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Big investors looking for better safety outcomes

Investor safety outcomes - big investors are looking for better safety outcomes for mining companies. Non disclosure may result in investment withdrawn
Investors are calling for disclosure on safety performance.

Some of the world’s leading investment groups are looking for better safety outcomes in mining following the Vale Brumadinho mining disaster.

Investors with a combined $12.5 trillion in assets, including the Church of England Pension Fund and the Swedish National Pension Funds, have threatened that they may review their portfolios if mining companies do not release information to assess safety risks on tailing storage facilities.

The Church of England Pension fund said that 655 publicly listed extractive companies were contacted (including oil and gas companies because tailings waste can be generated from tar sands operations and they may be involved in tailings through e.g. joint ventures).

To date 29 of the top 50 mining companies have made safety disclosures which have resulted in information about thousands of individual tailings dams/facilities being made public on company websites. Over 50% of the mining industry (specifically, 50% of publicly listed mining companies by market capitalisation) have responded and 20 of 22 publicly owned companies that are members of the International Council on Mining & Metals (ICMM) responded.

But it added that 69% of companies contacted did not respond to date.

In a joint statement, John Howchin, secretary-general of the Council on Ethics of the Swedish National Pension Funds, said ‘we will be engaging robustly with those that have not.’

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Disclosures bring a new level of transparency

Adam Matthews, Director of Ethics and Engagement at the Church of England Pensions Board and Co-Lead of the Investor Mining & Tailings Safety Initiative said:

“Good tailings management exists but, when tailings dams fail the consequences can be catastrophic for communities and the environment. These disclosures bring a new level of transparency to the mining sector that will enable us to begin to reappraise the risk in our portfolios.

“It is clear there has been insufficient attention paid by the investment community and tailings have in effect been treated as an externality.  These disclosures begin to change that understanding. We now know who has a facility, where it is, and we are beginning to understand the risks associated with individual dams.

“Through the work of the Investor Mining & Tailings Safety initiative, we expect to drive the highest standards of safety within company tailings management.  These disclosures are the first steps towards that goal.”

John Howchin added “Not disclosing is unacceptable and poses a very real risk to our investment. We are now working with partners to develop a global tailings database that can standardise independent reporting and monitoring of tailings.”

The move from significant investors flies a flag for increased disclosure from mining companies in respect of significant risks including those of safety and environment. Investors want assurances that the companies they invest in are conducting their operations ethically and without risks to the communities and environments in which they operate.

Investor want demonstrable safety outcomes

The global review of Tailings Storage Facilities is now being led by the Swiss former Environment Minister, Professor Bruno Oberle, that is co-convened by the International Council of Mining & Metals (ICMM), The Principles for Responsible Investment (PRI) and the United Nations Environment Programme (UNEP).

The work of significant investors is a refreshing response to the management of safety-related issues in mining and represents a significant shift in the view of ‘safety’ from an ethical and financial perspective. It may also be confronting for some governmental jurisdictions in respect of the requirement to maintain investment status.

While tailings are currently the focus of the agenda, investors may also seek to broaden the scope to other management of critical hazards in the near future.

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