Chief Executive Officer
Q&A with Sybil Veenman
Board Member and Chair of the Compensation,
Nomination and Governance Committee
Q: As you reflect on 2022, where would you say Royal Gold has made progress relating to ESG?
A: I am pleased with the increasing focus on emissions and understanding water usage in our interests and potential interests. Although as a company we have yet to ultimately conclude on our appropriate role with respect to Operator performance, we’ve made advances in our understanding of their performance by collecting, analyzing and disclosing relevant information. I would also say that we’ve further defined our philosophy, approach and internal processes around ESG and reporting, and are actively explaining to the outside world what we’re doing and why, in greater detail than we have historically.
Q: What is one of the challenges Royal Gold faces as it increases its reporting and disclosure, and how did you overcome the challenge?
A: There are different frameworks that an asset manager or bank typically uses, and then there are frameworks used for mining companies. When we attempt to align with the specificities of these frameworks, many of them are not applicable due to the nature of our business. We have made some important strides by aligning with leading ESG standards, including TCFD, the GRI and SDGs, in addition to our commitments to ESG-focused mining industry standards such as the World Gold Council’s (“WGC’s”) Responsible Gold Mining Principles (“RGMPs”) and the International Council on Mining and Metals (“ICMM”) Mining Principles. We continue to engage with investors and other stakeholders to help us understand the most important ESG factors for us, and to discuss what those are and how they are relevant to our business.
Q: How has ESG reporting and disclosure supported Royal Gold and its business strategy?
A: Disclosing our inaugural 2021 ESG Report to the world formalized our vision, our mission and our core values; it also more formally articulated our philosophy, what we have been doing, what we are doing, and where we are headed. That report was an important step forward, also because it reinforced how ESG has shifted from a framework for managing reputational risk to a lens for understanding our relationship to systemic risk and sustainable economic performance.
2022 highlights
$1.1M
contributed to support organizations in our office and mining Operator communities
100%
direct corporate Scope 2 and 3 emissions offset, achieving carbon neutrality for three consecutive years, from 2020 to 2022
4 years
of stable Operator Scope 1 and Scope 2 emissions, with a declining trend in GHG emission intensity over that period (from 2019 to 2022)
98%
of Scope 3 Investment (Operator Scope 1 and Scope 2) Emissions were successfully tracked and reported
20%
of our senior management identify as female, an increase due to hiring our first Vice President, Investment Stewardship, which also increased our technical and professional ESG expertise
1st year
reporting against the Task Force on Climate-related Financial Disclosures (TCFD) framework, with the completion of a climate scenario analysis and a compilation of climate-related risks and opportunities associated with stream and royalty interests that make up more than 80% of our revenue
Our Vision, Mission and Core Values
Royal Gold aspires to be the gold standard in everything we do, and we strive to operate in alignment with the following Vision, Mission and Core Values that are shared throughout the Company.
Vision
To be the gold standard as an employer, a financing partner, an investment and a community member.
Mission
To shape the future of mine finance through creativity, collaboration and a commitment to mutually beneficial outcomes for all stakeholders.
Core Values
We must ensure a safe, respectful and inclusive work environment; support our local communities; seek to support the sustainability efforts of our Operators; and care for and deploy our shareholders’ capital to maximize value.
Partnership
We strive to develop and nurture long-term relationships with all stakeholders.
Integrity
We exemplify honesty, transparency and accountability in everything we do.
Our four ESG pillars
We believe four key ESG pillars are worthy goals that support Royal Gold’s business model. Managing our business and reporting our progress in terms of these pillars will provide a meaningful way for our stakeholders to evaluate Royal Gold’s performance.
Governance and culture
We will create a culture of responsible investing and partnership through effective governance and stakeholder engagement.
Investment strategy
We will seek investments in the projects of like-minded Operators that share our values, and will strive to integrate ESG terms into our due diligence, decision-making and investment documentation.
Stewardship
We will align our business strategy with sustainable goals and incorporate ESG issues, including the potential impacts of climate change, into investment analyses, decision-making processes and ownership practices.
Transparency
We will periodically review and report on our activities, and be transparent about our positive and negative impacts.
Royal Gold’s support spans across the technical and the critical but also softer ESG issues. As an advisory member on our ESG Board subcommittee, I know its members cannot make any operational decisions. Still, Royal Gold is a valuable contributor in the whole ESG conversation, about where specific initiatives are required, or improvements can be made. A true supporter, Royal Gold will even give the team a pat on the back for a job well done.”
Johan FerreiraChief Executive Officer, Khoemacau Copper Mining and Cupric Group
Priority ESG topics
The following ESG topics of interest to shareholders and other stakeholders were identified in 2021 through an ESG priorities assessment with an independent, third-party ESG consulting firm; these topics informed the development of our four pillars and they remain priorities for our business.
The figures below identify ESG risks that Royal Gold believes are the most important and the direct or indirect influence we may have on those risks, our assessment of the relative importance of each risk to Royal Gold and our stakeholders.
Priority Topic Matrix
| Category | Important ESG topics | Direct | Indirect |
|---|---|---|---|
| Environmental | Transition to a low carbon economy |
1 Climate change (Scope 2 and 3) 2 Climate change (portfolio) |
1 Operator risk associated with energy intensity, transition to low-carbon fuels, water availability, and other risks related to climate change |
| Social | Talent |
1 Health and safety 2 Employee development and retention 3 Stakeholder communication and relations 4 Diversity and inclusion |
2 Operator risk associated with health and safety, human rights, labor rights and community relations |
| Governance |
Product design/Life cycle of a deal Governance Business integrity |
1 Ethics, integrity and compliance 2 Risk management (investment process and asset stewardship) 3 Corporate governance 4 Cybersecurity |
Our approach
Governance
Royal Gold is committed to leading corporate governance practices that promote the long-term interests of our shareholders; creating strong oversight models with the Board of Directors (“the Board”); enhancing the accountability of management; fostering strong and open relationships with our Operators, employees and other stakeholders; and building public trust in our Company. Oversight of the management team is provided by our highly capable and independent Board, consisting of individuals with diverse skills and experience that align with our business strategy. Our Directors offer valuable perspectives that promote the best interests of Royal Gold and our stakeholders.
What this past year has taught us more than ever is that there’s such a need for people to connect to something bigger than themselves. For a company like Royal Gold, it’s not just the CEO but the employees who are seeking purpose and ways to have an impact. The Royal Gold team volunteered in the warehouse and helped us sort and prepare medical supplies for upcoming shipments to developing countries. We are so grateful for our partnership with Royal Gold, who so generously aids in our mission of delivering health and hope to the world.”
Sharon WagnerDirector, Corporate Philanthropy, Project C.U.R.E.
Feature stories
Mining community contribution highlights
Royal Gold’s Mining Community Contribution Program looks to support programs in the communities where we hold stream or royalty interests that promote sustainable development on a global scale.
Khoemacau Copper Mine, Botswana, Africa
We worked with the Khoemacau team to identify areas in need and successfully contributed $200,000 to complete the construction at the Toteng Medical Clinic, including the water tanks, pumping and cooling systems and mechanical equipment required by a medical clinic. We continue to work with Project C.U.R.E. to obtain approval to ship used medical equipment to support the Toteng clinic.
Centerra Gold, Inc., British Columbia, Canada
Royal Gold contributed C$40,000 to the “Nothing About Us Without Us” Project organized by Centerra to build First Nation capacity and utilize traditional knowledge to improve reclamation and closure planning. Specifically, the financial contribution helped fund a reclamation training and skills development pilot program run by Chu Cho Environmental LLP, for summer students from the McLeod Lake Indian Band and the Nak’azdli First Nation.
Nevada Gold Mines, Nevada, USA
Royal Gold has been invested in Cortez for many years, which NGM operates. In late 2022, Royal Gold donated $140,000 to the NGM-established I-80 Fund to help contribute to the region’s small business community. NGM established the I-80 Fund in July 2020 with an initial $5 million investment. The Fund provides low-interest loans to small businesses negatively impacted by COVID-19, or new business start-ups and expansions. In 2022, 19 loans were approved, 57 jobs were created, and 57 jobs retained.
Local office community contribution highlights
Our internal Donations Committee that administers our annual charitable giving and selects donation recipients in our local office communities, which include Denver, Lucerne, Toronto and Vancouver.
Project C.U.R.E – Denver, Colorado, USA
In addition to our Operator-related donations, Royal Gold has played a supportive role over the years by providing financial support to Project C.U.R.E. for the distribution of medical supplies at the onset of the COVID-19 pandemic, and donating box trucks and a forklift. In 2022, Royal Gold funded the purchase of a second box truck to collect medical supplies in Colorado for distribution to other countries.
Daily Bread Food Bank – Ontario, Canada
Our Toronto office employees volunteered at the Toronto Daily Bread Food Bank in 2022. Royal Gold has financially supported the organization since 2020. The Daily Bread Food Bank is a registered Canadian charity that provides equitable access to nutritious food. Royal Gold shares the Daily Bread Food Bank’s belief that food is a human right, and that no one should go hungry or face barriers in accessing the food they need.
Next generation of leadership
We believe in educating the industry’s next generation of leaders who will be tasked with continuing the evolution of responsible resource development and sustainability standards. Over the past ten years, we have contributed nearly $1 million to support educational initiatives.
Royal Gold endeavors to support programs that aim to achieve impactful, measurable and sustainable outcomes that align with one or more of the Sustainable Development Goals (SDGs).
