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Transition at Risk

The human cost of minerals is threatening the renewable energy transition, says Jessie Cato, Natural Resources Programme Manager at the Business and Human Rights Resource Centre.

Anglo-Australian mining firm Rio Tinto’s share price fell from A$113 to A$107 in January after Serbian protestors succeeded in halting the company’s exploration licences.

Prime Minister Ana Brnabic told a press conference that she “had put an end to Rio Tinto in Serbia” amid concerns about the environmental impact of efforts to extract lithium – an essential input to the batteries used to power electric cars.

Rio Tinto had planned to begin extraction in 2027 but protestors claimed the development of a large mine near the town of Loznica in the western Jadar Valley could cause “irreparable damage to the landscape and contaminate the region’s water supplies”.

Brnabic’s action demonstrates a willingness by governments to challenge mining companies when they pose an environmental threat, but human rights abuses rarely prompt such decisive political intervention.

More frequently, warnings go unheeded, resulting in severe damage to the lives of mining employees and local communities before eventually being exposed. Rio Tinto had been granted permission by state authorities in Western Australia to blow up 46,000-year-old Aboriginal caves at Juukan Gorge, before the subsequent protests led to the resignation of the firm’s chief executive and condemnation by a parliamentary enquiry.

In the aftermath, the firm has tried to put its house in order, including the publication of a report on its workplace culture by Australia’s former sex discrimination commissioner.

A threat to progress

The Business and Human Rights Resource Centre’s (BHRRC) latest Transition Minerals Tracker, published last week, reveals 61 new human rights abuses in 2021 linked to companies extracting cobalt, copper, lithium, manganese, nickel and zinc.

Overall, the BHRRC report identifies 495 allegations of human rights abuses between 2010 and 2021. Over two-thirds of recorded allegations involve 12 companies, which are “among the largest and most well-established of the extractive sector”. This includes Grupo México, Codelco, BHP and Anglo American.

Glencore receives the dubious award for miner with the world’s worst human rights record, according to the BHRRC report.

The NGO says Glencore is linked to the highest number of allegations in Africa, the second highest in Asia Pacific, and third highest in South America.

And the allegations of abuse against the international mining companies identified by BHRRC are not trivial, nor are they limited to human rights.

Jessie Cato, Natural Resources and Human Rights Programme Manager at BHRRC, says: “We look at environmental abuses such as water pollution and destruction of habitats, as well as violations of free prior informed consent, corruption and tax violations. We also record violence and physical attacks which sometimes end in death. These happen to individuals and groups who are protesting mines or doing some sort of blockades of mines.”

A third of the allegations in this year’s BHRRC report relate to physical attacks on human rights defenders. Thirty per cent of those attacks are on “indigenous peoples defending their land and water rights”.

Cato says: “Fourteen percent of those attacks ended in murder.”

BHRRC says attacks are carried out directly by mining companies or indirectly through security services, private militia and police forces.

Cato says investors should be concerned about the human rights abuse allegations not only because of the threats to life, but because they risk “derailing the fast and just transition to renewable energy”.

“Investors need to ask whether the cost of the energy transition is acceptable when it is based on quite egregious human rights attacks. We would say no.”

She also notes “this level of widespread abuse goes beyond those whose rights are impacted; it is also bad news for business”.

Cato says: “Companies with poor human rights records expose themselves to reputational risk and hesitation by responsible investors, threatening the progress of the global energy transition as communities increasingly push back against violations of their rights.”

Investor pressure

Cato says it is imperative investors apply pressure on mining companies to switch from “unsustainable, exploitative practices in favour of a human rights focused business models”. To help, the BHRRC has sets out recommendations for investors to better manage their risk from mining investment (see boxout).

Cato says: “The energy transition can still happen, but we are drawing a line and saying certain behaviour must be outlawed. [Human rights abuses] have been a hallmark of the extractive industries for a long time; this is not new to the extraction of transition minerals. By highlighting what is happening there is an opportunity to change existing business models to something more sustainable that recognises human rights.”

Some investors are already taking action.

This March ESG investor reported the Church of England Pensions Board’s launch of Mining 2030, an investor-led initiative tackling systemic issues in the sector as it transitions to net zero.

Cato says it is critical that investors conduct due diligence on the companies in which they invest, going beyond reading ESG policies.

“If you are investing in this sector, do you know the risks? Then you need to explore what the company says it is doing about those risks and then ensure they put those policies into practice. If these companies say they adhere to the UN Guiding Principles on Business and Human Rights, investors need evidence of that.”

Forcing change

Cato welcomes the EU’s introduction this February of proposals for a Corporate Sustainability Due Diligence Directive which aims to make environmental and human rights due diligence mandatory across the supply chain. She says the requirements will support investors in this scrutiny, since voluntary reporting has fallen short.

“The voluntary measure has not necessarily worked out. A shift from policymakers to mandatory is what we need. This is not a ‘nice to have’, it is a ‘must have’.”

Cato also welcomes – but does not endorse – the proliferation of the Initiative for Responsible Mining Assurance (IRMA) which offers independent third-party verification and certification for mining companies that adhere to its human rights standards.

She says IRMA standards are an important addition to a market reliant on “standards that are too basic and a box ticking exercise”.

Cato points to an April investigation by Global Witness into the of the International Tin Supply Chain Initiative (ITSCI), which is supposed to ensure a clean supply chain of tantalum, tin and tungsten ores from the Democratic Republic of Congo (DRC).

Global Witness reports: “Our findings suggest that ITSCI’s system has permitted the laundering of tainted minerals in DRC. Large amounts of minerals from unvalidated mines, including ones with militia involvement or that use child labour, enter the ITSCI supply chain and are exported, evidence suggests. ITSCI’s incident reporting frequently appears to downplay or ignore incidents that seriously compromise its supply chain.”

The Global Witness report also highlights the supply chain issues for companies using extracted minerals. Apple, Tesla and Intel are identified in the investigation as possible recipients of “materials obtained through mines controlled by militia or through mines controlled by militia or that use child workers”, thus underlining the need for greater transparency and scrutiny along supply chains.

Cato concedes there is a significant amount of work to be done to improve human rights in the mining sector. However, she says change is possible but only once there is widespread recognition that a transition to net zero cannot come at any cost.

“Climate change is the ultimate human rights issue. We are transitioning to net zero with great urgency and we need to apply that same urgency to transitioning the mining sector to more responsible practices.”

BHRCC recommendations for investors

  • Establish and publicly communicate human rights standards for all transition minerals mining investments, consistent with the UN Guiding Principles for Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct.
  • Develop an engagement plan with transition minerals mining investees to insist on urgent and decisive action to remove human rights and environmental risks from operations, and the associated reputation, legal and regulatory risks.
  • Undertake rigorous human rights and environmental due diligence and review potential investees for any past involvement with retaliation. Avoid investing in companies with this track record.
  • Use leverage with investee companies which cause, contribute to, or are directly linked to human rights and environmental harms, including attacks on HRDs (human rights defenders), so that companies mitigate negative impacts and provide access to remedy to those affected.

Source: BHRCC 2022 Transition Minerals Tracker

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