A Principles for Responsible Investment-backed global standard for the safe management of mining waste storage facilities launched yesterday, which investor representatives say they will be expecting miners around the world to adhere to.
The PRI, representing $103.4trn in AUM, said it would push for an independent entity to help implement the standard for the facilities, also known as tailings dams.
The standard is the result of the Global Tailings Review, co-convened in March 2019 by the PRI, United Nations Environment Programme (UNEP), and extractives trade body the International Council on Mining and Metals (ICMM) following the fatal collapse of tailings facilities at Brumadinho, Brazil, on 25 January 2019.
The standard contains 77 specific auditable requirements for operators to adhere to across six key topics: affected communities; integrated knowledge base; design, construction, operation and monitoring of tailings facilities; management and governance; emergency response and long-term recovery; and public disclosure and access to information.
According to the conveners, the standard “can be applied to existing and future tailings facilities, wherever they are and whoever operates them”, integrating social, environmental, local economic and technical considerations with the aim of “zero harm to people and the environment”.
Adam Matthews, Director Ethics & Engagement at the Investment Team of the Church of England Pensions Board, spoke on behalf of the PRI, saying: “For the first time we have a global standard that goes beyond existing best practice and establishes the most comprehensive standard that investors will hold companies accountable for in their implementation.”
Matthews said the standard would become a requirement by investors of their investee companies through disclosures and reporting, and would be used as a reference in work with banks and insurers.
Matthews also co-leads the Investor Mining & Tailings Safety Initiative, the coalition that demanded disclosure on tailings from over 700 publicly-listed miners, which it used to create an interactive database of around 1,800 tailings dams.
“We want to see every company that has a tailings facility adopt the standards. As investors, we provide their debt, and equally we’re working with both the banking and insurance sector to reinforce the standards. If you have tailings facilities, please expect to hear from investors.”
Matthews said the PRI would develop an ‘investor expectation’ of mining companies based on the standard, as well as support the establishment of an independent institution to drive its uptake.
“As the PRI, we are not finished and we’ll support an independent institution to drive the standard and to ensure that it will continue to evolve and support independent implementation. We intend to work with progressive companies and others to ensure that this issue is fully resolved.”
John Howchin, Secretary General of the Council on Ethics for the Swedish National Pension Funds, said: “We have been assured by the Global Tailings Review’s independent expert panel that if this standard had been in place, the disaster at Brumadinho would not have happened. We expect all mining companies to comply with this framework, and responsible investors looking to address the risks of tailings failure now have a responsibility to drive implementation, incorporating the standard into stewardship and active ownership strategies.”
He said: “The ambition is to be able to educate a global group of young, hungry engineers that can travel around the world to check that these safety standards are indeed a global standard.”
Tom Butler, CEO of ICMM – whose member firms represent around a third of the market and own around 12,000 dams – said the standard will be integrated into the trady body’s existing member commitments, including third-party assurance and validation.
“Members have committed that all facilities with ‘extreme’ or ‘very high’ potential consequences will be in conformance with the Standard within three years of today, and all other facilities within five years," Butler said.
He added that there “are mechanisms that exist” to deal with member companies which consistently refuse to comply with the standard.
Matthews said: “We want to see this go beyond the ICMM membership. Those that don’t take the standard up will present a very clear risk to investors – why should we want to remain invested in companies that are not taking on this standard?”
The news comes as Canadian shareholder advocacy organisation SHARE warns that energy and mining investment chains could be hiding indigenous rights risks.
SHARE said in a new report that the $4bn Dakota Access Pipeline project is just one example of the hidden risks that can indirectly hit investors through “increasingly complex finance structures in raising capital for energy and mining projects”.
The paper, Energy and Mining Investment: Assessing Accountability for Indigenous Rights in Complex Investment Chains, outlines the types of indirect exposure to indigenous rights concerns as well as key questions investors can ask about due diligence for independently-managed operations.