Industry

Momentum to Tackle Mining Risks Growing

The Global Investor Commission on Mining is urging investors to formally join the initiative to contribute to multi-stakeholder sustainable solutions for the sector.  

The investor focus on addressing the environmental and social systemic risks permeating the mining sector has accelerated over the past few months, with an investor-led initiative looking to recruit further participants as it ramps up engagement with the industry.

“Since the launch of the Global Investor Commission on Mining 2030, we have started to see some encouraging dialogue across the investor community on the mining sector – the challenges and the opportunities, as well as how we can really incentivise the sustainable long-term in mining,” said Adam Matthews, Chair of the Commission, and Chief Responsible Investment Officer of the Church of England Pensions Board. 

The environmental and social impacts of the mining sector are far-reaching, he said. 

“If an investor has a diversified portfolio, mining is probably quite a small part of its holdings. However, the sector has an oversized impact on any commitment to net zero, given its ability to produce the minerals needed in the climate transition,” Matthews said. 

Mining companies have often been in the spotlight due to environmental and social scandals, such as the Brumadinho dam collapse in 2019. 

“If something goes wrong in mining, those that have ultimate responsibility are the owners of it,” warned Matthews. 

Mining companies must also meet escalating demand for critical minerals to support the climate transition. A 2020 World Bank report estimated the production of minerals, such as graphite, lithium and cobalt, will need to increase by nearly 500% by 2050 – the equivalent of nearly three billion tonnes.  

To meet demand, mining majors are increasingly looking to acquire smaller companies to monopolise key critical mineral deposits. 

The Global Investor Commission on Mining 2030 aims to support the sector’s just transition to net zero, while meeting growing demand for critical minerals, by plugging gaps in global environmental and social standards, identifying investment opportunities, and attempting to consolidate existing relevant ESG data. 

“There are some very important questions for investors to start considering,” Matthews said.  

“How are we incentivising the long-term [climate transition]? How do we really instil confidence in these companies to incentivise best practice? 

“There’s some real reflections to be done on the investor side in that respect.” 

Multi-stakeholder approach

Matthews said that the Steering Committee is now formalised and has been overseeing the formation of the Commission. The initiative is now open to multi-stakeholder members. The Commission will commence its work in the next few weeks, he said, and will ultimately paint a “holistic” overview of the mining sector.  

“We’re going to be working through a number of phases in terms of understanding the landscape of critical minerals demand and capacity, identifying issues that are going to challenge the mining sector throughout the transition, and considering how standards and disclosures can be consolidated,” he added.  

The Commission is encouraging applications from individuals across the investment industry, mining industry, Indigenous communities, academia, banking, and more. It is especially encouraging stakeholders from key mining geographies and the Global South to apply.  

The group will next be seeking information and submissions on growing future demand for critical minerals and the challenges facing the sector, according to Matthews, who added that he will also be going to visit various mines across South Africa and beyond in the coming months. 

“We are keen for a broad set of perspectives across the spectrum that can shape the deliberations and outputs of the Commission,” he said.  

“When mining goes wrong, the solutions are multi-stakeholder.”  

Candidates have until 19 May to apply, with the first Commission meeting expected to take place at the end of June. 

The investor-led initiative is advised by the United Nations Environment Programme, and backed by the Archbishop of Canterbury, Archbishop of Cape Town, the Australian Council for Superannuation Investors (ACSI) and the UN-convened Principles for Responsible Investment (PRI). 

ESG Investor understands that investor engagement initiative Climate Action 100+ is preparing to release new standards for mining imminently.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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