May 9 – Efficient energy storage is key to the fight against climate change. Batteries for vehicles and to store energy from renewable power installations, are estimated to have the potential to slash carbon emissions in the transport and power sectors by 30%, according to the World Economic Forum.
But the estimated surge in demand for minerals needed to feed battery manufacturing for the clean energy transition is staggering. The World Bank has estimated that the production of graphite, lithium and cobalt needs to increase by 450-500% by 2050.
The mining sector already has a long history of environmental and human rights abuses, with recent high-profile cases such as the tailings dam collapses at Brumadinho and Mariana in Brazil still fresh in the minds of the public and investors. It has a considerable challenge ahead to not just stop damage from existing mines, but to prevent the growth of its operations leading to a simultaneous uptick in abuses.
The need for the mining sector to rectify its record has been acknowledged for some years. The 2001 launch of the International Council on Mining and Metals (ICMM) followed a recognition by the industry that it had a serious trust deficit with society, according to Aidan Davy, its chief operating officer.
These concerns have been amplified in recent years, resulting in an acceleration in the establishment of multiple industry and stakeholder initiatives, including the World Economic Forum’s Global Battery Alliance in 2017, the World Bank’s Climate-Smart Mining Initiative, launched the same year, and the Responsible Cobalt Initiative in 2016. New standards have been developed, such as the Global Industry Standard on Tailings Management in 2020. The Global Resources Initiative is currently consulting on a new mining standard.
Nevertheless, serious social and environmental issues continue to plague the sector. The Business & Human Rights Resources Centre (BHRRC) has been monitoring human rights abuses against local communities and indigenous peoples, and environmental impacts of mining over the past 10 years.
In that time, its tracker has documented close to 500 allegations of human rights abuses related to the extraction of six key transition minerals: cobalt, copper, lithium, zinc, nickel and manganese. In 2021, 61 new allegations were recorded, it said.
Over two-thirds of recorded allegations are against 12 companies, which are among the largest and most well-established of the extractive sector, including Grupo Mexico, Codelco, BHP, Anglo American and Glencore. One third (148) of all allegations of abuses involve attacks on those defending the environment or communities.
Most of these were not standalone events, according to the BHRRC’s natural resources researcher Caroline Avan. “There was a continuum between land rights, in particular, and attacks on those defending them, particularly in relation to the rights of indigenous peoples to give free prior and informed consent for the exploitation of their lands,” she said in an interview.
“A leading category of abuse is in relation to the environmental damage of extraction, in particular with regard to access to water, either in terms of quantity or pollution,” she says. “The situation is not getting better; as a matter of fact, the frequency of allegations of abuse has actually increased, given the rapid expansions of mining projects relating to the energy transition,” she adds.
Christian Poirier, programme director of Amazon Watch, agrees. “The extractivist sector has endless PR resources to very much create a narrative that they are abiding by international law and ethical standards that are increasingly demanded of them, while finding massive loopholes to continue business as usual, perhaps by investing in creating or protecting certain areas at the expense of others,” he says.
Nabylah Abo Dehman, head of stewardship at the Principles for Responsible Investment (PRI) points out that mining companies tend to score comparatively highly on benchmarks such as the Corporate Human Rights Benchmark and the World Benchmarking Alliance because they have the right policies and processes in place, and implement the U.N. Guiding Principles on Business and Human Rights sufficiently in terms of scoring criteria.
However, benchmarks such as the Responsible Mining Index, which carries out site-level assessments, score the same companies really poorly, she notes.
“There are still massive issues with security personnel, impacts on communities, and worker safety. You don’t get the full picture just by looking at a benchmark, and I think it’s a massive problem for investors looking at these companies, because if they just rely on an ESG rating, they might not get the full picture,” she says.
Davy acknowledges that despite the rigorous assessment procedure that companies must pass to become a member of the ICMM, membership is not “a talisman that gives you protection against bad things sometimes happening”.
Its 26 members include Vale and BHP, responsible for the 2015 collapse of the tailings dam at the Samarco iron ore mine near the town of Mariana in Brazil in 2015, which released a flood of tailings equivalent to around 12,000 Olympic swimming pools. The disaster destroyed a village, killed 19 people and left hundreds homeless.
“One of the things that we hope would distinguish our members from other companies is what they do as a consequence: do they go into denial defence mode, or do they have a mindset that this is unacceptable, that they have fallen short in terms of the standards they subscribe to, and will they (be) rectifying and remediating terrible situations,” he says.
The companies responsible have compensated the affected community via an independent foundation, which has provided new homes, support with livelihoods, healthcare facilities and upgraded social and economic infrastructure, according to Davy. They have also invested significantly in innovative methods of tailings storage, which separate the solid sand from liquid materials, rather than the traditional method of holding all materials together, he reports.
Even since the beginning of this year, new initiatives are targeting the mining sector. The Global Commission on Mining 2030 was launched in January 2023 by institutional investors, chaired by the Church of England Pensions Board and advised by the United Nations Environment Programme (UNEP). Its goal is to identify gaps in global best practice standards and disclosures, across social and environmental risks including artisanal mining, waste management, biodiversity protection, child labour and the role of minerals in conflict.
Adam Matthews is chair of the commission and chief responsible investment officer of the Church of England Pensions Board.
“There is very good practice in the mining sector. I’ve seen and experienced it,” Matthews says. “I know that there’s a lot of commitment from a number of companies to really be best practitioners. But that is all undermined by the poor practice that also exists. This risks the social licence of mining as a sector, and makes it very difficult for investors.”
Certification and standards can make a difference, Matthews believes, citing the example of the Initiative for Responsible Mining, which was set up in 2006, and has seen demand for its certification increase.
Another is the Global Industry Standard on Tailings Management, launched in 2020 by UNEP, PRI and the ICMM following the tailings dam collapses in Brazil. The standard has now been implemented by 63 mining companies, while a further 66 are actively reviewing it. An institute has been established to oversee audits of individual sites, Matthews says.
“The standard has rigorous transparency, reinforced with audit that I think gives a lot of confidence, and there are opportunities to reflect if lessons can be extrapolated into other areas.”
The finance sector is increasingly expecting companies to implement the standard. Matthews says a number of investment funds now have policies to vote against board directors and chairs of companies that have not implemented the standard, while some insurance companies insist on implementation as a condition of insurance.
“There’s a clear message for any company with tailing facilities that working towards the standard is absolutely central to carry the confidence of the finance community,” he says.
Meanwhile, in 2022, the U.N. PRI launched Advance, which it describes as is the world’s largest stewardship initiative on human rights, backed by more than 220 investors collectively representing $30 trillion in assets under management.
The first phase of the initiative will specifically target 40 companies across both the mining and metals and the renewables sectors, including Anglo American and Rio Tinto, whose respective investors, Schroders and Morgan Stanley Investment Management, and ACSI, Phoenix, Aviva and Pimco, will be working directly with them to effect change. Signatories will be expected to align their political engagement with human rights responsibilities.
“Advance is very much a work in progress. We are going to determine expectations for each individual company in collaboration with their investors, and the support of two advisory groups that we’ve put together,” Abo Dehman of PRI says.
All these initiatives have created a momentum behind the move to sustainable mining, says Davy of ICCM. “The emergence of various standards has encouraged almost a race to the top rather than a race to the bottom.”
There is now strong alignment across standards for biodiversity, climate change and waste, he adds. “We’re getting to a point where the expectations of what good looks like within the sector are becoming pretty normative. … It will be harder for less responsible operators to survive and thrive against that backdrop.”
Campaigners welcome these initiatives, but say their efficacy remains to be proven. Fundamentally they want to see a holistic assessment of the amount of mining that is needed for the transition, and how that could be reduced by action in other areas.
For example, U.S. lithium demand could be cut by up to 92% in 2050 in comparison to the most lithium-intensive scenarios by decreasing car dependency, right-sizing EV batteries, and creating a robust recycling system, according to research by the Climate and Community Project, a U.S. based think-tank.
Any increase in mining is likely to lead to a corresponding rise in environmental and social impacts, Avan says. “It’s really important that investors not only think about mining, but also the overall ecosystem around mining, such as reuse and recycling.”
Poirier of Amazon Watch fears that this system-level thinking is not happening. “What we’re trying to do is lay over the same fossil fuel infrastructure system that we have now with clean energy. It is untenable to try to draw minerals out of the earth to maintain the same level of consumption that we have today,” he says.
“We simply can’t address the climate and biodiversity crises using the same tools that have put us where we are.”
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Ethical Corporation Magazine, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.
Source: reuters.com
