Mining Linked to Human Rights Abuses
Investors, companies urged are being urged to increase their focus on the social impacts of the climate-critical sector.
Natural minerals underground are essential to the world’s energy transition, but new research has found that their extraction was linked to a surge in human rights-related abuses by mining companies.
International NGO the Business and Human Rights Resource Centre’s (BHRRC) latest transition minerals tracker identified more than 630 allegations of human rights abuse connected to the extraction of seven key critical minerals – including copper and lithium – since 2010. Ninety-one of them were recorded in 2023 alone.
“The world’s most vulnerable populations face the greatest risk from climate breakdown, but also the greatest risks from companies extracting transition minerals,” Caroline Avan, Head of Natural Resources and Just Transition at the BHRRC, told ESG Investor. “In the last year, there has been widespread violations of environmental, land and Indigenous Peoples’ rights and livelihoods, with the most severe consequences for those being asked to host large transition mines.”
One in four of the allegations were centred around reports of abuse against workers, including more than 50 cases of work-related deaths since 2010. In addition, 143 allegations concerned attacks against human rights and environmental defenders. At least 17 were also linked to gendered impacts of transition-mineral mining – including accusations of rape and sexual abuse and restricted access to jobs.
Just ten of the 93 assessed mining companies concentrated more than 50% of the total allegations – including Glencore, Minmetals and Grupo Mexico.
“This lack of basic respect for human and environmental rights raises alarm bells about whether a just and sustainable energy transition is achievable,” Avan observed.
Demand for critical minerals is set to drastically increase as the world attempts to align with the goals of the Paris Agreement, meaning that mining companies will be increasingly exposed to human rights-related abuses if they do not act.
Analysis conducted by the International Energy Agency in 2022 noted that 40% of the current global production of cobalt, lithium and copper came from mines was associated with at least one allegation of human rights abuse.
Yet, according to the BHRRC, only 39% of mining companies with a least one allegation of abuse currently have a human rights policy in place.
Investor action
The BHRRC’s findings confirmed that the mining sector needs to better identify, prevent and mitigate human rights abuses caused by its business operations. Investors in the sector, too, can push for progress in that regard.
“In many cases, investors can be directly linked to these [social-related] impacts, even as a result of a minority shareholding,” Avan noted. “In such circumstances, [they] are required to use their leverage to influence their investees.”
Although Avan welcomed the growing number of human rights-related shareholder resolutions, she argued that the shift to align investment practices with human rights standards was still nascent.
“Early indications suggest there is much room for improvement within investors’ human rights and sustainability policies and practices,” she added. “But investors are increasingly engaging with their mining company investees and are willing to play their role in insisting on more responsible practices.”
The BHRRC also recommended investors commit to rights-respecting investments in the mining sector and develop policies on preferred ownership and investment models favouring shared benefit outcomes for communities and workers.
Beyond human rights issues, mining companies are also being increasingly scrutinised on their climate-related performance.
As such, mining major Glencore’s plans to spin off its coal-mining assets into a separate business – pending shareholder approval – has been highlighted by the Institute for Energy Economics and Financial Analysis (IEEFA) as a concerning strategy for climate-focused investors. The IEEFA argued that simply divesting the assets meant Glencore would have no control over whether subsequent coal production is phased-down and Scope 3 emissions being reduced.
In the same vein, the Church of England Pensions Board (COEPB) issued a statement this week on potential takeover bids for Anglo-American, pointing to the company’s progressive climate-related action.
“Our position is not in any way a judgement of any company making a bid for Anglo, but rather a call for greater reflection by institutional investors as to what is at stake and at risk of being lost,” the statement read. “Mining has an absolutely vital role to play over the coming decades to provide the critical resources for the low-carbon transition and other industrial activity, and we question if losing Anglo is the right market response.”
Last year, the IEEFA also signalled increasing investor pressure on mining giants Rio Tinto and BHP to tackle their Scope 3 greenhouse gas (GHG) emissions.
“As asset owners, we have a relationship with the behaviours of companies we own and invest in, and their impacts on communities and the environment,” said Adam Matthews, Chief Responsible Investment Officer at the COEPB. “The mining sector has an oversized strategic relevance to so many other sectors, and as such warrants much greater understanding and focus by investors.”
Investors who are disengaged run the risk of incentivising short-termism, Matthews explained, externalising the impacts upon society, beneficiaries, long-term institutional investors, and the wider world.
Pushing for progress
Several investor initiatives looking to bolster the social and environmental performance of mining companies and support further action are already in place.
The Global Investor Commission on Mining 2030, for instance, aims to support the sector’s ‘just’ transition while meeting growing demand for critical minerals. It proposes to do so by plugging gaps in global environmental and social standards, identifying investment opportunities, and attempting to consolidate existing relevant ESG data.
The commission’s creation followed several mining-related disasters that have had disastrous ramifications, including the destruction of a 46,000-year-old heritage site in Western Australia by Rio Tinto and the Brumadinho tailings dam disaster in Brazil.
“The purpose of the commission is to ensure that, as an investment community, [we] identify the challenges and best practices [and] align our expectations [on] the vision we can have for the sector and the interventions we can support to help shape that,” Matthews, who is also the commission’s Chair, told ESG Investor. “This is an enormous challenge and an opportunity, and the commission presents a vehicle for thoughtful and practical engagement.”
As of November 2023, the commission had amassed support from 82 investors who collectively managed US$11 trillion in assets, including Scottish Widows and the Australian Council for Superannuation Investors.
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