Week of 21 February 2022
Mining companies: Invest in addressing human rights risks (not just environmental risks) on the ground
Our key takeaway: Mining companies are showing improvement on corporate-level governance and tracking of human rights and environmental issues, but their approach at mine-site level—where efforts matter most for people and planet—are still lacking. Companies need to apply their standards consistently across all of their operations, paying special attention to social risks alongside environmental ones.
The Responsible Mining Foundation has released its 2022 Responsible Mining Index, which assesses the practices of 40 large mining companies’ policies and practices on economic, environmental, social and governance issues, as well as an assessment of 250 mine sites:
- Mine-site efforts matter most: Most human rights and environmental risks of mining companies occur at the mine site—yet “[t]he vast majority of the 250 assessed mine sites across 53 countries cannot demonstrate that they are informing and engaging with host communities and workers on basic risk factors such as environmental impacts, safety issues or grievances.” Specifically, 94% of the mine sites scored on average less than 20% on the 15 core issues addressed by the study (Air Quality, Community Complaints & Grievances, Decent Living Wage, Local Employment, Local Procurement, Rehabilitation & Post-Closure, Safety of Communities, Safety & Health of Workers, Tailings, Training of Workers, Water Quality, Water Quantity, Women Workers, Worker Complaints & Grievances, and Workplace Deaths & Injuries). The report points out that “[i]t is at mine-site level that these issues matter most – for local stakeholders who risk exposure to harmful impacts, for investors who need to know about asset-level risks, for Board members and senior executives to know if risks are being well managed, and for companies seeking to show respect for their neighbours and host communities.” To that end, one the key recommendations for companies is to avoid harmful impacts by assessing and managing risks to people and planet consistently across all operations, ensuring that prioritisation of salient risks takes into account the local context and jurisdiction. Companies are also recommended to track metrics and performance at mine site—not just at corporate level—and to provide mine-site disaggregated data to “meet the needs of stakeholders including affected communities, workers, investors and others interested in site-level risks and performances.”
- There are some encouraging improvements at corporate level: The report found that, although many companies are still lacking policies and practices on specific ESG issues, “companies show an overall average improvement of 11% over the RMI 2020 results. Marked improvements have been achieved by some lower performing companies.” The report provides a few key recommendations for companies to improve their corporate level governance of social and environmental risks. For one, companies need to ensure adequate resourcing: “If company leadership is serious about ESG and Sustainability, these departments need to be provided with the finances, people, agency and respect required to ensure effective management of ESG issues. In addition, companies can bring Sustainability into the C-suite for stronger governance, accountability and signalling.” In addition, companies should be assigning high level responsibility for ESG performance “by designating specific Board members and senior executives as responsible and accountable for the companies’ ESG performance. Remuneration of senior managers can integrate ESG criteria, which are publicly disclosed.”
- Imbalances in addressing social issues alongside environmental issues: The report finds that “[t]here is a risk of stalling of momentum among the leaders on ESG issues, even as the industry announces ambitious plans on technical issues, such as emissions reductions or efficiency gains. Applying the same level of effort and leadership to, for example, social performance issues or the management and disclosure of local environmental impacts, would do much to help the industry meet society expectations on these critical issues.” In particular, some of the issues that the RMI has been tracking over the past 6 years continue to show weak performance, including: financial surety for social closure of mines, disaster management and recovery; tracking and acting to improve the quality of company-community relations; assessing and addressing mining-related impacts on community health; and paying living wages to workers. To RMF, this signals that these issues are “clearly not registering with companies as priority elements of their ESG strategies. While these issues are highly salient to the wellbeing of local mining-affected people, they are still rarely addressed by external requirements or reporting frameworks, and seemingly not noted as significant by ESG investors.” To address this issue, the report recommends that companies invest in and mainstream social impact assessments alongside environmental assessments and any other assessment processes required by local regulation.