Analysis: Norwegian ethics committee spells out reasons for divesting Vale after tailings disaster

Amid fossil fuel exclusions, Vale exclusion stands out

Norges Bank Investment Management (NBIM) has excluded Brazilian mining firm Vale from its investments following a recommendation from its ethics panel.

It comes amid a slew of exclusions from the influential investor, including Sasol, RWE, Glencore, AGL Energy and Anglo American over their coal operations following new thresholds. ElSewedy Electric (due to a hydropower project in Tanzania) was, like Vale, excluded over severe environmental damage.

Norges also put BHP Vistra Energy, Enel and Uniper on watch over coal links.

Brazil’s Eletrobras was excluded due to “unacceptable risk” that it “contributes to serious or systematic human rights violation” in connection with the Belo Monte power plant.

Campaigners are hailing the fossil fuel exclusions but there’s a risk that the exclusion of Vale – whose involvement in the fatal Brumadinho tailings dam collapse in February last year led to unprecedented investor action – could be overlooked.

The disaster, which has claimed up to 300 lives, led to the formation of the Investor Mining & Tailings Safety Initiative spearheaded by the Church of England and the Swedish AP funds with the support of other investors such as APG, Robeco, New Zealand Super, LGPS Central and BMO Global Asset Management.

This ultimately led to the launch of a mine tailings database and an investor summit on the issue.

The initiative is co-chaired by Adam Matthews, Director of Ethics and Engagement at the Church of England Pensions Board, but he wasn’t available to comment on the Norges divestment. The Church of England confirmed that NBIM is not a signatory to the initiative but that it is on its tailings investor mailing list.

There was also a global review co-convened by the International Council of Mining and Metals (ICMM), the Principles for Responsible Investment (PRI) and the United Nations Environment Programme (UNEP).

Responsible Investor looked at the human face of the accident in January.

The Government Pension Fund Global (GPFG) that is managed by NBIM held a 1.1% stake in Vale worth NOK6.6bn (c.€600m).

The Council on Ethics’ 12-page report, put together in June last year and just released, reveals a litany of corporate behaviour that persuaded NBIM that its holding of the company was untenable.

The exclusion recommendation only focuses on the environmental damage caused by the Brumadinho disaster and the earlier Samarco accident and not Vale’s wider operations.

But it makes clear that, while it has not assessed the company on human rights, “the consequences for human life and health in this case are of such a nature that they may also constitute human rights violations, including the right to life, safety, a home and clean drinking water”.

The panel says it has not itself examined conditions at Vale’s mines in Brazil, but relied “on a substantial volume of openly available documentation on dam safety in general and these two accidents in particular”.

This material includes the Morgenstern report that followed the Samarco accident and even research documents produced by the company’s own employees, as well as information provided by the prosecuting authorities and documentation from the certification body used by Vale.

In the aftermath of Brumadinho, the Council on Ethics contacted the company (on February 25, 2019) and says it received a reply the next month in which Vale said it had 148 dams in Brazil, of which 45 are tailings dams.

The panel went on to cite Vale as saying in April 2019 that it would comment on the Council’s draft recommendation but failed to do so.

Lindsay Newland Bowker, Executive Director of the World Mine Tailings Failures group, told RI that Vale is “the only company fixing their tailings” and that according to the Responsible Mining Index, Vale “ranks in the middle of the pack”.

“There are plenty of worse portfolios out there getting no attention at all from their owners and plenty more dumped in a deplorable state.”