Single Standard Offers Progress on Mining’s ESG Risks
Panellists at ESG Investor’s Nature Data event identified need for guidance and action on artisanal mining, lobbying and Indigenous Peoples’ rights.
Investors seeking to address the ESG risks in their mining investments have been urged to respond to a consultation on a consolidated sustainability standard developed by leading industry bodies.
The Copper Mark, International Council on Mining and Metals (ICMM), Mining Association of Canada and World Gold Council are consulting on a draft standard to simplify current guidance and promote continued improvement of ESG practices across metal and mineral value chains. The proposed standard comprises 24 performance areas related to responsible mining practices, including artisanal and small-scale mining, biodiversity, ecosystem services and nature, human rights, and Indigenous Peoples.
“There are currently roughly 80 operating or reporting standards that any mining company would be subject to, and that’s a huge burden,” said Stephen Barrie, Deputy Chief Responsible Investment Officer at the Church of England Pensions Board (CoEPB), speaking on a panel discussing the sector’s nature-related risks and impacts at ESG Investor’s second Nature Data for Institutional Investors event.
“There are a number of significant topics for us investors [in the draft], and I’d strongly encourage any institutional investor to have a look at the consolidated mining standard proposal and engage with the consultation.”
The standard’s first consultation, which closes on 16 December, will be followed by a shorter second consultation in early 2025. Once finalised, it will be adopted by the participating organisations, which collectively encompass 100 mining companies with around 600 operations in 60 countries.
Despite the mining sector’s Scope 1 and 2 greenhouse gas emissions accounting for an estimated 4-7% of all such emissions globally, and as much as 28% when considering Scope 3 emissions, mining has been increasingly acknowledged as having a key role in the low-carbon economy transition.
The International Energy Agency has estimated that the annual demand for transition minerals for renewable energy production will triple, rising to more than 30 million tonnes, by 2050. The industry underpins up to 45% of the global economy considering both its direct contribution and that made to other industries, and plays a principal role in the economies of 81 countries home to half of the world’s population.
Artisanal mining risks
The mining sector has a mixed record across ESG risks, panellists noted, including health and safety disasters and disregard for indigenous rights, alongside industry-level efforts to better address social and environmental impacts.
Founded in 2001, the ICMM has played a major role in spreading best practice across members, who make up a third of the global mining and metals industry. But the nature and focus of its membership has left some risks unaddressed, according to George Chevely, Portfolio Manager, Metals and Mining Specialist at investment manager Ninety One, who said the sector had “fallen down” on the issue of artisanal mining.
Artisanal mining, carried out by individuals or small groups with minimal or no mechanisation, has been criticised for poor basic worker health and safety provisions, and causing environmental damage. Estimates suggest 15-20% of global minerals and metals are derived from artisanal mining.
“As investors, we need to understand that miners must engage with problems, like artisanal mining, even if they don’t think it affects them,” said Chevely. “ICMM members need to engage with governments and help solutions around artisanal and illegal mining, otherwise they’re going to be tarred with the same brush as the rest of the industry. ICMM needs to help improve the image of the industry beyond their members.”
Investors are already engaging with the mining industry on a range of environmental and social themes via the Global Investor Commission on Mining 2030. Launched in 2022, Mining 2030 has been backed by investors representing US$15 trillion in AUM, including CoEPB. The investor-led initiative launched guidance on assessing environmental and social impacts in October, which will be developed into action plans due to release in H2 2025.
In January, ICMM released a nature position statement which laid out a five-point plan for how the mining sector can help meet the needs of the energy transition while taking account of its impacts on nature. It also launched new Tools for Circularity for mining and metals companies in October.
Shelley Lizzio, Senior Programme Manager for Business & Nature at international wildlife conservation organisation Fauna & Flora, welcomed efforts made by ICMM to ensure its members are not mining UNESCO World Heritage Sites and legally designated protected area.
However, Lizzio, who previously worked at mining giant Anglo American, expressed concerns that “less scrupulous” companies not involved with ICMM may still see these areas as “fair game for mining” due to the financial opportunities they present.
Lobbying overlooked
The Taskforce on Nature-related Financial Disclosures (TNFD) has released sector-specific guidance to help mining firms and their investors to better understand and address the sector’s nature footprint.
The guidance covers core and additional indicators and metrics to assess quantify impacts and dependencies, but CoEPB’s Barrie said there was need for greater attention to both lobbying and the rights of Indigenous Peoples.
“The role of companies in lobbying governments and regulators directly or through their industry associations doesn’t have sufficient focus in TNFD,” said Barrie. “There’s already a global climate lobbying standard, but we need to apply similar standards to nature. Institutional investors also have a key role in engaging with companies to ensure that their lobbying of governments is pointed in the right direction.”
In August, the world’s second largest metals and mining firm, Rio Tinto, was criticised by the Australasian Centre for Corporate Responsibility for lobbying the Australian government to water down new environmental laws. The company has also been lambasted for its destruction of sites historically important to Indigenous People in the country.
“Something that’s clearly articulated in the consolidated mining standard is the importance of consultation with Indigenous People and locally affected communities as part of companies’ biodiversity and nature processes and that’s something not reflected so clearly in the TNFD,” added Barrie.
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